Mexican Women in American Factories: Free Trade and Exploitation on the Border

4. The History of the Maquila Industry

The first maquilas were built along the Mexico-U.S. border in 1965 with the commencement of the Border Industrialization Program. After touring Asia’s export processing zone, Mexico’s minister of industry and commerce, Octaviano Campos Salas, adapted this new development approach to Mexico’s border by creating the maquiladoras (Kamel 1990, 36). The BIP established a twenty-one-kilometer free trade zone along the entire border. A maquila or maquiladora is defined as an entity operating under a special customs regime, which enables companies to import in-bond and duty-free raw materials, equipment, machinery , replacement parts, and other items needed for the assembly or manufacture of finished goods for subsequent export. Companies reexport the finished or semi finished product from Mexico and may sell it in the Mexican market subject to certain restrictions. Foreign investors may own 100 percent of the equity in a maquiladoras operation. (Mexico ’s Bimonthly Economic News 2000, 2) The maquiladoras are also referred to as “twin plants” and in-bond industries .1 Companies import machinery, parts, and raw materials dutyfree and export finished products around the world. The Mexican government began the BIP as an aggressive regional promotion of capitalist industrial growth. In 1966 there were 57 maquilas employing 4,257 people , and by 2004 there were 2,800 maquilas employing over one million people. The number of maquilas and employees continued to climb until 2007, when the number of people employed had nearly doubled, to 1.9 million. The idea of creating maquilas along the Mexican border did not origCHAPTER 4 The History of the Maquila Industry 66 Mexican Women in American Factories inate with entrepreneurs and investors in the United States or Asia. It was the idea of the Mexican government, which needed to create lots of jobs quickly to put the country on the road to modernization. The government took advantage of U.S. tariff schedules 806 and 807, which allowed U.S. corporations to locate their manufacturing plants along the border and import machinery, parts, and raw materials without taxation . In the end this reduced the import duties on U.S. goods shipped abroad for assembly and then reimported into the United States for sale. The program was originally designed to provide employment for seasonal migrant laborers who had lost their jobs after the demise of the Bracero Program.2 Initially, the growth of the maquiladora industry occurred only along the border in the Mexican states of Baja California, Sonora, Chihuahua (south of New Mexico and Texas), Coahuila (bordering Texas), Nuevo León (south of Texas), and Tamaulipas (bordering Texas). In 1972 the BIP became the Mexican Industrialization Program (MIP) because of its expansion beyond the border zones. Box 4.1 gives a timeline of the political and economic events that contributed to the growth of the maquila industry. In spite of two major setbacks, one in 1975 due to a recession in the United States and the other in 1982 created by a financial crisis in Mexico, the number of maquiladoras increased dramatically between 1978 and 2000, from 457 plants to 3,703 (table 4.1). Although multinational companies were eager to outsource their manufacturing in order to lower costs, the Mexican government sweetened the reward by passing laws that simplified the establishment of a maquila (1973), made workforces cheaper and more flexible (1975), and reduced taxes and eliminated tariffs and duties (1994). It should come as no surprise, then, that the Mexican government took the bold step of changing their constitution to clear the way for the maquiladora industry. NAFTA and Maquiladora Growth The North American Free Trade Agreement signed by U.S. President Bill Clinton and Mexican President Carlos Salinas de Gortari in 1994 broadened the scope of the BIP. NAFTA removed barriers to trade by eliminating custom duties and tariffs and offered “tax holidays” to foreign companies that established operations along the border and in the Mexican interior. As a result, the number of maquiladoras increased. As table 4.1 illustrates, the number of maquilas in Mexico grew steadily BOX 4.1. HISTORICAL TIMELINE OF EVOLUTION OF MAQUILA INDUSTRY 1941 Ley de Industrias de Transformación (Manufacturing Industries Law)—Exempted “new” and “necessary” industries from a wide range of taxes, import licensing fees, and quotas. 1942– Bracero Program—Mexican migrants are officially assigned to tempo1964 rary jobs, primarily agricultural (and some railroad construction jobs), in the United States in...