Maquiladora Essay

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Maquiladoras are plants devoted to producing or assembling intermediate goods required by other companies in their productive  processes, so they are part of productive chains for activities of international subcontracting. They operate under a special tax system that  allows them  to import  inputs  and components free of tariffs for assembling products  destined for the international market.

Maquiladoras rose in the 1960s. They expanded as part  of the processes of internationalization of production, the establishment  of free trade agreements, and economic globalization. They are considered  an alternative  to  increasing  international competitiveness by taking advantage of the conditions offered by the host  countries: abundant  and cheap labor, flexibility in the use of the workforce, a corporative  system that favors trade unionism control and discipline in  the  factory,  and  loose  regulations  in  protecting the environment.  To encourage  their establishment, governments  offer tax benefits and other  economic incentives, creation of infrastructure, labor deregulation, and containment of wages.

Maquiladoras  initially developed in border  areas and were considered a proper means to solving problems of unemployment and migration. They reached significant development during the 1980s and 1990s along the  border  of Mexico and the  United  States and  in countries  of southeast  Asia such  as Korea, Taiwan, Hong  Kong, and  Singapore. However, the internationalization of production through maquiladoras should be regarded as a phenomenon of global industrial  redesign.  They have constituted export processing zones involving an asymmetrical  industrial articulation  between developed and peripheral countries  based  on  a new regime  of international division of labor, which benefits contracting  corporations without encouraging industrial development in the host country.

Initially,  maquiladoras   emerged  as  small  plants of  low  investment,  characterized   by  intensive  use of unqualified  workforce  under  a very fragmented and routine  assembly work process. They have been called “sweatshops” owing to low wages, piecework payment, extended hours of work, poor working conditions  that damage the health of workers, abuse and gender inequity, unjustified dismissal, and illegal employment  of child labor. They operate  traditionally with female labor, especially with single mothers and teenagers who accept the conditions of work and compensation because they need the employment  to survive. These precarious job conditions explain their high levels of turnover.

In addition  to this traditional  model of maquiladoras, a segment of them has evolved toward manufacture under  forms of lean production and flexible specialization. They are factories with sophisticated technology that enables increased automation of the work process  that  requires  higher levels of skills in the workforce; there was an increasing incorporation of specialized  technicians  and  engineers.  In  these plants, the traditional advantage of cheaper labor lost its importance. In its place, competitiveness rested on greater  flexibility based on polyvalent work and the use  of Japanese manufacturing techniques  such  as Just-in-Time production and Total Quality Control.

Also, a smaller  segment  of maquiladoras  corresponds  to highly capital-intensive  companies  based on research and development processes. They require increased investment and advanced technology to facilitate  innovation  and  design.  They increasingly participate  in integrated  international business networks operating under diverse collaborative and exchange frameworks.

Trade liberalization trends and economic regionalization and globalization have pushed many countries to accept the establishment of maquiladoras as part of their strategies to boost economic development  and facilitate  their  incorporation into  the  international economy. However, primarily large transnational corporations  control  this process. They impel off-shoring production to  increase  their  competitive  capabilities in the global markets, which rarely attend the development  requirements of the host country. One of the great problems is related to the so-called runaway shops, the footloose industry  and the fly-by-night  enterprises:  The maquiladoras  simply move to distinct  geographic zones when they find greater competitive advantages. This process creates what it wanted to avoid, i.e., unemployment, migration, and the emergence of ghost towns that have no alternative economic activities for the people. Therefore, governments are increasingly forced to establish better regulations to guarantee  more equitable treatment and a different incorporation of the maquiladoras  considering the economic and social needs of the country.

The design of national  development  strategies tends to encourage  a better  integration  of national  manufacturing,  a greater  economic  development,  and an advantageous  incorporation to the  flow of international trade and production.

Bibliography:

  • Shad Dowlatshahi and Cristina Urias, “An Empirical Study of ISO Certification in the Maquiladora Industry,”  International   Journal  of  Production  Economics (v.88/3, 2004);
  • Rachel Kamel and Anya Hoffman, The Maquiladora Reader: Cross-Border Organizing Since NAFTA (American Friends Service Committee,  1999);
  • Alejandro Lugo, Fragmented Lives, Assembled Parts: Culture, Capitalism, and Conquest at the U.S.-Mexico Border (University of Texas Press, 2008);
  • NAFTA and the Maquiladora Program: Rules, Routines, and Institutional Legitimacy  (Texas Western  Press, 2008);
  • Devon G. Peña, The Terror of the Machine: Technology, Work, Gender & Ecology on the U.S.-Mexico Border (CMAS Books, 1997);
  • Fernando Romero, Hyperborder: The Contemporary U.S.-Mexico Border and Its Future (Princeton Architectural  Press, 2008);
  • James G. Samstad and Seth Pipkin, “Bringing the Firm Back In: Local Decision Making and Human Capitol Development in Mexico’s Maquiladora Sector,” World Development (v.33/5, 2005);
  • Enrique De La Garza Toledo, “The Crisis of the Maquiladora Model in Mexico,” Work and Occupations (v.34/4, 2007).

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