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 There
is a growing trend of companies relocating to Mexico. They Initially moved to
Mexico to reduce their labor and operations costs in order to be competitive.
The population is predominantly young with 37.5 percent of the population being
under the age of 15. The advantage this gives to companies choosing to relocate
to Mexico is an abundant labor force. Not only the labor factor is the impulse
to move down to Mexico, but also: Increased
vertical integration:
Industries'
competitors and suppliers are following companies to Mexico and locating in the
same area because of the necessity of close proximity to fit production chain
requirements Consumer
tendencies:
Consumers'
wants and needs are changing very quickly. The US is such a large market that
a company cannot afford not to be close to its consumers. For foreigners this
makes Mexico an attractive location versus Asian countries with similar competitive
benefits. Doorway
to Latin America:
Mexico serves as the doorway to the rest of Latin
America. The consumer markets in Latin America will exceed those of Europe and
Japan by 2010. Mexico is a logical choice for Asian companies wishing to enter
the Latin American market. 
A
maquiladora is a Mexican manufacturing operation subject to up to 100% non-Mexican
ownership. The main objectives are to take advantage of trained, inexpensive and
productive labor force; high quality products; proximity to suppliers, customers
and headquarters and simple procedures to temporary import and export raw materials,
finish goods and equipment.There are several ways a company may participate in
the Maquiladora Business: Participate
in a shelter program. Typically they contract with a company for a
one-year period and provide appropriate buildings, sites and facilities, administrative
support, labor, liaison to obtain necessary permits, filings, etc., and necessary
customs and brokerage services. Sub-contracting
with existing plants.
Some companies prefer to contract directly with a Mexican company or an existing
twin plant to assemble goods and then to transport goods across the border for
final distribution. Joint-venture
with a Mexican company. This is probably the least favored of the options
because joint venture usually means 50% control being exercised.
Organizing
a entirely owned subsidiary or affiliate corporation under Mexican corporate
law.
Some companies exercise this choice but the legal, administrative, operational
and financial requirements and commitments require a high degree of
corporate sophistication to successfully operate under this method.
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