For manufacturers in the U.S., it’s important to understand the benefits of maquiladoras. Since 1965, maquiladoras have been a major part of manufacturing operations in Mexico. Their unique geographic location along with other key details creates valuable opportunities for manufacturers. In many cases, these opportunities can have a meaningful, positive impact and should be considered.
The benefits of maquiladoras should be on the radar of U.S. manufacturers. Close proximity to the U.S. border can lead to quicker delivery of goods and lower shipping costs. Beneficial legislation including NAFTA and IMMEX also reduce important tax burdens and make it easier to establish operations. Taking advantage of these benefits and more can lead to significant business growth for U.S. manufacturers.
In this article, we’ll take a close look at each of the benefits that maquiladoras have to offer U.S. manufacturers.
The first benefit that can be found at maquiladoras is lower labor costs. Keeping labor costs low is an important aspect of manufacturing that helps to maximize profits. Some data indicates that manufacturing costs in Mexico are as low as 10% of the cost to manufacture in the U.S.
This won’t come as a shock to many industry veterans familiar with outsourcing manufacturing. Historically, the U.S. has been on the higher end when it comes to the cost of manufacturing goods. However, what may surprise some is that Mexico’s labor rate is now competitive with traditional manufacturing powerhouses, including China.
Since 2009, Mexico and China have gone in opposite directions in terms of manufacturing labor costs. While China’s costs have steadily risen, Mexico’s have been stagnant with little to no increases. Obviously, there’s no guarantee that this trend will continue. Until it does though, manufacturers should be mindful of this detail.
Thanks to the close proximity of many maquiladoras to the U.S., manufacturers can quickly receive their goods. Maquiladoras located close to the U.S. border can deliver their finished goods in just a few hours in some cases. Compared to products coming from China via ocean freight that can take weeks to arrive, Mexico has a distinct advantage here.
Another benefit of the close geographical distance between the U.S. and maquiladoras in Mexico is reduced shipping costs. With a shorter distance traveled, less fuel and labor is needed to deliver products. For businesses with few, infrequent shipments this cost savings may not be a deciding factor. However, companies with constant, high-volume freight can benefit significantly from this.
When it comes to getting products quickly, the difference is even more noticeable. Receiving a shipment quickly from outside of North America will require air freight. This is the most expensive method of freight delivery. On the other hand, shipments from Mexico can arrive quickly via trucks at a fraction of the cost.
Some of the most significant benefits of maquiladoras are a result of the North American Free Trade Agreement (NAFTA). This trade agreement got rid of most tariffs on imports and exports between the U.S., Canada, and Mexico. With tariffs removed, many businesses are able to manufacture and transport more products.
To qualify for duty-free import and export, the goods being shipped must originate in one of the three countries. The shipment must also be accompanied by a NAFTA Certificate of Origin. This document confirms the origin of the goods or products being shipped.
Are you ready to start manufacturing in Mexico? An important part of this process is separate from the manufacturing itself. You’ll need to efficiently transport your goods between the U.S. and Mexico. To do this, you’ll need a logistics company that understands cross border freight to Brownsville and beyond. This is where R+L Global Logistics comes in.
We have over 30 years of experience and knowledge in managing cross border freight. From clearing customs to transporting your freight and everything in between, we manage the process for you. In addition to the required tools needed to effectively manage cross border freight, we offer other services that simplify your process. Warehousing, supply chain management, and more allow us to provide you with an individualized approach.
Contact us today to receive a quote for your cross border freight or to learn more about how we can help you.