What is the IMMEX Program?
The IMMEX program is a manufacturing solution created in the 1960’s to utilize preferential tariff agreements between the U.S. and Mexico & to encourage foreign investment in that country. The IMMEX program is an acronym in Spanish for “Manufacturing, Maquila and Export Services Industries Program” (Industría Manufacturera Maquiladora y de Servicio de Exportación).
More commonly, the IMMEX program is known by their traditional name “Maquiladora”.
Why Is IMMEX Important for Companies Wanting to Manufacture in Mexico?
Manufacturing companies who utilize the IMMEX program enjoy operations savings that companies utilizing manufacturing options in other countries like China, do not. The IMMEX program allows manufacturing companies to lower manufacturing costs by sending materials and equipment, utilizing a temporary duty-free basis to Mexico, having the materials manufactured or assembled, then re-sent back to the U.S. for sale or distribution. In addition, the IMMEX program also allows the manufacturer in the U.S. to take advantage of a large, skilled, & affordable labor pool for their operations.
How Does the IMMEX Program Work?
According to the Tijuana EDC, for the manufacturer to enjoy the benefits of the affordable labor pool, tax exemptions and duties, they must simply participate in a sustained manufacturing process: send the materials to Mexico and have them come back to the U.S. as finished goods.
“It is important to notice that this exemption only works when the raw materials are temporarily imported, and then exported as finished goods. IMMEX regulates the operations of the companies under its program in order to keep everything under control, but also to improve the processes of each company and promote their growth.”
What Are the Benefits of the IMMEX Program?
The benefits to a U.S.-based business relate primarily to the cost, quality and availability of labor, and the proximity to market. Other benefits of operating through a IMMEX program include:
- Unlimited duty-free imports
- Unlimited foreign capital investment
- Limitless options for type or amount of product that can be manufactured
- Reduced manufacturing costs
- High-quality product
- Reduced transport time and cost (specifically in comparison to manufacturing in eastern countries)
According to the Wall Street Journal: “Mexico has remained consistent with costs and taxing, which allows companies to plan budgetary needs in advance and avoid any surprises that may set them back. It has also permitted U.S. companies to rely on Mexico as a manufacturing partner. As of 2015, 90% of Fortune 500 companies have investments in Mexico, making the maquiladora industry vital to the U.S. economy.”
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