IMMEX was created in the 1960s to encourage foreign investment in Mexico through preferential tariff agreements between their country and the U.S. IMMEX stands for “Manufacturing, Maquila, and Export Services Industry Program” (Industrie Manufacturera Maquiladora y de Servicios de Exportación). IMMEX is more commonly known by the name “Maquiladora“.
What Is a Maquiladora?
Maquiladoras are factories or plants in Mexico, typically near the Mexico/U.S. border. Normally, the Mexico shelter manufacturing services partner is owned and operated by a US company (although other countries, like China, can also have Maquiladoras in Mexico.)
How Does IMMEX Help Companies Manufacturing in Mexico?
Companies that use the IMMEX program reduce manufacturing costs they can’t get from other countries like China. IMMEX allows companies providing manufacturing services in Mexico to lower their manufacturing costs by shipping materials and equipment to Mexico, having them manufactured or assembled there and then having them shipped back to the U.S. IMMEX also gives U.S. manufacturers access to a source of skilled, affordable labor.
For businesses that are looking to outsource their manufacturing to a company that specializes in co-production, this approach has many benefits. Cost competitiveness or labor shortages in the U.S. may cause this need.
At NovaLink, the maquiladora model is the main source of labor. Mexico’s maquiladoras, an exceptionally talented & educated workforce with a median age of 26 years, have proven capable of building & creating sophisticated products for our clients.
The IMMEX Program: How Does It Work?
According to the Tijuana EDC, if manufacturers want to benefit from cheap labor, tax exemptions, and duty-free imports, they should simply have a sustained manufacturing process: get materials to Mexico and have them sent back 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 IMMEX?
Cost, quality, and availability of labor are the biggest benefits of a U.S. business using IMMEX. IMMEX offers other benefits as well:
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)
The Wall Street Journal says:
“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.”
Is the IMMEX Labor Force Skilled Enough to Handle Co-Production Manufacturing?
The Washington Post says yes. More than 13,000 engineers graduate from Mexico’s universities every year, which is more than Canada, Germany, and Brazil, which is almost twice Mexico’s size. Forbes says Mexico’s labor force is a talent pool that should be tapped into:
“Shorter term, I believe that more companies can alleviate their talent gaps by thinking outside of borders and identifying great talent globally. From my perspective, it’s challenging to identify a better fit for U.S. time zones, cultural compatibility and relevant work experience than Mexico.”
People assume that the lower cost of production means that the goods are of lower quality, but that’s not true. The labor force in Mexico, because of its high level of education and skill in production, has expertise comparable to the U.S.
When it comes to manufacturing a complex product, a nearshore manufacturing partner like NovaLink which utilizes the IMMEX, might be the best solution for you.
NovaLink has provided shelter and contract manufacturing services to various industries for over 30 years. NovaLink has an advantage whether it’s an in-demand product that requires precision and high tolerance, or one that has become commoditized.
Thousands of companies could benefit from working with the IMMEX & NovaLink.
