A maquiladora is a factory or manufacturing plant located in Mexico, typically near the U.S.-Mexico border, that is owned and operated by a foreign company, often from the United States or Canada. These factories import raw materials and components duty-free, assemble or manufacture products using Mexican labor, and then export the finished goods back to the foreign company's country or other markets, usually without paying tariffs or import duties
. The maquiladora system was established in the 1960s by the Mexican government to encourage foreign investment, stimulate industrialization, and reduce unemployment, especially after the end of the Bracero program in 1964. The factories benefit from tax advantages and preferential trade agreements such as NAFTA and its successor USMCA, which allow duty-free imports of materials and duty-free exports of finished products. This setup enables companies to leverage lower labor costs in Mexico while maintaining business ties and benefits with their home countries
. Maquiladoras produce a wide range of goods, including electronics, clothing, automotive parts, medical devices, and more. They are often called "twin plants" because the parent company is based in the U.S. or elsewhere, while the manufacturing occurs in Mexico. The maquiladora industry has played a significant role in the economic development of northern Mexico and the U.S.-Mexico border region
. In summary, maquiladoras are foreign-owned Mexican factories that assemble or manufacture products using imported materials under favorable tariff conditions, primarily for export, taking advantage of lower labor costs and trade agreements between Mexico and other countries
