Are Maquiladoras and Shelter Services the Same?11.29.21
When it comes to Mexico shelter manufacturing, there are a lot of terms, some used interchangeably, that get thrown into the mix. Two of these are “maquiladoras” and “shelter services.” Though they operate together, they do not have the same meaning. To get a clearer understanding and benefits of each, let’s outline the definitions and differences.
Maquiladora As a Factory
A maquiladora is often referred to as simply a “maquila” and is defined as being a physical factory in Mexico that’s owned and operated by a foreign company. Specifically, a maquiladora manufactures products in Mexico and exports them to other countries.
Maquiladora As a Program
The other way maquiladoras are referenced is part of the maquiladora program. This program originated in the 1960s until transitioning in 2012 to what is now known as the IMMEX program, although both names are still used today. The IMMEX maquiladora program is unique to Mexico and allows foreign companies exemption from the 16% value-added tax when temporarily importing raw goods, materials, and equipment needed for the manufacturing process.
Additionally, duties are not applied when exporting finished goods to the U.S. and Canada if classified as “Made in Mexico.” However, it must be noted that the VAT exemption through the IMMEX program does not make a company duty-free. To determine which products are applicable for the IMMEX program and meet duty-free requirements, the expertise of a Mexico shelter company can help.
Maquiladora vs. Shelter Services
Meanwhile, when working with a shelter company and taking advantage of Mexico shelter services, foreign manufacturers work under the maquiladora licenses already in place. U.S. and other foreign companies also have the option of operating as their own entity or maquiladora, but must go through the application process to be accepted into the IMMEX program and reap the tax benefits.
Essentially, shelters represent the legal entities that allow companies to operate in full compliance with minimal risk and liability. Shelter services include all administrative tasks necessary to get a company up and running, which allows time for leaders to focus on manufacturing. These include:
- Securing permits and licenses
- City and building selection according to each project needs
- Real estate strategy and negotiation
- Human resources and recruiting
- Accounting and payroll
- Sourcing vendors
Global manufacturers have benefited from Mexico shelter services for decades as a cost-effective, structurally sound way to do business. The number of manufacturers with a presence in Mexico continues to increase as challenges persist for those formerly operating in China.
Benefiting from Mexico Shelter Services
The influx of port delays and limited truck drivers has caused mass disruption in the supply chain, which has led to halted operations and endless frustrations. In October, a record-breaking 100 ships were waiting at the Long Beach and Los Angeles ports, waiting to be offloaded, only to be delayed further due to the truck driver shortage plaguing America.
Though many manufacturers had already considered moving operations from China to Mexico prior to the pandemic, this additional challenge has solidified their strategy of partnering with a Mexico shelter company in the near future. With Mexico being in close proximity to many U.S. manufacturing headquarters, those receiving shipments from Mexico’s border cities can often expect them on the same day.
For more information about maquiladoras and how shelter services can benefit your operation, contact IVEMSA today.