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Will Mexican Manufacturing Be Less Competitive?

Oct. 9, 2013
Proposed taxes could cause companies to think twice before setting up shop in Mexico.

As Martin Kennedy managing director of the Americas for Trico, which manufactures nearly 40 million windshield wipers per year for 24 global automakers ,told me during an interview for “How a Texas Border Town Boosts U.S. Manufacturing”: "We set up shop here 26 years ago. In compliance with laws related to maquiladoras, we manufacture in the U.S. and assemble in Mexico. That has been a winning strategy all of these years."

Could this strategy be threatened due to a proposed tax reform bill? Stephen Downer, correspondent for Plastic News wrote the following article on the subject.

QUERÉTARO, MEXICO — Critics fear a controversial tax reform bill being debated in Mexico's Congress will make Mexican export manufacturing and assembly less competitive and discourage future foreign direct investment, if passed.

"It could spell the end of the maquiladora culture," in which dozens of plastics processors participate, Carlos Palencia, general manager of the National Council of Maquiladora & Export Manufacturing Industry, of Mexico City, told Plastics News.

The Mexican government established the low-wage maquiladora program in 1965, reportedly to solve the problem of rising unemployment along the border with the United States.

To read the full article “Proposal would boost taxes on maquiladora plants” click here.

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