New president of Mexico’s Maquiladora Association sees industry gains; urges government to step up efforts concerning competitiveness

Luis Aguirre recently took the helm as the president of CNIMME, Mexico’s national maquiladora industry. That put him in a position to lead the largest aggregate employment sector as it faces competitive and safety issues. During this interview with MexicoNow, he did say the government needs to have a greater sense of urgency concerning the country’s competitive rating which has slipped in recent years.

To what extent do statistics from 2010 show positive trends in the maquiladora industry?

Luis Aguirre, President of CNIMME,
Mexico’s national maquiladora industry: The numbers in 2010 were positive versus those of the crisis during 2009. There was a 150,000 gain in employment. This is a new and important record. We have more than 1.8 million working in the industry.

The generation in employment and the recovery in the exportation numbers speak to recovery from the recession.

There have been modifications in the laws concerning the maquiladoras. From your position, what do you want people to understand about them?

Aguirre: This deals with the IMMEX decree. After 18 months of negotiation with the Mexican government, we finally have published this new decree. This decree has important points negotiated for the benefit of the industry. For example, we eliminated several cancellation clauses of the program.

These result in cost advantages for the maquiladora industry.

Also, there are important changes in the validation process for a new IMMEX program. Most important among the benefits is the period of time for temporary importation for certified companies. Instead of having just 18 months for temporary importation, it is now 36 months or 60 months, depending on certification. This opens new market options. This is a good thing for the maquiladora industry to offer new value-added services to the OEM’s.

What is the latest news concerning IETU, the new corporate fixed income tax regimen in Mexico?

Aguirre: This tax went into effect in 2008. The IETU will expire at the end of this year, 2011. We are working very hard on this issue. This is very important for the maquiladora industry. If this is not authorized to continue past this year there could be a cost impact. We are showing the government the numbers that support the importance of this industry. We are also showing the government the investment in the country and the generation of employment.

Based on the numbers let’s take a further look at the maquiladora business activity in Mexico in 2010 as compared to the previous year.

Aguirre: The recovery was not at the same time for all the sectors.

The indicators are still positive.

The most important impact was with the automotive industry. That sector is producing the most positive numbers. Automotive is leading the recovery.

There has been a decline in competitiveness in Mexico as compared to other countries. The ranking had dropped in 10 years from Number 52 to Number 66. To what degree is this story about regression in Mexican competitiveness; to what degree has emergence of other countries pushed Mexico further down the scale?

Aguirre: I think it is a combination of factors. The markets and especially the strategies of other countries are more aggressive. That is why as an industry, the maquiladoras need to be more focused on the strategies the other countries are following. We need to see the advantages of what they are offering for foreign investment in their countries especially for manufactured products from there. In Mexico, we have had some progress for benefits for the maquiladora industry, but we need to move faster in the Congress.

We need to be aggressive like China, India and Brazil. That is an important challenge for us to push the Mexican government to move that way.

In your last answer you seemed to express a degree of urgency.

Yet you seem to indicate that the Mexican government does not have that sense of urgency.

What will it take to compel the Mexican government to have that sense of urgency when it comes to global competitiveness?

Aguirre: As the maquiladora national council that is what we are trying to do. We already have in Congress a special commission for our concerns.

This commission was established at the end of 2009. During the past year we worked with them on important initiatives that are being presented this month in Congress. I think we are doing important work for the government to work faster to create more investment in Mexico as well as to benefit the companies already established here.

What can non-Mexican owning companies do that will help the cause of the maquiladoras in such a way as to inspire the Mexican government to say, “We want to help!”

Aguirre: That is a very interesting question. That is part of the lobbying we are doing with the CEO’s of the maquiladora companies in front of the president of Mexico, the senators and the diputados (lower house), especially with those in charge of economic activity. We are also working with the governors of states that have maquiladoras.

It is part of the official, but informal pressure to review and consider all the aspects of promotion and incentives we need to have in Mexico in order to offer an attractive opportunity.

What about the changes in the workforce in terms of preparing and education the workforce to meet the needs of the maquiladoras?

Aguirre: This is very important.

It is important to move in the bilingual as well as engineering education areas. We need to have more technical innovations in the maquiladora sector in the country to create products for the world market. That is why it is important to begin the work as far back as the elementary schools.

You said bilingual as in English- Spanish. Yet a major competitor is China. What about pushing for increased instruction in Chinese as part of the plan to make Mexico a more competitive, more flexible player in the world economy?

Aguirre: China is an important nation that is making changes now in the global decision-making process. I think that English is the commercial language for doing business.

That is why education and teaching English is so important.

How do you handle the issue of violence in Mexico?

Aguirre: The maquiladora national council is already working on that issue. We work very closely with the local and federal authorities.

We understand the consequences of this situation. We are trying to propose and implement new actions. We are part of various security councils and we provide initiatives, ideas and proposals and we are receiving the support from the local and federal governments to protect the production process inside our maquiladora plants.

You also point to opportunities. Why?

Aguirre: There are opportunities in Mexico versus other countries. I think the maquiladora national council is doing important work to make Mexico a leader in the coming years when it comes to attracting investment from around the world.

What about environmental considerations within the work of CNIMME?

Aguirre : As an industry we are promoting and have better environmental conditions. We have green industries which we are also promoting. We are already preparing aggressive projects for the maquiladora industry implement new technology to save energy, recycle water used in the production process, and to establish standards.

We want to be the leader in Mexico when it comes to that important field.