The Chamber of Industry and Commerce of Mercosur and the Americas is coordinating contacts and contracts between Mexican maquiladoras and various Brazilian industries, with the aim of introducing the concept of maquiladoras that exists in Mexico in Brazil and taking advantage of its enormous business potential in the markets of Mexico, the United States and Canada.
In this regard, the Chamber has already signed an agreement with a maquiladora located in Monterrey, specialized in the manufacture of equipment for public services such as garbage compactors, aerial baskets, platforms for towing vehicles, street sweepers, roll on roll off, ambulances, kits for repairing potholes and others. These equipments, due to their specific characteristics, normally do not have the capacity to compete in these markets due to the high freight costs and the “Brazil cost”.
The managing partner of the maquiladora has already visited Brazil and has selected some companies that manufacture these products, through the Chamber. As a result, the entity is already calling the first Brazilian companies to discuss their effective business contracts, with initial orders already placed and a production program outlined.
It is estimated that the business potential of the first four invited companies alone amounts to 50 million dollars annually.
What are maquiladoras?
Maquiladoras are special companies, with special legislation, that only assemble products manufactured by third parties. They emerged in Mexico in 1965 and gained great momentum after the devaluation of the Mexican peso in 1995, becoming a key part of Mexican foreign trade under the NAFTA agreement with the United States and Canada. Maquiladora products are considered Mexican and, therefore, enter those countries with tax advantages.
Maquiladoras import parts and pieces from any part of the world where it is cheaper, assemble them and sell them. Therefore, their production costs are much lower than those of most of the manufacturers' countries of origin, also due to the cost of local labor. In the case of the maquiladora associated with the Chamber, there is the added advantage of being located in a free trade zone, which allows it to import tax-exempt.
The potential of maquiladoras
Maquiladoras alone export about $80 billion a year, which is equivalent to Brazil's total exports expected for 2004. They supply 981% of the U.S. market for televisions and most household appliances such as stoves and other appliances. In 2003, Mexico had a $35 billion surplus in its trade balance with the United States, but a $5 billion deficit with the rest of the world due to the import movement of maquiladoras, which have a low rate of nationalization.
The most aggressive businessmen in the world are involved in this business, especially those from Asia. Around 3,500 maquiladoras and hundreds of service companies and specialized lawyers revolve around it. Brazilian businessmen have so far been on the sidelines of this international movement and are beginning to become aware of it through this initiative of the Chamber of Industry and Commerce of Mercosur and the Americas.
