The maquiladora industry on the northern border of Mexico has long been a cornerstone of the country’s economy. These manufacturing plants, known as maquiladoras, play a vital role in the global supply chain, particularly in sectors such as automotive, electronics, aerospace, and medical devices. In this comprehensive exploration, we’ll delve into the industrial mix, workforce, specific industries, and prominent companies within critical cities along the northern border of Mexico: Ciudad Juarez, Chihuahua, Tijuana, Baja California, Reynosa, Tamaulipas, Matamoros, Mexicali, Nuevo Laredo, Piedras Negras, Nogales, Ciudad Acuña, and San Luis Colorado.

Ciudad Juarez, Chihuahua

Ciudad Juarez is a beacon of the maquiladora industry on Mexico’s northern border. Situated across from El Paso, Texas, this city has a diverse industrial mix, ranging from electronics and automotive to textiles and aerospace. Notable companies like Foxconn, Bosch, and Lear Corporation have established a significant presence here. The workforce in Ciudad Juarez is highly skilled, with a strong emphasis on engineering and technical expertise. The city’s strategic location and robust infrastructure make it an attractive destination for foreign investment in the maquiladora sector.

Tijuana, Baja California

Tijuana, located in Baja California, is another hub of the maquiladora industry on Mexico’s northern border. With its proximity to San Diego, California, Tijuana has emerged as an essential manufacturing center for electronics, medical devices, and aerospace components. Companies like Samsung, Sony, and Honeywell operate large-scale production facilities in the region. Tijuana boasts a skilled and diverse workforce, drawing talent from Mexico and the United States. The city’s strategic location, coupled with favorable trade agreements like the US-Mexico-Canada Agreement (USMCA), positions it for continued growth in the maquiladora industry.

Reynosa, Tamaulipas

Reynosa, located in the state of Tamaulipas, is a vital player in the maquiladora industry on the northern border of Mexico. Situated across from McAllen, Texas, Reynosa has a robust industrial base focused on automotive, electronics, and metalworking. Prominent companies such as Delphi Technologies, Panasonic, and LG Electronics have established manufacturing operations in the city. Reynosa benefits from a skilled and cost-effective workforce, making it an attractive destination for foreign investors seeking to leverage Mexico’s manufacturing capabilities.

Matamoros, Tamaulipas

Matamoros, also located in Tamaulipas, is another key contributor to the maquiladora industry on the northern border of Mexico. With its proximity to Brownsville, Texas, Matamoros specializes in automotive manufacturing, with significant players like Aptiv, Lear Corporation, and Continental Automotive Systems operating in the region. The city’s skilled workforce and supportive government policies and infrastructure have fostered a conducive environment for manufacturing growth. Matamoros continues to attract foreign investment, driving economic development and job creation in the area.

Mexicali, Baja California

Mexicali, situated in Baja California, is renowned for its thriving maquiladora industry on the northern border of Mexico. With a focus on aerospace, electronics, and medical devices, Mexicali hosts major corporations such as UTC Aerospace Systems, Gulfstream Aerospace, and Rockwell Collins. The city’s skilled workforce and strategic location near the California market make it an ideal destination for companies seeking to establish manufacturing operations in Mexico. Mexicali’s robust infrastructure and supportive business environment further enhance its attractiveness to investors in the maquiladora sector.

Nuevo Laredo, Tamaulipas

Nuevo Laredo, located in Tamaulipas, is a significant player in the maquiladora industry on the northern border of Mexico. Positioned across from Laredo, Texas, Nuevo Laredo specializes in automotive, electronics, and consumer goods manufacturing. Notable companies like Panasonic, Electrolux, and Continental Automotive Systems have production facilities in the city. Nuevo Laredo benefits from a skilled and cost-competitive workforce and an efficient logistics infrastructure for cross-border trade. The city’s strategic location along major transportation corridors makes it attractive for companies looking to optimize their supply chains.

Piedras Negras, Coahuila

Piedras Negras, situated in Coahuila, is a burgeoning hub of the maquiladora industry on the northern border of Mexico. Adjacent to Eagle Pass, Texas, Piedras Negras specializes in automotive, electronics, and aerospace manufacturing. Companies like Aptiv, Electrolux, and GE Aviation have established regional operations. Piedras Negras boasts a skilled and productive workforce supported by training programs and educational institutions catering to the manufacturing sector’s needs. The city’s strategic location and favorable business climate make it an attractive destination for foreign investment in the maquiladora industry.

Nogales, Sonora

Nogales, located in Sonora, plays a significant role in the maquiladora industry on the northern border of Mexico. The city specializes in electronics, medical devices, and consumer goods manufacturing across from Nogales, Arizona. Jabil, Kimberly-Clark, and Flextronics have manufacturing facilities in the region. Nogales benefits from a skilled and bilingual workforce and efficient transportation infrastructure for cross-border trade. The city’s proximity to key markets in the United States and its competitive operating costs make it an attractive location for companies seeking to expand their manufacturing footprint in Mexico.

Ciudad Acuña, Coahuila

Ciudad Acuña, situated in Coahuila, is a rising star in the maquiladora industry on the northern border of Mexico. Across from Del Rio, Texas, Ciudad Acuña specializes in automotive, electronics, and aerospace manufacturing. Major companies like Bendix,  Cessna, Bosch, and LG Electronics have established manufacturing operations in the city. Ciudad Acuña benefits from a skilled and motivated workforce and supportive government policies that promote investment and economic development. The city’s strategic location and access to transportation networks position it for continued growth in the maquiladora sector.

San Luis Colorado, Sonora

San Luis Colorado, located in Sonora, is an emerging player in the maquiladora industry on the northern border of Mexico. Adjacent to San Luis, Arizona, the city focuses on manufacturing automotive, electronics, and consumer goods. Companies like Delphi Technologies, Honeywell, and Flextronics have regional production facilities. San Luis, Colorado, boasts a skilled and dedicated workforce supported by vocational training programs and educational institutions. The city’s strategic location and proximity to major markets make it an attractive destination for foreign investment in the maquiladora industry.

The maquiladora industry on the northern border of Mexico continues to thrive, driven by a diverse industrial mix, skilled workforce, and strategic location. Cities like Ciudad Juarez, Tijuana, Reynosa, Matamoros, Mexicali, Nuevo Laredo, Piedras Negras, Nogales, Ciudad Acuña, and San Luis Colorado serve as vital hubs for Mexican manufacturing activities, attracting investment from leading companies across various sectors.

This article summarizes, with examples, Bolivia’s main economic activities. Primary, secondary, and tertiary activities, as well as Bolivian exports and imports, are examined.

According to estimates by the International Monetary Fund for 2022, Bolivia’s economy is the ninety-sixth (96th) largest in the world with a nominal GDP of US$43.4 billion, behind other Latin American economies such as Ecuador 59th (US$107.6 billion) and Panama 70th (US$ 68.5 million).

Bolivia’s economy is dependent on natural resources like oil and gas. These have driven the country’s recent growth, although institutional deficiencies limit its development.

Composition of economic activities in Bolivia

A diverse mix of primary, secondary, and tertiary activities characterizes the economic activities of Bolivia. Primary activities, including agriculture, forestry, and mining, contribute 13% of the nation’s Gross Domestic Product (GDP). The secondary sector, encompassing manufacturing and industry, plays a more significant role, constituting 37% of Bolivia’s GDP. However, the backbone of Bolivia’s economy lies in tertiary activities, such as services and tourism, which account for a substantial 50% of the country’s economic output. This balance between the three sectors underscores Bolivia’s economic resilience and adaptability.

Primary economic activities of Bolivia

The country has one of the largest natural gas reserves in Latin America. It is currently Latin America’s fourth-largest natural gas producer after Mexico, Argentina, and Venezuela. It also stands out in producing other mining-oil goods such as tin (the fourth largest producer in the world), antimony, lead, silver, zinc, and gold.

In primary activities, Bolivia has a significant agribusiness participation with several sectors of great importance for the Bolivian economy. Agribusiness employs around 5% of the country’s workforce. Livestock farming and the production of soy, sugar, rice, chestnuts, cotton, sesame, wheat, coca leaf, banana, cassava, and quinoa stand out. It is currently the second largest producer of quinoa worldwide, after Peru.

Bolivia has technical agriculture developed by medium and large businesses. However, traditional agriculture is also common, with little technology and low yields. It is common for the land to be tilled with animals, natural fertilizers, and basic tools such as hoes and sickles.

Secondary economic activities of Bolivia

Bolivia is a non-industrialized country, and its production is primarily artisanal. It is characterized by low productivity and informality. Even so, it is very important due to its participation in the country’s GDP. With time, however, it has lost economic ground to the tertiary or services sector.

In Bolivia’s secondary sector, small and medium-sized light industries stand out. The most developed industries in Bolivia are manufacturing, sugar refining, leather goods, tobacco, cement, beer, dairy, textiles, chemicals, glass, jewelry, explosives, and paper.

Bolivia’s secondary economic activities are located mainly in La Paz, El Alto, Cochabamba, and Santa Cruz de la Sierra.

The largest company in Bolivia is the Cervecería Boliviana Nacional brewing company. It has eight plants in the country and has more than 1,700 direct and 6,200 indirect workers. This company controls almost the entire Bolivian beer market and has 11 registered beer brands.

Tertiary economic activities of Bolivia

Bolivia’s tertiary sector includes tourism, finance, health, education, commerce, restaurants, shopping centers, transportation, telecommunications, and entertainment. This sector employs 67% of the country’s workforce.

In Bolivia, tourism continues to grow, reaching more than 1.7 million travelers per year who visit to marvel at the peaks of the Andes and the rainforests in the Amazon. The most visited cities are Santa Cruz, La Paz, and Cochabamba.

Another important sector of these activities is telecommunications. Bolivia has 850 thousand landline telephone lines and 7 million mobile telephone subscribers. It also has 4.1 million Internet users.

Bolivian international trade

Bolivia’s main trading partners are Brazil, Chile, the United States, China, Argentina, Colombia and Peru.

Bolivia’s main exports

Bolivia mainly exports raw materials such as oil, zinc, gold, lead, and silver. It also exports soy flour, oil, coconuts, walnuts, and bananas.

The main destinations for Bolivia’s exports are Brazil (27%), Argentina (16%), the United States (12%), Colombia (5.5%) and China (5.1%).

Main imports of Bolivia

Bolivia mainly imports value-added goods such as automobiles, machinery, telephones, pesticides, computers, gasoline, rubber wheels, and automobile parts.

The main origins of Bolivia’s imports are China (17%), Brazil (16%), Chile (11%), the United States (10%), and Argentina (7.2%).

Bolivia’s economy is ranked 96th globally, with a nominal GDP of US$43.4 billion. Economic activities in Bolivia rely heavily on natural resources, particularly oil and gas, but face challenges due to institutional deficiencies. The nation’s economic activities are diverse, with primary, secondary, and tertiary sectors contributing 13%, 37%, and 50% to the GDP, respectively. Bolivia is a major producer of natural gas and mining-oil goods, and modern and traditional practices mark its agriculture sector. Despite being a non-industrialized country, small-scale industries thrive, particularly manufacturing and brewing. The tertiary sector, employing 67% of the workforce, encompasses tourism, telecommunications, and finance. Bolivia’s international trade, with key partners like Brazil and the United States, revolves around exporting raw materials and importing value-added goods.

Lithium production in Argentina broke another export record, and the prospects are encouraging. This is due to the expansion of capacity and the expectation of a recovery in carbonate prices.

The year 2023 would have ended with an export record for lithium in Argentina. The mineral is vital for the manufacture of batteries used in electric vehicles. Based on official data for the first ten months of the year, which showed external sales of lithium of USD 682 million in that period, a study by the Rosario Stock Exchange (BCR) projected that 2023 would close with external sales of almost USD 900 million. This represents a growth of 27% compared to the 2022 figures.

From January to October, the report states, “more than 28,000 tons of lithium carbonate were shipped as of October of 2023, a product that represents more than 80% of exports of lithium in Argentina,” The development of lithium production in Argentina has been exponential, as the country exported USD 28 million at the beginning of the century and only in 2016 did it surpass the USD 100 million barrier. In turn, the jump in export value from 2021 to 2022 was primarily influenced by the recently rising price of lithium.

Lithium production in Argentina will expand in 2024

As for the future, “With significant progress in many projects in 2023, it is expected that 2024 will begin with more production capacity and that lithium extraction in Argentina will continue to expand during the year. Towards the end of 2024, the productive capacity of Argentine lithium is expected to more than quadruple compared to the levels seen at the beginning of 2023,” the Rosario report projected.

The BCR also warned that the recent imposition of export duties for mining would impact the development of gold, silver, copper, and lithium projects in Argentina. As is observed in agribusiness, the imposition of this type of tax on productive activities affects development and production, slowing it down in many cases, the authors wrote.

The collapse of the price of lithium

On the other hand, it is worth highlighting the sharp drop that the price of a ton of lithium carbonate suffered in the last year: after bordering on USD 80,000 per ton at the end of 2022, in the spot markets, it was trading at the end of 2023 below 15,000 dollars, although it is more difficult to estimate the impact of this reduction on the value of exports, which in most cases is tied to contractual supply volumes and prices with buyers.

“The recent price declines are partly explained by the liquidation of stocks of battery cells, which has temporarily reduced the demand for lithium for their production,” explained the BCR.

According to the study, once the liquidation of stocks is over, the price outlook would become bullish again due to the cut in global supply. “China’s economic dynamics will be another key issue in the global lithium and battery markets. Any potential slowdown in the world’s leading battery market could act as a bearish factor for the global prices of lithium products,” says one passage in the report.

Still, global lithium demand is expected to increase 5-fold from 2022 to 2030, according to the IMF.

Projections for lithium production in Argentina are highly encouraging compared to other countries that supply the mineral globally. According to the consulting firm CRU Group, until 2027, lithium production is expected to grow 8% annually in Chile and 16% in Australia, while the average annual increase in Argentina aspires to be 50%.

Elon Musk is interested in lithium in Argentina

President Javier Milei assured that Elon Musk, co-founder and principal shareholder of Tesla, the world’s largest producer of electric vehicles, called him because he is interested in procuring lithium from  Argentina.

In this framework, the governor of Catamarca, Raúl Jalil, one of the three river provinces of Argentina (the others are Salta and Jujuy), considered “it is very good” that Musk wants to make investments, but as long as “the rules of the game of the province and economic and social environmental control standards are followed.”

“In Catamarca, there is a lot of legal security and, together with Salta and Jujuy, it has a significant investment boom not only from foreign capital but also from Argentine capital,” Jalil asserted.

He also pointed out that the three provinces, which formed the so-called “Lithium Mesa,” are working to establish “common rules of the game and regulations” for producing and selling lithium in Argentina.

In conclusion, Argentina’s lithium industry has demonstrated remarkable growth, breaking export records in 2023 and projecting substantial expansion in production capacity for 2024. Despite facing challenges such as the imposition of export duties and a sharp decline in lithium prices, the country remains optimistic about its position in the global market. With a concerted effort among provinces to establish common regulations and environmental standards, Argentina aims to maintain its competitiveness. The interest of industry leaders like Elon Musk further underscores the significance of Argentina’s lithium resources on the global stage. As the demand for lithium continues to surge worldwide, Argentina appears poised to play a pivotal role in meeting this demand and contributing significantly to the growing electric vehicle and battery industries.

Abog. Natalia Cáceres Martínez
Executive Secretary
National Council of Maquiladora Export Industries
Asunción, Paraguay
natalia.caceres@mic.gov.py

LATAM FDI: In what year did the maquiladora industry in Paraguay start? What are the conditions that brought about its birth?

Natalia Cáceres Martínez: The maquiladora industry in Paraguay officially began in 1997 with the enactment of Law 1064/97, which establishes how the Maquiladora Export Industry has to function. Compared to regional competitors, Paraguay offered lower wages, which was attractive for companies seeking cost-effective production. Also, Paraguay’s young and growing population presented a readily available labor pool.

LATAM FDI: How many manufacturing companies operate in the maquiladora industry in Paraguay, and what trends have been observed in establishing new companies in recent years?

Natalia Cáceres Martínez: The maquila regime currently has over 270 companies with an approved program. The maquiladora industry in Paraguay has experienced steady growth in recent years, with several new companies establishing operations in the country. The average growth of the maquiladora industry in Paraguay in the last ten years has been around 20%. The industry has also diversified, evolving from producing mostly textile and plastic products to unconventional products such as dog chews and electric bicycles, auto parts, high voltage cables, and intangible services such as call centers and BPO.

The establishment of new companies is due mainly to tax breaks and other incentives contemplated in the current legislation, a key attraction for new investors. Competitive labor costs compared to developed or regional competitors, general political and economic stability, as well as Paraguay’s ́strategic location for those companies that want to export products to countries in the region, especially Brazil, are also aspects that contribute to making the country a good investment choice. On top of everything, the country’s government has firmly supported and promoted the maquiladora industry in Paraguay.

LATAM FDI: What is the current workforce size in Paraguay’s maquiladora sector, and how has it changed over the past decade?

Natalia Cáceres Martínez: The maquiladora industry in Paraguay currently employs more than 25,000 people directly and indirectly around 60,000. The employment growth generated by this industry is linked to the installation of large manufacturers in recent years.

In 2023, employment in the maquiladora industries sector has increased by 6%. Seventy-four percent of the jobs linked to the maquiladora industries are registered in the following categories: auto parts, clothing, intangible services, plastics, and pharmaceutical products.

Forty-five percent of jobs linked to these industries are held by women, making this a highly inclusive regime since it also encourages first employment and family employment.

The maquiladora industry in Paraguay generates formal employment and provides technical skills training to people, allowing professional growth and new job opportunities.

LATAM FDI: What are the primary products manufactured in Paraguay’s maquiladora industry, and have there been any notable shifts or expansions in the range of goods produced?

Natalia Cáceres Martínez: The maquiladora industry in Paraguay produces a wide range of products. Textiles, auto parts, and food are the main ones. There has been notable expansion and diversification in production, with new sectors, such as pharmaceuticals, and a greater variety of products manufactured. Several multinational companies have established maquiladoras to produce electrical components, wire harnesses, and other automotive parts. Since their installation in 2013, they have expanded their operation considerably, employing almost 7,000 people and exporting more than 280 million dollars in 2023.

Products such as jeans, t-shirts, sportswear, and underwear are also being produced in Paraguay within the textile sector, representing 19% of exports under the regime. Some companies manufacture plastic products such as furniture, bottles, packaging materials, toys, and disposable medical supplies. Chemical companies also produce fertilizers, pesticides, and other industrial chemicals. Companies dedicated to producing pet chews have also set up shop in the country.

In recent years, companies have been established to manufacture non-conventional products such as electric bicycles, scales, gelatin, and synthetic fibers to reinforce concrete structures, among others.

LATAM FDI: Regarding major exports from the maquiladora industry in Paraguay, which products contribute significantly to the country’s export economy, and how have export patterns evolved?

Natalia Cáceres Martínez: The main exports of Paraguay’s maquiladoras are textiles, auto parts, food products, plastics, and leather goods. Export patterns have evolved towards greater diversification, increased added value, and exploration of new markets.

The auto parts sector currently represents around 30% of maquiladora exports, becoming a reference sector for the maquila. These companies from Paraguay export automotive and electronic components to Brazil, Argentina, Europe, the United States, and Asia.

The second important sector is textiles and clothing, which represent 19% of maquiladora exports. Paraguay has become an essential supplier of textiles and apparel to countries such as Brazil, Argentina, the United States, and the European Union.

Likewise, the manufacturing of food products has expanded, representing 16% of exports at the end of 2023.

LATAM FDI: What have been the main advantages that the maquiladora industry in Paraguay has introduced?

Among the main benefits that the implementation of this special incentive regime has provided to Paraguay are the following:

1. Foreign investment for the installation of large industries that have found in Paraguay a place that allows them to shorten their production chains, reduce their costs, and become more competitive in international markets.
2. The generation of labor, the formalization of employment, and the transfer of technical knowledge.
3. The diversification of export products, the increase in the productive chain, and the income of net foreign exchange to the country.

LATAM FDI: What are the main attractions for foreign investors? Why choose Paraguay?

Natalia Cáceres Martínez: Without a doubt, Paraguay offers international investors:

1. The best investment and business climate in the region.
2. The most competitive tax scheme in the region.
3. Tax incentives for investment and importing inputs for industrial transformation.
4. Demographic bonus
5. Cheapest green energy in the region.
6. Macroeconomic stability.
7. Greater ease for opening and closing companies.
8. Expanded market access with 100% tariff preferences to all MERCOSUR countries, Chile and Bolivia, as well as almost all South American countries. All this and more makes Paraguay one of the most attractive countries in the region for investors.

LATAM FDI: Thank you for answering our questions, and good luck in working to make the maquiladora industry in Paraguay grow and prosper.

Natalia Cáceres Martínez: You’re welcome.  Thank you for the opportunity to address your audience about Paraguay and its maquiladora industry.