If Morena approves eliminating outsourcing law, CEEG companies will be leaving Mexico

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Some of the companies that make up the CEEG are Fiat Chrysler, GM, Bayer, Axa, Dupont, Daimler, Exxon Mobil, Arcelormittal, AT&T

If the law that eliminates outsourcing is approved, the Executive Council of Global Companies (CEEG) warned that the international companies that comprise it would leave Mexico, while the American Society assured that eradicating this figure will represent the loss of investment from the United States in Mexico and the disappearance of millions of jobs.

The president of the CEEG, Claudia Jañez, said that adding excessive rigidity in Mexico such as the one intended to the subcontracting mechanisms added to exorbitant payments for PTU could not only compromise our investment and reinvestment plans in Mexico that we usually project between 5 and 10 years go ahead but make difficult decisions, such as relocating part of our operations to other countries.

mexico outsourcing jobs at risk

He considered that the impact that the outsourcing initiative has on formal employment is not being fully measured.

He pointed out that global companies have an inalienable commitment to the rule of law, “we are convinced that, in order to aspire to sustained and inclusive economic and social development, it is essential to create an environment of certainty and trust in investment.”

The current tax burden in Mexico such as the Payroll Tax, IMSS, Infonavit, the 8% increase in the employer contribution that will have to be paid from 2023, is high.

To which should be added the different factors of the reform, such as not being able to subcontract, including specialized services shared in the same economic group, which implies not crediting VAT, or requesting the return of income tax and changing the internal corporate deeds that we have It took decades to build, plus a generalized profit-sharing scheme, leaving us with a very small margin for reinvestment in Mexico.

The Maquiladora Industry

This would mean a brake on the operations of companies operating in Mexico and therefore the ability to maintain jobs today already compromised by the economic contraction.

It would be infuriating if the investments represented by the 54 international companies of the CEEG were put in check, such as the 2.445 billion that were reinvested in 2019, he said.

“We represent approximately 10% of GDP, we generate approximately 500 thousand direct jobs, 1.5 million indirect jobs, all of them with average salaries much higher than the national average.

“With our investment and with the reinvestment of profits we not only create more jobs, but we also train more people, build better infrastructure, promote cutting-edge technology, hire more national suppliers and multiply the development opportunities of the communities in which we operate” he added.

He agreed with the government that fraudulent practices of fraudulently using the subcontracting regime, in order to evade labor, social security, and tax obligations should be completely eradicated and those that exist, punished with total rigor.

So now is the time, he stated, that “no reform takes companies and jobs out of the market that we do fulfill and do generate.”

Some of the companies that make up the CEEG are Fiat Chrysler Automobiles, GM, Bayer, Axa, Dupont, Daimler, Exxon Mobil, Arcelormittal, AT&T, Basf, Bosch, BP, Cargill, Caterpillar, Brookfield, Citibanamex, DHL, Danone, Fedex, GE, Grupo Modelo, HSBC, Honeywell, and Holcim.

For his part, Larry Rubin, president of the American Society, assured that eradicating subcontracting will represent a loss of investment by the United States in Mexico, as well as the loss of thousands of jobs.

He explained that there are few third-world countries that do not offer this labor hiring scheme, being a competitive instrument for companies of any entity. Not having subcontracting in Mexico would represent the loss of direct employment and investment to the country. It works to promote with the Executive and Legislative, that there are options and that the subcontracting market is regulated.

THE MAQUILADORA INDUSTRY

Setting up Manufacturing in Mexico in a Maquiladora

What are Maquiladoras?

At Made In Mexico, Inc. we would be delighted to walk you through the A to Zs of Maquiladoras and the Mexico manufacturing industry and explain how it can net big gains for your organization’s bottom line. And by that we mean savings up to 75% or more off your labor costs!

The word Maquiladoras comes from colonial Mexico, where millers charged a “maquila” for processing other people’s grain. Today the same term is used to describe companies that process (assemble and/or transform in some way) components imported into Mexico which are, in turn, exported – usually to the United States. Terms that are synonymous with Maquiladoras include: offshore operations, production sharing, twin plants and in-bond.

With many foreign companies turning to the Maquiladoras for labor-intensive manufacturing processes such as assembly, packaging, sorting and repair work, the 35-year-old Mexico Maquiladora industry is continually evolving. More and more, Mexican Maquiladoras are providing their workers with extensive training that prepares them to handle a wide range of high-skill manufacturing positions with quality, efficiency and an exceptionally high level of productivity. Though the Maquiladora industry continues to change and grow, the cost-saving benefits of manufacturing in Mexico’s Maquiladoras remain constant:

  • The entry-level wage for low-level jobs in Mexico is approximately 25% of the hourly wage paid to workers in the U.S., which nets you enormous cost savings.
  • Mexico’s standard work-week of 48 hours yields unbeatable speed of production without the financial drain of overtime pay.
  • Fast, easy startup with little capital investment turns projects that would be cost-prohibitive in the U.S. into lucrative possibilities.
  • Tijuana’s close proximity to the U.S. border eases time constraints and transportation costs.
  • Withthe wholly owned, Cost-Plus Shelter Maquiladora option available through Made In Mexico, Inc., you can have as much or as little involvement with the administrative and labor-related responsibilities of your Mexican operation as you desire.

Mexicos Low-Cost Labor Force EMPLOYS MILLIONS

Maquiladora: (mäkelädo´rä ) n. Synonymous with Mexico manufacturing, Maquiladoras are Mexican assembly plants that manufacture finished goods for export. Maquiladoras are generally owned by non-Mexican corporations that take advantage of low-cost Mexican labor, advantageous tariff regulations, and close proximity to U.S markets. Maquiladoras are one of Mexico’s primary sources of foreign exchange.

For your convenience, we’ve compiled some information on the history of maquiladoras and answers to frequently asked questions about the rules and regulations that govern them.

Source: madeinmexicoinc.com,elsoldemexico.com.mx, ceeg.mx

Mexico Daily Post

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