Legal Implications Mexico

Establishing and maintaining production operations in Mexico, however, can be unexpectedly difficult. Given Mexico’s recent protectionist past, U.S. auto companies in Mexico have learned to live with a complex set of regulations. Yet almost all of these regulations will be phased out during the next ten years if NAFTA is ratified, including those that allowed foreign manufacturers to capitalize on the cheap labor of the maquiladoras. Moreover, these same automakers have become increasingly involved in compensating for the shortcomings of the Mexican public sector.

Companies that require a reliable, nontransient work force, for example, may find it necessary to provide their Mexican employees with improved roads, schools, health care, housing, and child care. Some U.S. commentators have called for taxing the maquiladoras to raise money for local housing and environmental cleanup. With increasing media attention paid to extreme examples like toxic wastes polluting the streets of Mexican colonias—the illegal shantytowns where many maquila workers live—the costs of doing business in Mexico won’t remain hidden for long.

Take the issue of adequate housing for factory workers. There’s very little available housing in Mexico because of the country’s capital shortage, so some companies have come up with their own solutions. Ford and the state government of Sonora, for instance, became involved in housing when the U.S. company expanded its new non-maquiladora plant in Hermosillo in 1987. Located near the west-coast port of Guaymas so that transmissions could be easily imported from Japan, the auto plant was a great success, both economically and politically. Yet local managers found that there simply weren’t enough people living in this agricultural area to staff the plant as it grew, even though there was a severe job shortage throughout Sonora. In an effective public-private partnership, the Sonoran government built new homes near the Hermosillo plant, while Ford...