Maquiladora Mortality: Manufacturing Plant Closure in Mexico

Robert B. South and Changjoo Kim

Journal of Development Studies, 2019, vol. 55, issue 8, 1654-1669

Abstract: Manufacturing plant closure has been the subject of much national concern, and an extensive literature principally focused on the developed world. This study extends the findings on plant closure with an analysis of export-oriented manufacturers (maquiladoras) in Mexico, 1996–2006. The foci of this research are hypothesised variables of maquiladora closure: product manufactured (value-added), size of plant, plant location, and size of urban place. The results of a logistical regression model indicate that plant size and value-added are highly probable determinants of plant closure; large, high value-added product maquiladoras have low rates of plant closure. Maquiladoras manufacturing low value-added products have high rates of closure; however, these manufacturers also have significant numbers of surviving plants. This suggests that multiple manufacturing platforms are viable among Mexico’s export-oriented industry. The findings also suggest that much plant closure is a result of exogenous factors,exiting plants in a global search for cheap labour. Mexico, however, has a geographic comparative advantage that, for many maquiladoras, trumps wages in more distant locations.

Date: 2019
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DOI: 10.1080/00220388.2018.1498970

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