Strategies for integrating gainsharing and restructuring into the post‐NAFTA maquiladora industry

Abstract

The moderate Mexican labour cost has been the key incentive for the relocation of US production operations in Mexico. This co‐operative operational programme, known as “production sharing”, has developed in the US/Mexico border zone and in designated regions of the Mexican interior. This programme is also known by the common Spanish name of maquiladora (meaning “contract milling”) industry. Ironically, one of the most neglected factors of production in the maquila industry is labour management. Until recently, human resource management has been executed with minimal consideration to labour costs. American corporations desperately jockeying for global market share soon realized that by attending to and restructuring Mexican manufacturing operations, management would then be able to place the firm ahead of the competition. Restructuring is an essential part of progressive management but can hinder production and reduce profitability if poorly implemented. Restructuring by downsizing can have detrimental effects on the organization, especially in Mexico where cultural, political, and legal considerations favour the employee. In the past downsizing has proven ineffective for many corporations. The management of human resources in Mexico presents an extraordinary challenge to the American manager. A downsizing model has been designed with the American maquiladora manager in mind. The model was formulated by accommodating the Mexican cultural and legal phenomena.