Logistics and manufacturing issues in maquiladora operations

Maquiladora operations have become increasingly popular during the past 10 years. The driving force behind this popularity has been the dramatic devaluation of the Mexican peso, which has made Mexican labour among the lowest cost in the world. However, to take full advantage of maquiladora operations, additional logistics costs are incurred in supporting the Mexican production/assembly facilities. The logistics/manufacturing cost trade-offs inherent in maquiladora operations are explored empirically. While logistics costs were found to increase and logistics performance decreased, most of the firms involved in maquiladora operations considered their operations to be highly successful based on production cost savings.