Certified Supply Chain Professional (CSCP) Practice Exam

What is a notable characteristic of a maquiladora?

1. High tariffs on imports

2. Complex export documentation required

3. Lower labor costs in Mexico

4. Strict environmental regulations

The correct answer is: Lower labor costs in Mexico

A maquiladora is a specific type of manufacturing operation in Mexico, primarily set up by foreign companies to take advantage of certain economic benefits. A notable characteristic of a maquiladora is indeed the lower labor costs in Mexico. This characteristic is significant because it allows companies to reduce production costs, leading to increased competitiveness in the global market. The proximity to the United States and the ability to import raw materials duty-free for manufacturing also play a role, but the primary allure remains the cost savings associated with labor. The other aspects, such as high tariffs and complex export documentation, can actually be seen as challenges or obstacles that maquiladoras might face, rather than characteristics. Similarly, strict environmental regulations may apply but are often less stringent compared to other countries, making it easier for these facilities to operate with fewer regulatory burdens. The overall setup and appeal of maquiladoras revolve around taking advantage of lower operational costs, particularly in labor.