Mexico’s Maquiladora Workforce Shrinks as Costs, Tariffs Rise

Employment in Mexico’s maquiladora sector continues to contract as manufacturers face rising labor costs, new trade barriers, and growing automation. The industry has now recorded 20 consecutive months of job losses, marking its longest streak of layoffs since official records began in 2007, according to the National Institute of Statistics and Geography (INEGI).

Companies operating under Mexico’s Manufacturing, Maquiladora, and Export Services Industry (IMMEX) program employed 2.8 million people in August, about 4% fewer than a year earlier. The reduction of 119,000 positions represents the sharpest decline since mid-2020, when the pandemic halted nonessential activities across the country.

The Ministry of Economy recently suspended 670 firms from the IMMEX program as part of a compliance initiative known as “Clean Operation.” The registry currently reflects the addition of 443 new companies and the removal of 540. Most maquiladoras remain concentrated in Baja California, Chihuahua, Nuevo Leon, Tamaulipas, and Sonora.

Israel Morales, National Director, Mexico-US Relations Committee at the National Council of the Maquiladora and Export Manufacturing Industry (INDEX), says that the sector’s challenges stem from both domestic and international pressures. “The wage increase in northern Mexico is a positive measure socially but, combined with new tariffs, it affects competitiveness and forces companies to reassess production costs, often leading to temporary shutdowns or workforce adjustments,” he tells El Universal. 

Recent protectionist measures in the United States, aimed at encouraging manufacturers to relocate production back home, have dampened demand for Mexican exports. As a result, firms are reviewing pricing strategies and, in some cases, passing additional costs on to consumers.

The industry is also adapting to higher fiscal and operational demands. Recent customs reforms have increased compliance obligations, while Mexico prepares to raise import duties on certain raw materials from Asia. 

Many companies are turning to automation as a long-term response to higher wage and training expenses, investing in advanced systems that require fewer but more specialized workers. According to the International Monetary Fund, global automation could displace as many as 190 million jobs.

A report by consulting firm Kearney, Nearshoring and Mexico’s State of Logistics 2025, found growing concern among manufacturers about proposed reductions in working hours and higher labor costs, both seen as potential constraints to Mexico’s competitiveness in global supply chains.