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Conducting Business in Mexico… Is it Safe?

A couple months ago, I covered the ever-growing competitive landscape between manufacturing in Mexico and manufacturing in China. Interestingly, some of you inquired about the obvious risks (non-Customs related) involved with manufacturing in Mexico, so I thought I would take a look at the current climate.

It’s a given that Mexico’s war on crime is a point of consideration, and most likely contention, for companies deciding whether Mexico is a viable option for manufacturing. When looking at the statistics on murders alone in the past few years, one could only hope that the government has plans for change. Well, they do, but it’s going to take some time to turn things around.

In January of 2012, the Mexican government reported that 47,515 people had been killed in drug-related violence since President Felipe Calderón began a military assault on criminal cartels soon after taking office in late 2006. Given that the government has a propensity to underestimate the actual deaths prior to finding the “missing,”35 percent can be easily and accurately added rounding out the total to around 62,000 killed.

Actual reports: number of victims in drug-related violence in Mexico, per year

  • 2007: 2,826
  • 2008: 6,837
  • 2009: 9,614
  • 2010: 15,273
  • 2011: 17,000+

It wasn’t until November 2012 that it was revealed why the statistic compilation was stopped, by Oscar Vega, head of the Mexican Sistema Nacional de Seguridad Publica. The statistics claim the number of deaths attributable to armed confrontations between drug gangs declined by 86 percent from December 2012 to January 2013.

Well…there’s a new sheriff in town. In case you missed it, in July of last year, Enrique Peña Nieto, of the Institutional Revolutionary Party, or PRI, which ruled the country from 1929 to 2000, was elected President of Mexico, succeeding Calderón. He took office in December of 2012 with a very ambitious plan to fight crime.

Very much unlike Calderón’s approach of deploying the military against the cartels, Peña Nieto has implemented a major shift in the country’s drug war strategy, placing a higher priority on reducing the violence in Mexico rather than making arrests and seizures to block the flow of drugs to the United States. What about the flow of guns from the U.S. to Mexico?

Peña Nieto recently laid out a plan before Mexico’s National Council on Public Security that is focused more on reducing crimes against ordinary citizens, such as murder, kidnapping, and extortion, than pursuing the leaders of the drug cartels. Peña Nieto and members of his cabinet are very critical of Calderón’s policies, which they say have simply resulted in a drawn-out war against cartels that has left tens of thousands dead.

The centerpiece of Peña Nieto’s plan is the creation of a 10,000-person national gendarmerie (paramilitary police force), designed to patrol far-flung areas where local law enforcement and military forces have failed to eradicate widespread crime. Similar forces are used in European countries like Spain and Italy. Some towns in Mexico have simply taken it upon themselves to form a neighborhood alliance for protection.

“I am convinced that we’re opening a new path, a new route and a new way to address the security of the Mexican people,” he said to the gathering of cabinet ministers, state governors and security officials, according to The Associated Press.

Peña Nieto’s plans also include re-organizing the nation’s police forces under the Interior Ministry in an effort to improve coordination. This action would disband the Public Security Ministry, which has been plagued by scandal, along with the military and police force. Other reforms include a review of Mexico’s detention policies, which allow certain drug suspects to be held for almost three months without being charged.

Interior Minister Miguel Ángel Osorio Chong issued a scathing rebuke of the previous administration’s policies, citing a study that showed 7 in 10 Mexicans do not feel safe.

When I posed this same question to one of our law firm’s attorneys living in Mexico (as she has all of her life), she did say that she is still afraid. She mentioned that the predominant crime has moved to central and southern Mexico (away from the U.S.-Mexico border) where the majority of the maquiladoras are located. There apparently is always a feeling of having to constantly look over one’s shoulder (even in broad daylight) for fear that stray bullets may catch an innocent victim. Sad but true. I have also been informed by our counterpart in Mexico that the media is reporting that since Peña Nieto has implemented his plan, the number of deaths attributable to organized crime has increased. Honestly, I think it may be a little too early to judge since it’s more than an simple uphill battle.. it’s a mountain to climb… like K2.

In light of this overall blanket of fear, Peña Nieto’s program also aims to target the roots of crime, including violence in the home and in schools. His approach also includes preventing addiction and detecting behavioral issues in young people early. To achieve these goals, the interior ministry will coordinate efforts across nine different federal agencies including health, education, economy and social development, among others.
“We’re convinced that combat and punishment alone won’t resolve the problem,” Interior Minister Miguel Ángel Osorio Chong told local press.

Mr. Osorio Chong also told the El Universal newspaper that it would be a mistake to expect, after years of deadly violence, that “anything will be resolved overnight,” saying “it’s an issue with deep roots.”

Not too long ago Mexico’s new administration offered details of its strategy in the country’s war on drugs, committing to spend $9.2 billion this year on social programs to keep young people from joining criminal organizations in the 251 most violent towns and neighborhoods across the country. “It’s clear that we must put special emphasis on prevention, because we can’t just keep employing more sophisticated weapons, better equipment, more police, and a higher presence of the armed forces in the country as the only form of combating organized crime,” Peña Nieto said.

Officials released a partial list of the communities to be targeted by the program, which range from violent Acapulco (the recent rapists have been captured and confessed) to the relatively peaceful city of Oaxaca. Osorio Chong and Peña Nieto also said the anti-crime program would overlap with a national anti-hunger initiative, so it remains unclear which portion of the funding goes directly to each program.

Osorio Chong said the anti-violence efforts would include better park grounds and lighting, improved health and social services, help for single mothers to find jobs, more arts and culture in schools, job creation through road improvement projects, a national campaign to promote a “culture of peace” by lowering school and domestic violence, and preventing and treating drug addiction. Peña Nieto emphasized previously announced government plans to increase from 6,000 to 40,000 the number of schools that have a full, eight-hour academic day instead of ending classes around midday. Brilliant!

“This is the first state policy that puts the citizen, and our youth, at the center of security,” Osorio Chong said. “We’re convinced that fighting and punishment don’t solve the problem.”

Some analysts and U.S. lawmakers have interpreted Peña Nieto’s rhetoric about a strategic shift as a veiled offer to ease back on drug cartels that don’t engage in violence, therefore returning Mexico to the days of a more laissez-faire attitude toward drug smuggling. The Mexican government has adamantly denied that it has any intention of relenting in the war on drugs, even as it changes the official tone and emphasis.

“Let’s be clear,” Osorio Chong said on Tuesday. “The state reaffirms its responsibility to pursue criminals and punish them in order to keep the peace.” The plan does seem rather ambitious, but obviously the one that Calderon had in place wasn’t working. I say give it time, possibly a couple more years, but for now…..it does seem like simple rhetoric, possibly to some, just a Band-Aid on an open abdominal wound.

So, the answer to the question “Is it safe to conduct business in Mexico?” I, like anyone else, can only research and present the facts. When it comes to the specific location of a potential manufacturing plant, there are numerous things to consider, but within the top five would naturally be the area’s crime stats. Putting things into perspective, there are areas of heavy manufacturing in Mexico along the border with the U.S. that look absolutely calm, even like a day at the beach, when compared to Chicago right now with its 70 active gangs and daily shootings.

By |2017-10-23T21:12:28+00:00June 17th, 2013|Categories: Uncategorized|0 Comments

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