Editorial: As bullets fly, is Mexico shooting itself in the foot?
By Clare Goldsberry
Published: September 14th, 2011
Published: September 14th, 2011
Mexico has become Mexico's #1 enemy. The violence surrounding the country's drug wars has been on the nightly news so often that now it almost isn't noticed. Several months ago, I contacted some molders and mold making companies that have facilities in Mexico to ask them about the situation. Is it interfering with business? Are you afraid to cross the border for business?
The article was entitled "U.S. molders in Mexico not adversely impacted by border violence" and while most of those I spoke with responded carefully - no one after all wants to admit that their manufacturing plant is in a war zone - they all said that precautions are necessary when crossing the border to visit customers or their plants. They know the dangers that exist as that country's armies of narco-terrorists fight their battles.
Multi-national OEMs are generally aware of the geo-political and social climates of the countries in which they operate manufacturing plants. It's an important consideration in site selection for plants in foreign countries. But when things turn sour, it's never easy.
On September 7, Navistar International Corp.'s chairman and CEO, Daniel Ustian, expressed his concerns regarding Mexico in a call with analysts. As the Wall Street Journal reported, Ustian "warned that the truck maker could shift production from Mexico because of escalating political instability, with drug-related violence moving into parts of the country once deemed as safe."
Like many U.S.-based manufacturers, Navistar has been manufacturing trucks and buses at a plant near Monterrey for more than a decade. In fact, the "maquiladora" or twin-plant concept (a plant on each side of the border) is more than two decades old. The arrangement makes it cost effective for U.S. companies to ship parts into Mexico, assemble them there, and ship them back to the U.S. with minimal tariffs or taxes.
One has only to look at the list of U.S.-based manufacturers there to realize that Mexico's manufacturing platform is a "Who's Who" of Fortune 500 companies. Mexico was one of the first LLCCs (Low Labor-Cost Countries) to reap the benefits of U.S.-based manufacturers seeking to reduce their costs to manufacture. Today, Mexico has a huge automotive industry that includes the Detroit Three, Japanese and European automakers, and a slew of auto parts makers including Delphi, TRW, JCI, and many more.
I've had the pleasure of touring a number of plants in Mexico over the past two decades and I can honestly say that I've been impressed by what I've seen. These are not schlock facilities filled with yesterday's worn-out equipment. These are new, beautiful, state-of-the-art manufacturing plants equipped with the best machine tool and molding technology; robotics; clean rooms; assembly-room floors you could eat your lunch off of; cafeterias that provide two hot meals daily to workers; and on-site medical care for the workers and their families.
These major global OEMs have given the booming, young population of Mexico tremendous opportunities to learn skills and trades, become managers, move up the ladder and become the new middle-class of Mexico. It breaks my heart to hear of all the violence in places that I've visited many times, touring plants and getting to understand what Mexico has to offer its people and U.S.-based corporations. Yet, Mexico is becoming its own worst enemy. The anarchy raging in that country among the drug cartels could result in job-destroying actions such as the one Navistar's CEO is thinking about: pulling manufacturing back to the U.S.
As we look around the globe however, there are many countries where political uncertainty and social unrest could throw a monkey wrench into plans to benefit from cheap labor. It's something that is watched closely by many CEOs. They know the risks of putting manufacturing plants in places where civil unrest is a national pastime. Even relatively stable, democratic countries such as India are having their problems and haven't been immune to spates of violence that threaten to erupt into more, and disrupt the flow of manufacturing and manufactured goods from that country to the rest of the world.
Mexico's proximity to the U.S., the largest consumer base for many of the products produced in Mexico by companies such as Whirlpool, Electrolux, Stanley Black & Decker, and many others, has made it a popular place to locate manufacturing. "Near-shoring" as it's called, makes shipping easier and less costly. U.S. suppliers have easy access to their OEM customers, and vice versa. Mexico appeared to be a win-win for everyone.
It's too bad that Mexico is now running the risk of chasing the multi-nationals - and the thousands of jobs they bring - from the country. Mexico suffered from the loss of many companies when the push to locate to China drove many from the region. The country and its many hard workers were just starting to enjoy a comeback when the violence started. Let's hope that our neighbor in the South can find a way to stop the criminal activity, and restore rule of law to the country. Their future is at stake.
Mexico as a nation would love
Mexico as a nation would love to see the end of the narco-gangs. The problem is, no-one has a strategy to accomplish this, and the fragmentation of the various mobs means that a "Pax Criminalis" is largely out of the question today. There are too many violent egos in the total picture for that to happen.
Similarly, the mobs are well diversified, tackling kidnapping, extortion in various forms, protection rackets for the construction and transportation industries, and on and on. Legalizing marijuana or other drugs would impact their revenues, but would by no means eliminate them. They are rich and ruthless and confident, and could withstand the hit on their cashflows.
At the same time, their power is not absolute. There are segments of Mexico where they dare not intrude, because the communities would employ any means necessary to evict them. It's largely in the cities, where the social ties are less close, or in areas of transient population such as the borders and maquiladora towns, that they have most power.
Whoever becomes President of Mexico in next year's election will need to appeal to nationalist sentiment by distancing himself or herself from US policies, at least publicly. At the same time, there needs to be more emphasis on addressing the traditional crime the narco-mobs engage in (such as the extortions and protection rackets mentioned above) and less emphasis on the drug business. It is here that public sentiment can be swung against the gangs' power.
There's probably no way they can be eliminated at this point in time, but much of their power depends on their swaggering attitude, and re-envisioning them as low-life, over-budgeted punks, would be a step in the right direction.
Edward Mason
After many years of hoping
After many years of hoping that DARE, popular trends and law enforcment type programs would curb drug usage; I have given up hoping it will ever change. Criminal activity follows the profit motive, just like legitimate business. Therefore, I propose a way to take the profits out of drugs while protecting society at the same time. Normally I do not encourage the government to enter private business, but in this case it should.
1. The government should begin selling controlled substances at steep discount to the black market prices, say 1/10 of current prices.
2. Addicts would register with the government to be eligible to purchase controlled substances.
3. The addict's names would be published in a database accessible to employers. Zero confidentiality should be expected.
There will certainly be gainfully employed users of illegal drugs who will want to conceal their usage from employers. However, as long as penalties for using straw buyers and diverting controlled substances to unregistered users are relatively light, the economic effect would still be to provide (diverted) controlled substances into the marketplace at 1/2 to 1/4 of current black market pricing. In time, the illegal market would disappear for economic reasons. The 'legitimate' market would become the only source for these materials.
One of the penalties for unregistered usage should be compulsory registration of secret users who are caught. This would ensure that over time the true scope of drug usage in society would be identified. How society wishes to deal with the issue could then be openly discussed and remedial steps based on true data could finally be taken.
Fwiw - I very much agree with
Fwiw - I very much agree with "Henk ten Tije" and
"Anonymous" (on September 15, 2011 - 6:08am)
KFs reaction of:
"In this case arms smuggling or counterfeiting would displace it"
Yes and if that did not happen then perhaps anti-catholic war would take over?
or food wars or ??
KF needs to spend more time at the psychiatrists office!
Pres
I strongly disagree KF.
I strongly disagree KF. Alcohol is much more dangerous than marijuana. Look how prohibition worked by taking something legal and turning it into a crime. Murder is and always was a crime. Marijuana never was and should not be a crime. The whole plant was origianlly banned because of hemp's compitition with cotton. For the record, I do not smoke! Legalizing and taxing marijuana would go along way to reducing budget deficits, easing the strain on the crimial justice system, and stabilizing Mexico.
This makes about as much
This makes about as much sense as making homicide legal
in order to reduce the murder rate.The equation doesn't change.It
only changes the particular commodity of preference. In this case
arms smuggling or counterfeiting would displace it.
KF
I worked in the El
I worked in the El Paso/Juarez region for seven years. I left in 2008
because the violence was unimaginably out-of-control. Today, it continues.
Now, even cities that were once considered safe like Monterrey are becoming
"killing fields". When I hear statements like,"It's not affecting business...",
I know that's the PR office talking. No one wants to admit that there is an
issue. Moreover, no one wants to admit that the cartels are operating inside
their facilities.....and you can be sure they are. It is impossible to escape
their influence while doing business on their turf...and that is a fact.
Keith F.
make drugs legal resulting
make drugs legal resulting that there is no profit to gain anymore.
tremendous reduction in violence will be a consequence.
Consumption by those who use may, or may not increase, remains the question, but so what ?
The cost for users will drop tremendously, so criminal side effects like pick pocketing, shop lifting etc. will drop dramatically too.
Also a Cost reduction will happen on Safety, policemen etc.
Invest some money in education new generation, not to use.
problem solved.
Henk ten Tije