Mexico's Insecurity

The Transported Assets Protection Association's two-day meeting in San Diego this month looking at U.S.-Mexico cross-border security couldn't have been more timely.

The rising violence driven by warring drug cartels has turned some areas of Mexico into something resembling war zones, putting a grim cloud over the country and its efforts to reawaken the manufacturing that turned the region near the border with the United States into a hotbed of factory activity in the 1990s.

A story on the front page of The Washington Post the same week as the TAPA meeting underscored the questions surrounding security in Mexico, portraying the city of Monterrey as bordering on lawlessness.

Once the unofficial capital of the maquiladoras manufacturing plants a short drive from the U.S.-Mexico border, Monterrey now is the scene of a bloody battle between the Zetas and Gulf cartels for control of the state's drug networks.

Security executives and planners from major American manufacturers heard a similar story at the TAPA meeting, yet the picture they portrayed was far more complicated and did not necessarily provide the easy answer companies may want when trying to decide whether the lower direct manufacturing costs come at too high a price for safety and security.

Sam Logan, an author and expert in Mexico's drug wars and a consultant on corporate risk intelligence in Latin America, showed images and detailed statistics that gave a gruesome view of the growing violence as cartels battled for supremacy in parts of Mexico. But Logan also showed a map with very clear borders delineating where rival cartels are spreading violence and where there is relative peace.

Mexico, he said, "is a sea of tranquility with pockets of violence."

One of those pockets is Ciudad Juarez, the sprawling Mexican industrial city across the border from El Paso, Texas, and a stop on the way from Monterrey into the United States. The border area near Tijuana, too, has grown extremely rough, Logan said.

It's unclear whether Mexico has lost business because of the cartel violence. The Post story notes Eurocopter recently backed away from a plan to build a $500 million plant in Monterrey. The plant will go to Mexico, only it will be built in the central Mexican state of Queretaro.

An official with the State Department's Overseas Security Advisory Council presented a similarly divided view of the country.

This official, who asked that he not be identified, noted cartel soldiers who do not care about bystanders had spread fear in various part of the country with brazen assassinations and shootouts in populated areas.

The OSAC office said a survey of foreign companies doing business in Mexico showed 45 percent said they had seen some impact from cartel violence, but 55 percent had seen no impact.

The impact, the OSAC official said, was largely indirect - the violence discourages private sector investment and discourages business travelers from traveling to Mexican cities.

And OSAC said its unofficial survey of homicide rates across Latin America showed Mexico far behind other countries, even with the drug violence. The rate of 18 deaths per 100,000 residents in Mexico was less than half the rate in Belize (44) and the rate was four times higher in Venezuela (75) and Honduras (77).

And a security official at a major electronics manufacturer told the TAPA meeting about the very aggressive security actions the company takes to guard goods that move from Los Angeles to Mexico, where it stages goods at its main Latin American hub and employs contract manufacturers.

This electronics company certainly is aware of the violence around Monterrey, where some of its components are made, but sees a line between the cartel violence and the theft the company guards against.

"We have not seen an uptick of cargo theft in Mexico, or at least we don't believe we are seeing anything tied to the cartel activity," said this official, who asked not to be identified.

The company is continually assessing its risks. "But at least at this time, and certainly this can change, we don't feel that the cartel activity, the violence, is having an impact on our transiting activity in Juarez," this official said.

Still, this company believes it might be cheaper to locate a distribution center on the Mexico side of the border, but they are not moving that operation from the U.S.

-- Contact Paul Page at ppage@joc.com .

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