Tales From the Rio Grande (Part One)

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Global Trade

Last week I had the opportunity to visit a client in Texas with a plant just across the border in Mexico. I always enjoy these types of trips not only because I believe that each client has something to teach us but each experience offers an opportunity to expand one’s horizons. Unfortunately, the trip to Mexico taught me a lot about drug cartels, violence and the difficulties of running a business in these border towns. It also taught me how much time and effort US companies need to expend to secure their operations in Mexico. And I use the word “secure” literally and figuratively.

First, I learned this from conversations with our client that random shootings and killings are quite common. Two people specifically mentioned be-headings (including a public display on a main border bridge to the US). What both individuals said about those killings was perhaps more shocking….in Mexican culture, these occurences are often photographed and front and center on newspaper front pages. The frequency of the killings and the subsequent press coverage has had a profound numbing effect on the Mexican population at large. For every drug runner that US Customs and Border Patrol catches, my associates suspect up to 30 manage to enter the US. The situation has gotten so out of hand that these stories are making the news in our own press. Here is the most shocking, about how President Calderon’s own drug czar was on the take – $450,000/month from one of Mexico’s leading cartels. Here’s a piece from the US Council on Foreign Relations discussing the growing spread of violence across Mexico and it’s threat to US security. And here’s an entire section of the Los Angeles Times blogs devoted to this issue specifically.

Besides having an enormous impact on US-Mexico trade relations, the growing drug traffic has a huge impact on the various US companies with operations just south of the border. Many of these towns are in a near desperate situation. Workers have to travel, often through dangerous areas just to show up to work each day. The maquiladora, like in China, has become their own “cities within cities” by providing day care, basic medical care, meals etc. Workers who work for these US companies used to be paid monthly or every two weeks but are now having to resort to daily payments so that they can leave the premises without the fear of being robbed of their monthly income. I personally can not understand how Mexico has higher labor costs than China. The squalor looks about the same as in China or India. I’ll chalk it up to corruption in Mexico.

Later this afternoon we’ll cover other US/Mexico operations challenges.

–Lisa Reisman

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