Mexico: descent into chaosMore companies shun Mexico as violence spirals
Growing numbers of companies are deciding to limit their investments in Mexico because of spiraling drug-related violence in one of the world’s most important emerging markets; Mexico continues to lure foreign investment with its low wages, location next to the United States, and the advantages of the North American Free Trade Agreement; for some companies, particularly those that do not yet have operations south of the border, the violence has become daunting
Mexican federal police being deployed // Source: colorlines.com
Growing numbers of companies are deciding to limit their investments in Mexico because of spiraling drug-related violence in one of the world’s most important emerging markets.
The latest is Swedish appliance maker Electrolux AB, which said Thursday it had chosen Memphis, Tenn., over locations in Mexico for a $190 million appliance factory that will employ 1,200 people.
The Wall Street Journal reports that the decision involved a host of factors, including proximity to component suppliers, distribution centers and another Electrolux plant in Springfield, Tennessee. The paper quotes company’s managers to say, though, that Mexico’s deteriorating security also played a role.
Mexico continues to lure foreign investment with its low wages, location next to the United States, and the advantages of the North American Free Trade Agreement.
One of the U.S.’s largest trade partners, Mexico attracted $14 billion in foreign direct investment in the year’s first nine months, up 20 percent from a year ago, according to government figures. Some of Mexico’s biggest investors, including Wal-Mart Stores Inc., are maintaining their investment plans.
Fights between rival drug cartels have claimed more than 31,000 lives in the past four years, including more than 11,000 this year. Other crimes like robbery, extortion, and kidnapping also have climbed. For some companies, particularly those that do not yet have operations south of the border, the violence has become daunting.
“We won’t put a factory in Mexico until some of this violence gets addressed,” said Ron DeFeo, chief executive of Terex Corp., a Westport, Connecticut, maker of construction cranes and other heavy equipment. “We just can’t put our people at risk.”
