Mexico security fears grow for U.S. firms: survey

By Dave Graham
Reuters

Security fears at U.S. companies in Mexico have increased over the past year, fueled by growing concern about the threat from drug cartels, a poll by the American Chamber of Commerce of Mexico showed.

Some 67 percent of respondents in the study published on Tuesday said the security situation in Mexico had worsened in 2010, a rise of nine percentage points from the previous year.

Only 8.0 percent of those polled by the Chamber, which accounts for the bulk of foreign direct investment into Mexico, took the view that conditions had improved.

Foremost among the causes were threats to workers and increasing extortion by criminal gangs, who have been at war with the state since President Felipe Calderon launched a crackdown on the cartels after taking office in late 2006.

"These problems have affected operations, causing various companies to restrict movement of staff into and within Mexico," the report by the chamber said.

Over the past four years, more than 36,000 people have been killed in violence related to the drug war, although reports of workers being actively targeted by the gangs are rare.

Earlier this month, however, officials told Reuters two employees of Mexico's state oil monopoly Pemex were killed by suspected drug gang hitmen.

Firms have responded to the menace by stepping up security and 80 percent of the survey participants who felt the situation had improved based this assessment on additional measures they had implemented internally.

Only one in five felt an improvement was thanks to the efforts of Calderon's government, which has exchanged angry words with the United States over how to prosecute the drug war that is sucking up manpower and money from both countries.

All told, 26 percent of respondents said their company was safer than a year earlier, although 45 percent took the opposite view -- up from 34 percent in the previous survey.

BULLISH SENTIMENT
The rising tide of violence has stirred concern that foreign investment will stay away from Mexico. The study was inconclusive on this point, though other business surveys have suggested companies have not been panicked by the death count.

The American Chamber said some 27 percent of companies had reconsidered planned investment or expansion in Mexico due to the security outlook, the same proportion as last year. Just under half said the risks had not prompted them to reconsider.

Thomas Gillen, head of the American Chamber's security committee, said the group was optimistic the difficulties would not stop more investment reaching Mexico, which sells about 80 percent of exports to its northern neighbor.

"The president of the American Chamber said last night he's predicting foreign direct investment to Mexico of between $18 billion and $21 billion in 2011," Gillen said.

In the best case scenario this would be a rise of about 17 percent on 2010, when Latin America's second biggest economy attracted foreign direct investment worth $17.7 billion.

"In a word, the American Chamber is bullish," Gillen said.

A separate survey published in December by the German-Mexican chamber of commerce (CAMEXA) showed three out of four firms planned fresh investment in Mexico this year, and that 63 percent aimed to increase their staffing levels.

The American Chamber's survey was conducted between November 29, 2010 and January 31, 2011, and based on responses from some 511 participants, nearly double the previous total.