Coca-Cola And Pepsi Face Serious Security Problems In Guerrero Mexico

Nine months after the disappearance of 43 students in the town of Iguala in southwestern Mexico, Coca-Cola  has decided to shutter its facility in the nearby municipality of Arcelia, due to ongoing security problems. As I explained in a recent article for Fusion, "Citing concerns for the safety of its employees, Coca-Cola has decided to permanently shutter a storage facility in Arcelia, Guerrero, laying off 120 workers and eliminating one of the few sources of formal-sector jobs in the area." Guerrero, the state where Iguala is located, presents a unique security challenge for multi-national companies due to high levels of poverty, low levels of development, and the presence of a noxious mix of organized crime groups, armed citizens militias, and militant student organizations. According to Zacarías Rodríguez Cabrera, the Chairman of the Iguala chapter of Mexico’s National Chamber of Commerce, Service and Tourism (Canaco-Servytur), 10% of Iguala’s businesses have shuttered their doors. Coca-Cola has dealt with hijackings and politicized extortion by student protesters from the Ayotzinapa school and the more widespread threat of kidnapping, criminal extortion, and armed robbery. On June 24 a Pepsi executive was kidnapped while driving on the Iguala-Ciudad Altamirano highway. The incident mirrors a string of other kidnappings and killings in the area. On June 19 three doctors and a lawyer disappeared while driving on a highway in Guerrero. Their bodies have been found near Chilpancingo, the state's capital.

According to the latest report from the Justice in Mexico project, although overall violent crime fell during 2014 in Mexico, “Even amid the overall reduction in violence, there were serious security crises in central and Pacific states, notably the states of Guerrero, México, and Michoacán.” In 2014 there were over 1,000 organized crime style murders in Guerrero, placing the state second to only Chihuahua in terms of total homicides. In 2012, 2013 and 2014 Acapulco, the resort city on Acapulco’s coast, reported more homicides than any other city in Mexico, including Tijuana, Ciudad Juarez and Mexico City. Coca-Cola and Pepsi aren’t the only companies to have problems in Guerrero. Grupo Moctezuma (the Heineken-owned brewery that produces the Dos Equis brand) and Cemex have also experienced a string of incidents relating to militant protesters and threats from criminal groups. Cemex has also reportedly considered closing its operations in Guerrero.

As I explained in my article for Fusion:

Coca-Cola first closed its distribution facility in Arcelia last year, after criminals with machine guns hijacked and burned several of its delivery trucks. Despite the deployment of additional soldiers and police in Guerrero in recent months, the situation hasn’t improved, leading to the decision to pull-out altogether.

The state elected a new governor on June 7. Hector Astudillo, a politician from the PRI party of Mexican President Enrique Peña Nieto, will now be responsible for trying to attract new investment and improve security in a place that has become Mexico’s most complex and problematic state.

Click here to see a recent article on politics and security in Guerrero, Mexico.