Mexican Firms Defying Lockdown to Be Treated With Kid Gloves

(Bloomberg) -- Mexico’s President Andres Manuel Lopez Obrador said he’d rather use persuasion than force with companies that are defying health regulations to curb the coronavirus pandemic.

At least 15% of large companies in Mexico have flouted the emergency restrictions, many in the auto industry, according to the Health Ministry.

Asked if a crackdown is due, Lopez Obrador told reporters that he won’t force businesses to shut, but will call them out instead, next Monday.

“Nothing by force, everything by reason and law. Convince, persuade,” he said in a Tuesday morning news conference.

According to government guidelines, only factories producing essential equipment can stay open, but the rules have sometimes been ignored. The president said he would begin naming and shaming such companies, but “very affectionately, so that nobody gets offended.”

Mexico’s government at first eschewed strict lockdowns of the kind imposed elsewhere in the region, and in the early days of the pandemic Lopez Obrador continued to travel and shake hands with his supporters.

Read More: MEXICO INSIGHT: Containment and Constraints to Drag Down Growth

His softly-softly approach has provoked criticism as some workers got infected and died, and sparked protests in industrial areas near the U.S. border. In Chihuahua state, which borders Texas and New Mexico, most of the people who died worked in assembly plants, according to health authorities.

The coronavirus death toll at factories known as maquiladoras Ciudad Juarez -- an industrial city that shares a border with El Paso -- has risen to at least 13 according to state officials. On Tuesday, Mexican daily El Diario de Chihuahua reported that that figure may be as high as 18.

The Health Ministry initially threatened fines for companies breaking the rules, before the president advocated his less confrontational approach.

Despite the president’s rhetoric, authorities have already shut down some factories temporarily after deeming them non-essential, according to Animal Politico.

Some businesses are probably abusing the rules deliberately, but others are likely confused by the government’s failure to communicate clearly, said Carlos Petersen, a New York-based analyst at Eurasia Group.

“When this was announced, it was far from clear if they were mere recommendations or if they should be enforced by all,” Peterson said in a written message.

Mexico’s factories are often key to U.S. supply chains, and pressure is coming from Washington to keep some plants open. In a news conference, Ellen Lord, the U.S. defense undersecretary for acquisition and sustainment, said she is asking the Mexican government to help reopen some plants, including ones that are important for U.S. airframe production.

The discretion Mexico is leaving to companies over whether to implement the rules leaves the country vulnerable to a more rapid spread of the virus, said Javier Martin Reyes, a professor at the Economic Research and Teaching Center (CIDE) in Mexico City.

“The measures are not going to be as effective in health terms, and that’s why I think we’ll see more coronavirus cases and more deaths,” he said in a phone interview.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.