61134_TCU Supply Chain Presentationx - WikiLeaks

frizzflowerUrban and Civil

Nov 29, 2013 (2 years and 11 months ago)


Global Supply Chain Threats: Impacts to
Multinational Corporations

Track and monitor exogenous threats to the corporate supply chain so
that corporations can make proactive decisions to mitigate threats.

How STRATFOR Looks at Supply Chain

Types of Supply Chain Threats

Terrorism and Insurrection


Political and Regulatory Environment

Labor Unrest and Action

Natural Disasters

International Frictions

Nongovernmental Organizations

Mexico: A Case Study

The U.S. is Mexico's
largest trading partner

Large hub for U.S.

Manufacturing and
retail clients

Great concerns about
Mexico’s security
environment impacting
business operations and
supply chain

Terrorism and Insurrection

Medium risk

Domestic security threats arising from insurgency or terrorism

home to several rebel movements, including the Zapatista Army for National
Liberation and the Popular Revolutionary Army (EPR)

operate mostly in the southern and southeastern regions

Potential for specific attacks against foreign interests

History of attacks against financial and energy targets although frequency has
decreased in last year.

Drop in such activities in last couple of years. Cartel war has dominated
security threat environment.

Crime Environment

High risk

Critical level of organized criminal activity

drug cartels control supply
chain routes

Great potential for theft and violence

Number of deaths steadily increasing since 2006.

15,000 deaths associated with organized crime in 2010, according to Mexican

Organized crime pervasive throughout society, politics and security

Police and security forces face severe challenges when attempting to
counter threats

death threats and corruption.

Mexico’s Cartel War

Mexico’s Cartel War

Political and Regulatory Environment

Low risk

Regulations are clear and enforced

Friendly attitude toward foreign investments and operations


President Calderon is seeking policies to encourage increased
transparency from the government and government
owned businesses.

However, economic transparency and rampant corruption remain a

Labor Unrest and Action

High risk

Organized labor at local and national levels is strong, is present across
companies and industries, and has a powerful political voice.

Labor strikes are common, although usually quickly resolved through

Strikes create security disruptions

road blocks; violence sometimes

Natural Disasters

High risk

High rate of seismic activity

Both the Pacific and the Gulf/Caribbean coasts are affected annually by
tropical storms and hurricanes, which can lead to disruptions in harvests
and distribution

Seasonal floods are possible in the south

Droughts throughout the south and the Baja Peninsula are possible

Infrastructure is relatively extensive and well
developed, although roads
are often of lower quality in interior, posing some challenges to disaster

International Frictions

Low risk

Positive economic, political and military relations and interactions with
other nations

More free trade agreements than any other country

Low chances for disputes to take on a more concrete form, although
increasing tension along the U.S.
Mexican border

Most disputes relate to issues such as drug trafficking, illegal
immigrants and immigration agreements

Concerns about spillover of violence

Mexico: Nongovernmental Organizations

High risk

NGOs have significant political impact

Examples: Roman Catholic Church, worker and peasant groups and
foreign NGOs that are inclined toward socialism and anticorruption

NGOs have targeted trade in the past and can generate international
support for their issues

New anti
violence organizations are putting increasing pressure on the
government through public gatherings and marches

Reactions of MNCs to Supply Chain Threats

Many MNCs continue to operate and invest in Mexico due to low labor
costs, despite critical security threats, seeking third party consultants due
to concerns amongst shareholders or Board.

Concerns over increasing foreign presence in the line of fire

Increasing operational costs to guard against/react to organized crime

benefit analysis

Need for proactive intelligence and

to stay ahead of
threats and keep costs down

For more information, please contact:

Fred Burton


(512) 744