Mexico Closes US Owned Plant for Refusal to Sell Ventilators

[sl8]

Source: U.S. News & World Report

The northern Mexico border state of Baja California has closed a plant run by the Anglo-American health care firm Smiths Medical for allegedly refusing to sell ventilators to Mexican hospitals.

By Associated Press, Wire Service Content?April 10, 2020
U.S. News & World Report

TIJUANA, MEXICO (AP) — The northern Mexico border state of Baja California closed a plant run by the Anglo-American health care firm Smiths Medical Friday for allegedly refusing to sell ventilators to Mexican hospitals.

Baja California Gov. Jaime Bonilla said the firm refused to sell Mexico some of the machines, which are badly needed to treat patients with coronavirus.

[...]

The company did not immediately respond to requests for comment. Industry sources have argued the factory is an export-only plant that operates under special rules that allow it to import raw materials and parts duty-free, on the condition they be re-exported and not sold on the local market.

Read more: https://www.usnews.com/news/best-states/minnesota/articles/2020-04-10/mexico-closes-us-owned-plant-for-refusal-to-sell-ventilators

[Maxheader]

1. I don't get it..

For what reason?..Why won't the Minnesota corp fab and give the hospitals

the equipment?

[Laelth]

12. It appears that their Mexican company charter ...

... doesn’t ALLOW them to sell products in Mexico. They are, under Mexican law, an export-only factory.

BUT, because they provide no essential benefit to Mexico, they were in violation of Baja California’s stay-at-home order by continuing to operate the plant, so the Governor shut them down.



-Laelth

[SpankMe]

38. Jobs?

I think Mexico and other countries have these export only factories because of the jobs they provide. Not much other benefit to the host country, but better than nothing.

[Laelth]

39. Partially, sure.

In addition, they don’t want American manufacturers competing against Mexican manufacturers in the Mexican market.

-Laelth

[Lochloosa]

2. I think it's time to say "Fuck the rules".

[usaf-vet]

17. Careful what you wish for Trump already thinks no rules apply to him and you see where that got us.

[Laelth]

18. Why not change the rules?

If the Mexican government were to grant this company an emergency exemption from their corporate charter (which forbids them from selling their products in Mexico), then I suspect this company would be HAPPY to sell some ventilators to Mexico if for no other reason than to get the plant up and running again.

-Laelth

[BrightKnight]

22. It would be in the interest of the Mexican people and the company

to find a compromise solution.

[BrightKnight]

29. US export laws may not allow the company

to export scarce ventilators parts if they are not for re-import. I am sure the lists have been updated. Requesting exceptions takes time and I doubt that it would be granted.

[bucolic_frolic]

3. Global emergency will trump a lot of rules and contracts

Governments can find a way when they want to

[Bernardo de La Paz]

6. Your point is good. But "trump" is the new swear word. Trump can go trump himself, hard. . nt

[Roy Rolling]

11. Love it

Trumpin’ A.

[TryLogic]

13. "Everything Trump Touches Dies"

[Bengus81]

21. Or Wuhan Don

[Cirque du So-What]

4. Multinationals wil! soon learn

they don't own every fucking thing. They'll also get schooled in good citizenship, like addressing the needs of their host countries. A brief perusal of industries that have been nationalized is in order as well.

[Igel]

30. Except that misses the context.

"You can only produce for export. That's what we, the Mexican government, order."

"Okay."

"WTF? You're only producing for export? How dare you? There are orders from good, loyal, patriotic *Mexican* hospitals you, the foreigner, are not filling. You're closed."

"We were just doing what you said."

"That's disrespectful, foreigner! Don't point out that we're being inconsistent. Do what we say now, not what the rules we wrote say. What matters is what individual bureaucrats decide minute by minuet and how you obey--that's what it means to be patriotic."

That's the context. You follow the rules the government says, you get kicked in the nuts. You don't follow the rules, you get kicked in the nuts. Either way, the nuts kick and nuts are kicked. Sounds like a life that would make *me* want to emigrate.

[johnthewoodworker]

5. I think right wing America can identify with this 'Mexico First' policy.

[KSNY]

7. They wanted "some" of the machines...not all

[UpInArms]

8. More from your link

Bonilla said the firm had continued to operate its assembly plant under the argument it provided an “essential” service, when most non-essential plants have been ordered closed to combat the pandemic.

But Bonilla ordered the Smiths Medical factory closed, because he argued it was providing no such essential service to Mexicans, and thus was not obeying health emergency contingency measures.

“We said to them ‘if you want us to consider you essential, you have to provide some benefit to the people of Baja California, by selling us ventilators, because we need them,’" Bonilla said. “They said ‘no, we are not going to sell you anything, we are just going to continue to use your labor’.”

I really cannot argue with the logic there

[2naSalit]

14. Makes sense to me.

[Nay]

16. Good for Mr. Bonilla!

[avebury]

9. The American company really did not think this thru.

They probably located the factory in Mexico to achieve cheaper costs and then bit the hand that fed them. Mexico did not submit an unreasonable request. They didn't demand all of their ventilators, just some of them. It really should not come across as any great surprise. It will be interesting to see if Trump weighs in the matter. I don't think that he would have a leg to stand on if he berates Mexico considering the fact that FEMA keeps stealing supplies that have been meant for US states. If any of the States had paid out any money for the stolen items it would be interesting to see a Governor insist upon pressing criminal charges for grand theft against the FEMA employee responsible for stealing the items. That is an issue that the voters would understand and would hurt Trump in November.

[BrightKnight]

28. They may have calculated that this

is not a big deal. They can divert the supply chain and do the work I’m the US. I doubt that thin profit margins are driving their decisions in the current climate.

Also, the may not be able to get access to scarce Brno parts if they are for export.

[NCjack]

10. Baja California Gov. Jaime Bonilla better be cautious. He is interfering in

the flow of profits to Jared Medical Supplies, Subsidiary of TrumpCo.

[2naSalit]

15. ++++++++++++++!!!!

[Jake Stern]

42. He is mad at a company for doing what MEXICAN LAW requires it to do:

manufacture their product solely for export.

You're right on one thing: He better be cautious. Cautious that pulling these kinds of stunts will convince these companies to go elsewhere and take their much needed jobs with them.

The guv could have petitioned the Mexican government to grant a temporary exemption to the "export only" regs however he instead chose to go full Trumper and shut down a plant manufacturing vital medical equipment out of nationalistic spite.

A dollar is a dollar and then company, freed from that rule, would have gladly sold the equipment to Mexican hospitals.

Once again: The company did nothing wrong and was only adhering to the rules imposed on it by the Mexican government.

[efhmc]

19. Easy enough to get around that rule. Just donate them.

[keithbvadu2]

27. For a Mexican gov't cash subsidy equal to the sale price.

For a Mexican gov't cash subsidy equal to the sale price.

[Toorich]

20. Hummmmmm

just curious, why would an American company build and run a manufacturing plant in beautiful Baja California?

[Laelth]

23. Same answers as always.

Cheap labor and lax environmental laws.

-Laelth

[BrightKnight]

24. The executives, engineers etc. can live on beautiful southern California

and still have access to cheaper near shore manufacturing.

[Igel]

32. Same reason we prefer to buy cheaper imports

and those near the border often go across the border for things like medications or health care.

[EX500rider]

34. Get with the program...individuals want to save moneyGOOD Corp. wants to save moneyBAD

[dalton99a]

25. "Bonilla ordered the factory closed because it was providing no essential service to Mexicans"

Hard to argue with that

[Igel]

33. No.

But it's hard for the Mexicans to complain, even as they shut something that might wind up killing non-Mexicans.

Bah. Non-Mexicans can die. Just make more demand for Mexican labor abroad. Makes the government there seem truly humanitarian. Won't help others, even passively.

Otherwise it's a case of having set up the rules, you can either change them or follow them. For a government to impose rules then demand that the rules be broken just sets up things for the government to come along later and punish the company for breaking the rules. But of course, a caring, humanitarian government would never do that.

First, I guess, you'd have to find a caring, humanitarian government, because it's already shown Baja California doesn't have one.

[mathematic]

31. So mexico literally shuts down production of life saving equipment and half the people here cheer

That's fucked up.

[EX500rider]

35. Yep. I agree. nt

[Laelth]

40. A lot of people misunderstood the complexity of the situation, I think. n/t

-Laelth

[tirebiter]

36. Open question: This is under USMCA rules now not NAFTA.

This wasn’t somehow figured in to favor the US by that brilliant Trump guy?

[rickford66]

37. They could export them over the boarder and send them right back.

Or how about Mexico granting for one month, a single square inch of sovereign territory in the plant to the US to accept the exports.

[pansypoo53219]

41. america first up the moron's ass.

[Baja2012]

43. Company is Correct

Just to provide some information before everyone criticizes the company without understanding the facts. The company is a maquiladora and is not legally allowed to sell products in Mexico. They do not even have a way to sell in Mexico if they wanted, all business transactions are using electronic PO`s in USD. This is part of the trade law negotiated between US and Mexico. It would require an agreement between the 2 government's to allow company to sell directly to Mexico. The reason they can't be shipped to US and imported back to Mexico is once products are shipped across the border without paying a import tax they become legal property of whatever hospital in the US purchased them. The US hospital would have to release the ventilators to be sold back to Mexico and then they would have the Mexican 16% VAT applied to them to be re-imported. The factory GM and even the owner of the company does not have the power to change trade laws on their own.

[Laelth]

44. Welcome to DU.

May we assume that you are a company representative?



Either way, welcome.



-Laelth

[Baja2012]

45. Baja Resident

I am not representing the company but I work in same industrial complex they are located in. I work for a large US maquiladora so I am aware of the rules and understand it is not something that is easy to do as everyone has been stating. I have been here for 10 years but never post but since this something I deal with every day I thought I would let everyone know that it is not something that is easy to do. For example my company builds products for multiple different US companies but the products don't belong to us we are just organized as a maquiladora and if we tried to sell directly into Mexico we would face having our license revoked and shutdown. No company is going to make that kind of decision to violate the law and put there factory at risk without some joint authorization from US/Mexico trade compliance.

[Laelth]

46. Excellent.

Well I, for one, am happy to have you with us and am glad that you can explain the complexities of US/Mexico trade relations to us.



-Laelth