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Navigating the Impacts of COVID-19 in Mexico’s Manufacturing Sector

The COVID-19 outbreak in Mexico and the government’s efforts to contain it are having profound implications for the manufacturing sector in the country—which represents approximately 17 percent of Mexico’s GDP. As much of the manufacturing industry has continued operations classified as essential throughout the federally mandated quarantine, and other organizations are gradually being reactivated, businesses are facing unique and acute challenges—including infection outbreaks in facilities, increased requirements for personal protective equipment (PPE), protest actions from employees, and supply chain-related risks.

In guiding your business through this difficult time, consider the following COVID-19-related challenges facing manufacturers in Mexico—and the strategies to mitigate them:

Challenge: Getting Back to Full Speed

Even those manufacturers deemed essential have had to contend with reductions in staff, the number of shifts and volume of personnel, and whether to minimize non-essential staff or enforce social distancing norms. As businesses plan their return to a new normal, they must weigh strategic considerations such as COVID-19 infection rates, employee needs and morale, budget allocations and hospital occupation—as well as tactical concerns including temperature checks, reconfigured staff shifts, physical barriers and decongesting access points to provide a framework for managers and locations aiming to reopen. Manufacturers currently must juggle internal stakeholders with external demands, along with government guidance and movements by competitors.

Solution: Adopt a Strategic and Tactical Return-to-Work Plan

Starting with crisis management teams, manufacturers should adopt a holistic approach to planning a return to work or augmenting their current number of workers. This should involve an analysis of the essential workers within the manufacturing facility, while continuing to carry out functions remotely as much as possible, and considering external factors such as infection rates, hospitalization numbers, and public transportation protocols.

Preventative protocols (rotated shifts, one-way circulation routes, enforced social distancing, ingress/egress considerations, health questionnaires, temperature checks, and contact tracing) as well as reactive protocols (actions in the event of employee infection, quarantine times and places for employees with suspected cases at home, reporting requirements regarding absenteeism, and PPE shortages) should be planned for and have clearly communicated internal leads in the business.

Challenge: Internal Spread of Infection

Despite the best efforts of manufacturers, COVID-19 outbreaks are likely to continue occurring, whether the contagion spread directly at the workplace or from workers interacting with family members and the general public as lockdown measures slowly ease. The ability of companies to plan for and react swiftly to these outbreaks will largely define not only how quickly contagions can be contained but also business continuity concerns, perceptions of duty of care by the employees and wider reputations with external stakeholders such as government agencies, clients, and even shareholders.

Solution: Establish Robust Monitoring Systems

Monitoring is a key part of any return-to-work plan. That said, its wider importance and implication in mitigating other key risks (protests, security trends, union activity, etc.) merits its inclusion as a standalone element for consideration.

In the era of COVID-19, it’s critical for manufacturers to set up dedicated monitoring resources to track outbreaks and infection-related trends, monitor social media for signs of employee dissatisfaction or negative public perception, and analyze crime trends around their site areas and along major commuting routes.

Challenge: Internal Communications and Information Sharing

Building on the previous challenge, the ability to communicate proactively and reactively with workforces—balancing information sharing without causing undue panic or worry—is a common theme in crisis management and never more so than in the COVID-19 context. Do employees have a right to know whether a family member of a fellow worker is sick? If a member of the security back office team falls sick and has been sharing transportation with the security officers? These questions and more make internal communications regarding healthcare, legality, and human resources issues a tricky tightrope to walk.

Solution: Empower a Fully Integrated Crisis Management Team

Most companies have activated and maintained their incident and crisis management teams throughout the pandemic. As the government-enforced shutdown draws to a close, companies should resist the temptation to wind down their crisis management teams (CMTs). At a minimum, CMTs need to have a holistic remit, covering human resources, financial, legal, media/communications, and subject matter experts.

Within the manufacturing sector, the ability to communicate early and effectively with internal stakeholders (employees, for the most part) and external stakeholders (community, clients, and providers) will be one of the critical aspects in preventing crises from developing and worsening. CMTs should prepare internal and external statements for key events such as confirmed internal COVID-19 cases, media references to the company, crises related to neighboring manufacturing facilities, and ambiguities and changes in government policy.

Challenge: Protest Action and Social Risk Issues

Despite their best efforts regarding the previously highlighted challenges, manufacturers are increasingly facing protest actions from their employees, the local community, or both. How to handle protestors—taking into account that they represent companies’ workforces and assuaging their concerns—while also implementing measures to ensure protest actions do not escalate and threaten the physical integrity of the facility or the reputation of the company more broadly, is high on the list of concerns for manufacturers in Mexico.

Solution: Take a Trigger-Based, Escalated Approach to Site Preparation

Manufacturing facilities need defined trigger-based and escalated protocols to ensure they detect, prepare, and react to the risk of social unrest.

Under such a system, companies define a list of triggers and assign corresponding actions for risk mitigation. Triggers might include informal employee complaints; negative social media activity by workers or the local population; union or other employee group communications or threats; or physical gatherings around the plant.

These are met with mitigative and preventative measures that aim to avoid, resolve, or reduce any conflict, such as internal communication campaigns, social media outreach, and other official communications to the local community.

As triggers occur, companies must also consider response tactics that focus on protecting their people and assets, such as increasing security provider presence for observation and potential crowd control, closing non-vital access points to avoid site intrusions, and removing or securing high-value items or cash from the site. It might be necessary to install safe obstacles that prevent large gatherings, window protection, or mesh wire fences, while staying mindful not to impede surveillance cameras, emergency exit routes, or telecommunications.

Trigger-based protocols—as part of a wider crisis management plan—should be supported by robust monitoring, analysis, and security teams to be most effective.

Challenge: Increased Off-Site Risks

The COVID-19 pandemic has brought impacts on both Mexico’s economy and security environment. As of June 2020, common crimes have decreased; however, Control Risks anticipates a rise in most crimes in the short and medium term. This includes both opportunistic crime, which represents a last resort for economically vulnerable populations, as well as sophisticated crimes such as cargo theft, kidnapping, and extortion—a result of organized criminal groups further diversifying their activities following the temporary closure of the U.S.–Mexico border. Essential manufacturers that have long been targeted for smuggling opportunities will become increasingly attractive to drug-trafficking organizations eager to identify ways to move their products across the U.S.–Mexico border.

Solution: Refresh Your Personal Security Protocols and Journey Management Plans

The knock-on effects of COVID-19 have altered the overall threat environment beyond a company’s facilities. As off-site risks grow due to criminal activity, manufacturers should take increasing steps to prepare and protect their workforces. As a first step, and to ensure an integrated approach, companies should update their security risk assessments to ensure that assets are appropriately identified and measured for criticality.

Once principal operational risks have been identified and/or confirmed the corresponding risk mitigation actions should be implemented. These should fall within the general arenas of training for personnel (to ensure that employees are adequately prepared to prevent and react to offsite risks), and preventative and reactive security planning—including intelligence gathering and updating journey and incident management plans (to understand trends in the security environment and the company’s tactical capabilities in tracking the movement of business vehicles and staff).

All elements should be linked to a robust response plan, with clearly defined actions on for common security scenarios—and how/if these will escalate and feed into the company’s crisis management team (CMT).

For an industry as critical as manufacturing, there is an urgent need to identify and mitigate the host of unique challenges brought about by the COVID-19 crisis—in conjunction with the economic and security quandaries it has created in Mexico. These challenges can be effectively mitigated (both in the preventative and reactive phases) through comprehensive crisis management planning—focused on monitoring systems linked to escalated triggers and preplanned actions.

Companies that successfully implement these programs will have a well-defined crisis management structure and protocols, with trained personnel, robust monitoring, and intelligence capabilities, and will be able to carry out decisive actions in a timely manner.

James Sinclair is a partner at Control Risks and head of the firm’s Crisis and Security Consulting practice for Mexico, Central America, and the Caribbean. He is based in Mexico City.

For more information, or to speak with an expert, please contact [email protected].

© Control Risks Group Limited 2020. All rights reserved. Reproduction in whole or in part prohibited without the prior consent of the Company.