Mexico's Kansas City Southern to stop investing in Michoacán

Kansas City Southern (KCS) suspended new investments in Michoacán starting this year, as a result of the constant blockades by social groups to the railroads in the state. Of the 118 million dollars that the company has committed to improve its railroad infrastructure in the country this year, only a small part will be destined to infrastructure maintenance in Michoacán, but as of this year new projects in the state have been cancelled.

Since July 31, teachers of Section 18 of the National Coordinator of Education Workers (CNTE) blocked the railroad tracks at Uruapan for an indefinite period of time. Until the weekend, the blockade had affected the transit of 16 trains with 95,554 tons of cargo. Data from the Association of Industrialists of the State of Michoacán (AIEMAC) estimate that the blockade has an economic impact of 50 million pesos per day for the state. This figure could be two or three times higher if damages to different industries are considered.

The teachers' strike is affecting industries such as petrochemicals, since the company has six trains with products from Petróleos Mexicanos (Pemex), as well as the automotive and steel industries, since the port of Lázaro Cárdenas is a strategic point for Mexico in terms of trade in auto parts and finished steel. Together with Manzanillo, the Michoacan port is the main entrance to the country for products coming from Asia, a trade that, as the President of Mexico, Andrés Manuel López Obrador, pointed out last Thursday, "is extremely important" for the country and the region.

These blockades occur due to the lack of payments from the state government to the teachers, which is affecting third parties such as the railroad industry and its clients. The blockade of the railroad tracks is classified as a serious crime, but the authorities have failed to find the culprits. Last year, the railroad industry registered 200 days of blockades in different regions of the country, but they were mainly concentrated in Chihuahua, Sonora and Michoacán. So far this year, the company has recorded 14 blockades totaling 30 days in Michoacan alone. There has been a significant reduction in crime, but the underlying problem continues.

Although there is openness on the part of authorities such as the Ministry of the Interior, immediate measures must be taken in the matter so as not to affect an industry and thus scare off investment, as is already happening in Michoacan. KCS is still willing to invest in other regions of the country. There is growth in several sectors and other states such as San Luis Potosi, Nuevo Leon and Tamaulipas.