The Baja California government has temporarily closed a medical device company in Tijuana after it refused to sell ventilators to the state to treat Covid-19 patients.
Governor Jaime Bonilla Valdez announced the closure of the Tijuana facilities of the United States company Smiths Medical on Thursday during a live video address posted to social media.
“I established contact with Foreign Minister Marcelo Ebrard to reach an agreement with said company because it’s not just Baja California that needs ventilators but the whole country. The corporation’s response was that they set up [in Tijuana] to create jobs and that the ventilators assembled there are committed to other countries,” he said.
“The decision was taken that if … companies don’t support or contribute to the state … [during] the health emergency, they are considered [to be undertaking] nonessential activities,” Bonilla said.
The federal government ordered the suspension of all nonessential activities until April 30 as part of efforts to contain the spread of Covid-19, which had sickened almost 3,500 people in Mexico as of Thursday and killed close to 200.
While Bonilla railed against Smiths’ refusal to sell ventilators to Baja California, the president of a Tijuana-based business group said the company’s stance was justified.
Carlos Higuera of the industry group Deitac said that it would be illegal for Smiths to sell products to the state government because it is part of the government’s manufacturing and export services program known as Immex. Companies with Immex permits that allow them to operate in Mexico must export 100% of the products they manufacture, he said.
“Immex manufacturing companies by … law cannot sell products in national territory. … Their legal status obliges them to sell all that they produce abroad,” Higuera said.
“The state government is asking for something that goes against the law,” he said, adding that if it wants to buy ventilators from Smiths it should do so in the United States.
Higuera said that Smiths and any other companies that have been forced to close even though their business activities are considered essential according to the government’s definition have the legal right to seek compensation.
Smiths could be deserving of significant government compensation because it will be unable to manufacture for a certain period of time and as a result will be unable to meet its contractual obligations with customers, he said.
The Deitac chief charged that the decision to temporarily shut down the company’s Tijuana factory, and the federal government’s cancelation of Constellation Brands’ brewery project in Mexicali after a public consultation in March, will make it more difficult to attract investment to Baja California.