A drug cartel business plan

Reuters:

Late last year, Mexican soldiers raided a house in Rio Bravo, a dilapidated town just across the border from Texas. What they found was a kind of "back office" that belonged to the Gulf cartel, the country's most violent drug gang.

Inside the gray, one-storey house, clerical workers helped run cocaine shipments hidden in U.S.-bound avocado trucks from southern Mexico, said soldiers on patrol in the town. The office tracked the drug movements in trucks equipped with GPS and progress was logged into spreadsheets on laptops.

The Gulf cartel as well as its hitmen often refer to themselves as "The Company" -- and not without reason. Often overlooked amid all the violence and chaos they engender is the fact that Mexico's drug cartels are capably run businesses that have turned into some of the most lucrative criminal enterprises ever.

The organizations have the equivalent of chief executives and accountants. They also use outsourcing and run offices to coordinate logistics, money laundering and murders, according to interviews with U.S. and Mexican anti-drug officials.

As in legitimate commerce, the gangs employ business models and strategic planning to manage and expand their operations, make acquisitions and seek alliances, officials say.

"A drug baron's day is as hectic as it would be if you were working at any big corporation," said a senior U.S. law enforcement official in Mexico. "They have accountants looking at every dime," he added.

Made up of loosely knit confederations of clan-like families that snatched power from Colombian smugglers in the 1990s, Mexico's main drug gangs have developed franchises in major European and U.S. cities to reach consumers. They offer a range of products for different users, from cocaine to marijuana to crystal meth. Managers send back the profits to entities that play the role of holding companies in Mexico.

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Conservative estimates put Mexico's total drug smuggling revenues at between $25 to $40 billion every year, more than the country's oil export earnings in 2009 and rivaling the annual revenues of U.S. companies like Nike and Coca-Cola.

It all starts with growers in the Andes, who sell coca paste to intermediaries such as Colombian guerrillas for between $500 and $800 a kilo, according to interviews with farmers and U.S. experts.

South American suppliers process the cocaine into a purer form and sell it on to Mexican cartels for up to $6,000 a kilo. Dealers working for the cartels in the United States and Europe break down their loads into individual grams sold between $80 to $100 each, generating between $80,000 and $100,000 a kilo, according to DEA data.

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There is much more.


The cartels have operating cost that cut into the gross profit on the sale of goods. These cost include payment for logistics and final delivery as well as bribes along the way. But it is still a very profitable business and that is why the cartels fight so desperately for control of the corridors into the US in cities like Nuevo Laredo and Juarez. Hopefully law enforcement on both sides of the border can learn something from the business plan and find a way to stop them.