Weekly Report 114 by PRODENSA

GENERAL SITUATION IN MEXICO

Weekly Review #114 I July 20, 2022

MANUFACTURING INDUSTRY MEXICO’S ATTRACTIVENESS FOR ELECTRIC CAR MANUFACTURING IS GROWING General Motors chooses its Coahuila plant as the manufacturing center for the Blazer EV, a model that is part of its plan to develop up to 30 electric and autonomous models by 2025. Chevrolet, a brand owned by General Motors, presented its Blazer EV model, to expand its offering in the mid-size electric crossover category, and anticipated that two more models will be available next year: Silverado EV and Equinox EV as part of its ambitious project to become carbon neutral by 2040, a plan that includes the development of at least 30 electric and autonomous vehicles by 2025, through an investment of 35 billion dollars. The new Chevrolet Blazer EV model will be produced at the General Motors plant in Ramos Arizpe, Coahuila, where the gasoline-powered Chevrolet Blazer is already manufactured and is currently undergoing a minor overhaul to begin production. In April of last year, General Motors announced an investment of one billion dollars to expand the capacities of its Ramos Arizpe complex, to prepare it for the production of electric cars and make it the fifth GM North American manufacturing site to produce this type of units, joining Spring Hill, Tennessee; Factory Zero, in Detroit-HamTramck, Michigan; Orion, also in Michigan; and CAMI, in Ontario, Canada. Francisco Garza, President and CEO of General Motors Mexico, was confident that other electric models of the company will also choose Mexico as a production desti-

SOURCE: Forbes Mexico

nation since it has the technology, capabilities, and workforce. “For the moment, what we have is the Blazer EV,” he concluded. Chevrolet Blazer EV 2LT and RS 2024 will be commercially available in the United States and Canada in the summer of next year. Until the first quarter of 2024, the offer will be completed with the SS version and the PPV fleet model. In Mexico, commercialization will begin during the last quarter of 2023, although details of versions, prices, and exact arrival date will be known at a later date. Blazer EV will be available in the United States in different versions: 1LT, 2LT, RS, and Chevrolet’s first high-performance SS electric model, along with a Police Pursuit Vehicle (PPV) model for police services, demonstrating the company’s advances in terms of load capacity, speed and performance.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference July 11-19, 2022 INTERNATIONAL • Mexico-Ecuador Trade: The President informed that a trade agreement is being signed with Ecuador. However, an agreement has not been reached regarding shrimp and bananas, as the government is attending to what is being raised in Sinaloa, Chiapas, and Tabasco. • Bilateral meeting with Joe Biden: President Lopez Obrador assured that the meeting was favorable for both nations. The migration issue was discussed with the focus that his administration has maintained on giving work to people in their places of origin. He insisted that support be extended to welfare programs that are already being implemented in Honduras, El Salvador, and Guatemala, with Mexican financing. In particular, the Sembrando Vida and Jovenes Construyendo el Futuro programs. The need for temporary work visas for Mexico and Central America and a significant increase in the number of visas were also discussed. Mr. Obrador mentioned that the main proposal was to promote productive activities in the United States and Mexico. He also proposed eliminating tariffs and trade regulations, simplifying procedures, and strengthening the relationship to jointly address the migratory phenomenon. In this sense, the President mentioned that they discussed changing the immigration policy;

avoiding that there are gaps to be filled by human traffickers or unscrupulous employers in the United States, to put an end to human rights violations and order the migratory flow. He emphasized that this proposal will be further analyzed. Regarding this, the President assured that, whoever mistreats migrants, regardless of the party, will be pointed out in “la mañanera” as an opportunist, racist and discriminatory politician. • Mexico-US Agreements: The head of the Federal Executive indicated that a commitment was signed to increase work visas for Mexican and Central American migrants. Next week, Foreign Minister Marcelo Ebrard will report on the agreements, including an investment of $40 billion dollars in the energy sector, and the sale of fertilizers and milk at fair prices, among others. Mexico committed to keeping the border open so that American cars can fill up with gasoline in border cities. • Meeting with American businessmen: President of the Republic assured that yesterday, Carlos Slim acknowledged that salaries in Mexico have grown less than in China and the United States in recent times. In this sense, the President commented that, during this meeting, there was a dialogue about the improvement of salaries, the generation of jobs, and the care of energy, also thinking about alternative energies.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S INFRASTRUCTURE • Mayan Train: The Ministry of Culture and the National Institute of Anthropology reported on the accompaniment they are carrying out to the Mayan Train project from the perspective of cultural recovery. Archaeological salvage and recovery of the archaeological findings found along the train’s route. 2. Improvement of the archaeological zones, which is directed to 21 zones in the 5 states where the Mayan Train passes. 3. Development of centers of attention to visitors in 9 archaeological zones. 4. Cultural promotion, community work, and safeguarding of the language and traditions of the Mayan peoples present in the region. CORRUPTION

HEALTH • COVID-19 Coverage: The Undersecretary of Health, Dr. Hugo Lopez-Gatell, said that the pandemic indicators show that the transmission of COVID in Mexico is slowing down, there is the occupancy of beds with ventilators of 5% and the occupancy of general beds is 18%. • Blood banks: The President pointed out that there is high corruption in ISSSTE, he gave as an example a clinic of ISSSTE, where there are subrogated contracts all services, specifically blood banks are privatized, and behind former officials who granted permits

• Detention of Alejandro Moreno: President Lopez Obrador pointed out that the alert to Alejandro Moreno, the National leader of the PRI, was issued by the Campeche Prosecutor’s Office and not by the Attorney General’s Office. • Caro Quintero’s arrest: The President indicated that the Navy acted with the support of the Prosecutor’s Office to count an arrest warrant. He emphasized that the American agencies had no direct participation in the capture of Caro Quintero nor in intelligence and with elements POLITICAL AGENDA • Media: He indicated that a thorough review is being made and an agreement is being reached with Ricardo Salinas Pliego so that he makes the tax payment that corresponds to him. The President indicated that there are no complaints against Tele-

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S visa from the government. He pointed out that the media receive payments for advertising because television is a means of reaching the population. He indicated that he will be reporting on the advertising model that the government has with the media. • Weekend tour: President, Andres Lopez Obrador informed that, this weekend he will supervise fertilizer plants in Baja California Sur; Lazaro Cardenas, Michoacan; Poza Rica and Coatzacoalcos, Veracruz. The objective is to increase fertilizer production by 50% with PEMEX’s public companies. He pointed out that the free fertilizer program is being expanded to various states of the Republic to support small producers. • Political career after his administration: Lopez Obrador will run for Senator of the Republic after his term. He assured that it is not an option he has considered. He reiterated that, once his administration is over, he will retire and will not return to political life and retire from social networks. He affirmed that he will not receive invitations to conferences or public or political events, even if they are friends or relatives. Likewise, he mentioned that he will publish his next book three years after the end of his term and will focus on conservative thought from the conquest • Violence: The undersecretary of Security commented that, by instructions of the secretary, Rosa Icela Rodriguez, they are already coordinating with the Prosecutor, Jose Luis Ruiz, to establish a work cell against homicide and kidnappings since deployment is expected soon. Work is also being carried out in the neighboring states to establish a shielding system.

ENERGY • Energetics: He commented that Spain is buying 35% of its gas from US companies. In Mexico, there are not enough liquefaction plants, but there are already two contracts signed: one in Ensenada and another in Altamira. There are also projects in Puerto Libertad, Salina Cruz and Coatzacoalcos. This program will be extended to Chiapas, Oaxaca, Zacatecas, Nayarit, Durango, Puebla, Morelos, State of Mexico, and we will analyze how to continue expanding it.

NEWS BY STATE

BAJA CALIFORNIA The Health Secretary of Baja California reports 4,005 active cases in the past 14 days and 834 new active cases in the past 24 hours. The vaccination plan continues this week for children and adult population in different municipalities. The Governor reminds the population that the use of the face mask in not mandatory, but it is recommended in closed spaces. The Baja California Aerospace Supplier Summit will be held in Tijuana, B.C. on November 8 and 9.

SONORA Official reports confirm 1,898 new cases in the last week. The vaccination plan continues this week for children from 5 to 11 years old and adult population in different municipalities. The Ministry of Health recommend the use of face mask to people in a vulnerable situation. “Business Meeting 2022” by CANACINTRA will take place on November 8 and 9 in Hermosillo, with the purpose of promoting economic development.

NEWS BY STATE

NUEVO LEON After the President of Mexico, Andres Manuel Lopez Obrador asked soft drink and beer companies to reduce or stop their production due to the drought that Nuevo Leon is facing, the Chamber of the Transformation Industry of Nuevo Leon (Caintra) emphasized the companies are implementing actions on this matter.

COAHUILA Positivity to COVID-19 continues to rise in the state of Coahuila, going from one week to another from 64% to 70%, this means that out of every ten people who take a test to detect said disease, seven have positive results. The positivity rate in this entity remains red, which represents a maximum risk.

He argued that currently the member companies of the Chamber, through the “Sumemos un Chorro” initiative, contribute more than 25 million cubic meters of liquid to the Monterrey Water and Drainage system.

TAMAULIPAS The industry installed in Altamira is applying technology to reuse water in its processes, an action that has been recognized by the Association of Industrialists in southern Tamaulipas (AISTAC).

NEWS BY STATE

SAN LUIS POTOSI San Luis Potosi began the week with 1,93 new positive cases of COVID-19, bringing the total to 201,184, as well as a new death, which added up to 7,571 deaths due to the coronavirus. In a press conference, the state Health Secretary, Daniel Acosta Diaz de Leon regretted that for the fifth consecutive day the state of Potosi has exceeded the threshold of 1,000 infections and expressed his concern about the increase in hospitalizations. JALISCO The third delivery of pediatric vaccines by the Federation arrives in Jalisco. It consists of 48 thousand doses for children from 5 to 11 years of age. The Secretary of Health, Fernando Petersen Aranguren details how the vaccination process will be carried out in the interior of the state: “With this arrival, it will be possible to continue this same week with the vaccination days in more than 70 municipalities in the interior of the state, including headers and various venues; in these days no appointment is required, just come with the documents of the girl or boy, such as printed federal registration and identification of the adults who must accompany him or her.”

AGUASCALIENTES In Aguascalientes, the Mexican Social Security Institute (IMSS) announced that since the start of the COVID-19 Permit version 4.0 nationwide, on July 6, 390 of these incapacities have been issued to workers through the QR Code, which is available at www.imss.gob.mx, in the IMSS Digital application for smartphones. The purpose of this permit is to prevent people from leaving home to go to the doctor, or bank, or to take a test. In this way, contacts are avoided, and the chains of contagion are reduced during this fifth peak transmission of the virus registered throughout the country. In this regard, the head of the Occupational Health, Economic and Social Benefits Department of IMSS Aguascalientes, Gustavo Curiel Muro, emphasized that it is unnecessary to go to the doctor or submit a confirmatory test in order to obtain this permit.

NEWS BY STATE

GUANAJUATO In view of the fifth wave of COVID-19, in Guanajuato, of the 307,002 cases, at least 91,737 have comorbidities, which corresponds to 30 percent; according to data from the Ministry of Health of Guanajuato, among the main comorbidities that people who have been infected suffer from are hypertension, obesity, and diabetes. According to the figures presented by the health authorities of Guanajuato, of the 30 percent of the infected people who present some comorbidity, 42.61 percent belong to people with hypertension, 39.75 percent with obesity, 31.61 percent with diabetes, 17.64 percent with smoking, 5.21 percent with asthma, 3.54 percent with renal insufficiency. Also, people with the chronic obstructive pulmonary disease with 3.42 percent, cardiovascular disease with 3.10 percent, immunosuppression with 1.68 percent, HIV-AIDS with 0.63 percent, and other diseases there is 0.63 percent.

QUERETARO The head of the Organizational Spokesperson’s Office, Erick Ventura, pointed out that cases of COVID-19 in Queretaro are increasing rapidly, so the possibility of a large segment of the population becoming infected is high. The state official emphasized that, although the new variants of the virus have not demonstrated greater risks of serious disease as the previous ones, an excessive increase in cases could put greater pressure on the health system and result in more deaths. Ventura, therefore, called on people to take responsibility because “the speed at which the disease is spreading is increasing, and we must help to slow it down.”

NEWS BY STATE

STATE OF MEXICO The governor of the State of Mexico, Alfredo del Mazo Maza, presented his third government report, where he focused on the strategy of containment before COVID-19, as well as on the part of support and economic reactivation. On the economic side, the governor emphasized that he worked with Nacional Financiera to generate a fund of 660 million pesos to support a total of 280 SMEs. Del Mazo also emphasized that subsidies were applied to the Payroll Tax, and the Tax on Hospitality Services was condoned, benefiting 45,000 companies that employ half a million people.

CDMX Authorities and business people of Mexico City signed a collaboration agreement with Nacional Financiera (Nafin), where the objective is that small and medium-sized enterprises (SMEs) in the city have access to more financing and training programs. During the event where the signing took place last Friday, July 15, the president of the Confederacion Patronal de la Republica Mexicana (Coparmex), Armando Zuñiga Salinas, explained that the private sector worked to promote the signing of this agreement, which aims to boost the state’s economic reactivation.

ECONOMIC RECOVERY ECONOMY AND INVESTMENTS IN MEXICO

NORTHEAST GOLDEN LOGISTICS: Golden Logistics celebrated the groundbreaking event to begin the expansion of its facilities in the city of Torreon, Coahuila. The company will invest 100 million pesos in this project and generate 1,200 new jobs. The company has been in the market for 24 years, offering the transportation of goods by different means, such as air, sea, rail, land, and warehouse services.

QUANTA COMPUTER Quanta Computer will expand its plant in Nuevo Leon. The groundbreaking ceremony was held for the new plant of Quanta Computer, a company dedicated to the design and manufacture of electronic products for use in information technology. Quanta Computer Mexico announced an expansion of 130 million dollars, to double the surface area of its plant and to have 2,000 employees by the end of this year. CENTRAL MEXICO

CA AUTOMOTIVE CA Automotive announces $7.25 million expansion in Durango. The Italian automotive cover company will take advantage of its proximity to the Port of Mazatlan to increase its exports. The expansion of the plant located in the Centro Logistico Industrial de Durango (CLID) will generate 550 jobs.

FANUC After investing 13 million dollars, FANUC Mexico increased its technological operations in Aguascalientes. The Japanese company built its manufacturing complex with an operating area of 10,000 square meters and 5,000 square meters of office space. It currently provides CNC, laser, and robot sales and support services and CNC support for ROBODRILL and ROBOCUT machines in Mexico and Costa Rica.

LABOR

UPCOMING NEW RULES FOR REMOTE WORK IN MEXICO The labor authority has made public the contents of new regulations for remote work. New rules focus in safety conditions and will be known as NOM-037 for health and safety conditions for teleworkers. Although the federal labor law opens the possibility to various ways of remote works the new rules will restrict the way remote work can be established. It seems to only set rules for home office and closes the door for other forms or remote work. One of the main concerns of the new rules is the process for the employer to approved the remote work locations. Rules as today are proposed will required a domiciliary visit or instead a verification document that the employee must complete and may require to send pictures. Privacy could become an issue.

ALVARO GARCIA HR, Vice President