Weekly Report 132

GENERAL SITUATION IN MEXICO

MANUFACTURING INDUSTRY

ILO CALLS FOR AN “ADEQUATE” WAGE SETTING TO ENSURE WORKERS HAVE A DECENT LIFE

The International Labor Organization (ILO) called on governments to promote adequate wages that consi der the needs of workers and their families, as well as economic factors.

In a note recently published in Latin America, the ILO stressed that “the setting of adequate wages is an essen tial mechanism for promoting decent living conditions and income for workers of both sexes and their families, and at the same time guaranteeing the sustainability of the companies that create jobs for these workers”.

Given that different conventions it has called for mi nimum wages, the ILO in its note stresses that it is possible to achieve minimum living incomes through various sources, including wages, labor income in the case of the self-employed, and social transfers.

Data from the Global Wage Report 2020/21 highlights that non-compliance with existing minimum wage le vels remains a huge challenge globally. Of the estima ted 327 million wage earners who receive a minimum wage or less, 266 million earn less than the minimum wage, largely due to non-compliance.

There are already a number of initiatives around the world aimed at establishing living wages through various me chanisms, such as statutory minimum wages, collective bargaining, or voluntary adjustment mechanisms.

To determine the level of a living wage in a specific loca tion - and to calculate the potential gap between living wages and prevailing wages - multinationals and living wage initiatives often rely on a “benchmark” living wage.

The ILO indicates that these benchmarks typically es timate the cost of living for a family of a given size in a specific location by calculating the cost of food, hou sing, health, education, and other essential or inciden tal goods and services.

Determining a “benchmark” living wage involves ma king some important assumptions about the number of workers and the number of wage earners in the household. For example, a given wage may be suffi cient to meet the needs of a family if it is earned by two people in the household, but insufficient if there is only one wage earner in the household.

“Considering that inflation or general price increases affect and reduce the real value of nominal wages, it is necessary that existing benchmarks be updated regu larly so that they do not lose relevance,” the note states.

In Mexico, every year, through the National Commis sion of Minimum Wages (Conasami), increases to the country’s general and professional minimum wages are set, and it is expected that in the coming weeks the discussion of the 2023 increase, whose policy is to recover from 2018, will begin in earnest.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning

Press Conference

November 16-22, 2022

POLITICAL AGENDA

• March and report November 27: The President mentioned that next Sunday’s march is to “com memorate that the oligarchy no longer governs, that the wealthy pay taxes, that 85% of households receive part of the budget (through support), that salaries will continue to increase, that we do not accept classism or racism, that there is hope and happiness among the people, that in spite of the pandemic and other calamities Mexico is moving forward.” He highlighted that with the construc tion of major works, benefits have been reported, from the creation of jobs to the fact that the price of gasoline has not increased.

• Legislative and Judicial Power: Regarding sever al attacks made by opinion leaders regarding the construction of majorities in the legislature and the controls imposed by the Supreme Court with the issue of unconstitutionality of several laws that have occurred in his administration, the President mentioned that the Judicial Power has become a barrier for the transformation to a certain extent for the fourth transformation. He mentioned that in a true democratic system there is a legislative and a judicial power, if what is sought is to carry

out a project, whatever it may be, it should not be forgotten that this project can move forward if it has the support of the congress and the judicial power.

• Presidential Agenda: The President mentioned the activities he will have next week:

— On November 21, the 100th anniversary of the assassination of Ricardo Flores Magon is going to be remembered at the National Palace.

—

On Tuesday he will be in Manzanillo because November 23 is Navy Day, and he will be giving the morning conference from there.

—

On Friday 25 will be the meeting of the presi dents of the Pacific.

— On Sunday 27th would be the march to com memorate the progress of the Fourth Transforma tion.

• Electoral reform: Regarding the possible rejection of his constitutional reform on electoral matters, the President emphasized that he will continue fighting. He made a call that when voting for a president it should also be done for the legislators if we want to have a president who “defends the people”. Regarding alternatives to his constitu tional electoral reform, the President commented that it is possible to reform the secondary elector

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

• Twitter: The President indicated that companies such as Twitter and Facebook should not censor information or political actors, referring to the case of Donald Trump’s suspended accounts. He com mented that free speech must be guaranteed.

ECONOMY

al law and reduce the budget so that there are no duplicities without violating the constitution. An other point he made was to avoid vote buying, for example through electronic purses, and to avoid manipulation in the media. He specified that there are no arguments to say that the reform is for the government to control the elections.

• Conflicts in Morena: Regarding the conflict be tween Monreal and Layda Sansores, the Federal President commented that he does not get in volved in it nor does he worry about it. He specified that his movement is safe because its strength is in the people. He added that disinformation is occur ring more in the middle sectors, for which reason it is necessary to continue generating awareness. He commented that he does not accept that there is polarization because it is a minority, even if it is millions of people, who are not with his “transfor mation” movement.

• Tax Forgiveness: While discussing the march in favor of the National Electoral Institute (INE), the President again criticized the tax forgiveness to companies and the privileges they had. In this re gard, he shared again the table of companies that received these benefits. He mentioned that Tele visa now pays all its taxes and criticized the fact that in the past two six-year periods it was remit ted more than the annual budget of Baja California Sur. He said that Banamex received more than 15 billion in taxes, which corresponds to 3 times what has been invested in the construction of 120 arti san roads in Oaxaca. He also mentioned CEMEX, Grupo Carso, ICA, Grupo Salinas, Inbursa, General Motors, Alfa, and VW and OXXO as beneficiaries of these policies. He commented that the “Mr. of OXXO”, Fernandez, had to pay more than 10 bil lion and of course he is upset.

HEALTH

• Glyphosate: The president reaffirmed that the plan being promoted is to eliminate this herbicide be cause it has been proven that it damages health and explained that there is no “natural or biologi cal” alternative that would help in the production process and that would do what glyphosate prod ucts do. An agreement was reached for CONACyT to develop an option.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

• Avian Flu: The avian flu situation in the country was questioned. President Lopez Obrador indicat ed that they have prepared a report on the matter, that it is a phenomenon that is occurring in differ ent countries of the world, that it is a disease that does not affect people, nor is it generating much impact at a productive level in Mexico. If there is a shortage of food, he indicated that a plan is un derway to open the country to import this type of products with sanitary guarantees. He projected the report of Minister Villalobos in which he stated that it is currently a disease that is spread through the migration of waterfowl (mainly ducks and geese) and affects 4 continents (Africa, America, Asia, and Europe). So far, the virus has been found in 5 farms and 3 backyard farms, with a total of 852,000 affected birds in the country, which rep resents 0.04% of the national poultry inventory. Before the end of this week, vaccination work will begin in the areas with the highest phytosanitary risk.

INFRASTRUCTURE

• Felipe Angeles Airport: The President mentioned that more and more people are using the airport, noting that there is an average of 9,000 passen gers per day, and that the airport hotel has already been inaugurated.

• Hacking of the Ministry of Infrastructure, Com munications, and Transportation: The President downplayed the importance of this fact and stat ed that “there is no problem”, he informed that the government continues to advance in public works and gave as an example the Mayan Train, which he affirmed “is the most important work in the world”. He emphasized that the companies’ data was not

violated in the computer attack against the Min istry. He also mentioned the dams and irrigation canals being built throughout the country. He reit erated that no problems have been observed be cause of the hacking, and that progress is already being made to recover category one in aviation.

• Gasoline: Lopez Obrador informed that the six ex isting refineries are being rehabilitated, for which a budget of forty or forty-five billion pesos has been allocated. With this, they are producing 65% of their capacity. He recalled that the Deer Park refinery in Texas was acquired at a cost of six hun dred million dollars and with the profits of the first year, the cost was covered. The Dos Bocas refin ery was also completed and will begin to be test ed. This refinery will process three hundred and forty thousand barrels more. Likewise, two coking plants (to convert fuel oil into gasoline) are being built in Tula and Veracruz.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

• Mayan Train: There was a breach of contract in a section in Tulum by Grupo Mexico, for which it was agreed to hand over the contract to 3 other com panies, Mota-Engil, ICA and Indi. He mentioned that Grupo Mexico is seeking to be paid an amount for the work done, which is greater than what FO NATUR’s technicians indicated. Due to this, the President sought an agreement with German Lar rea. However, today Reforma reported that Grupo Mexico is going to sue.

INTERNATIONAL

• Pacific Alliance: Regarding the visit of Presidents Boric and Petro to our country, the President men tioned that he will meet with them tomorrow. He regretted that the president of Peru will not be able to attend the meeting because the congress of that country did not give him permission. The president said that on Wednesday President Ga briel Boric, from Chile, arrives to the country; on Thursday, the President of Ecuador Guillermo Lazo arrives, and on Friday Gustavo Petro, President of Colombia. Among the four member countries of the Pacific Alliance, they are discussing the way to hold an event in their country to be able to hand over the presidency to the President of Peru, Pe dro Castillo.

• Texas Government: Regarding the actions an nounced regarding the border by Governor Greg Abbott, the President emphasized that Foreign Policy is not directed by local governments but by the federal government, in case Abbott was think ing of reaching agreements with the Mexican gov ernors of the border. He specified that he does not share his warlike and migrant vision. He stressed the presence of Mexicans in Texas and that the

country will continue to maintain a good relation ship with the United States but protecting its sov ereignty.

• Election of IDB President: Andres Manuel Lopez Obrador criticized the election of Brazilian Ilan Goldfajn to head the Inter-American Development Bank (IDB) for the next five years, as this main tains the current economic model and neoliberal policies, he said. Regarding Gerardo Esquivel, he commented that he could be nominated for other positions, he did not specify if he will ratify him to continue at the Bank of Mexico (BANXICO), so the Minister of Finance and Public Credit, Rogelio Ramirez de la O will have a talk with him.

SECURITY

• Joint security report: He reported on progress in the recruitment and training of active person nel, as well as in the process of building facilities, highlighting that the President has inaugurated 37 companies and there are still 92 under construc tion. He also highlighted the security support of

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

the SEDENA and National Guard to the Welfare Secretariat, which are already 1000 to ensure the distribution of the different programs that bene fit more than 470 thousand people. For her part, the Minister of Citizen Security highlighted the de crease in cases of intentional homicide, individual transportation robbery, public transportation rob bery, business robbery, home robbery and trans portation robbery. He pointed out that there was a decrease of more than 40% in the theft of motor vehicles during the current administration.

• Death of the Minister of Security of Aguascali entes: Regarding the death of Porfirio Sanchez Mendoza, Secretary of Public Security of Aguas calientes and the investigations in this regard, the President commented that it is now up to the State Prosecutor’s Office and then the Attorney Gener al’s Office to investigate what happened, evidence has to be collected and then reports will be given.

ENVIRONMENT

• Waste Management in Veracruz: Maria Luisa Al bores, Minister of the Environment and Natural Re sources, spoke about the actions that have been taken in the treatment of solid waste from the “Las Matas” open dump in Veracruz, which includes waste from the municipalities of Coatzacoalcos, Cosoleacaque, and Minatitlan. He showed the background context and progress to date in a joint work with Conacyt, and the routes to follow to fin ish the project in 2023. For his part, the President called on the inhabitants of the area to accept the installation of the space for waste management and not to increase the price of the land purchase.

NEWS BY STATE

BAJA CALIFORNIA

Last week several business chambers held a meeting with the Customs au thorities to follow up on strategic issues and mutual support to expedite the dis patch of merchandise safely.

SONORA

Strengthening the diplomatic and trade relationship with Arizona, our direct neighbor and strong trading partner, is part of the path to follow to consolidate development plans for Sonora, Gover nor Alfonso Durazo assured. On a tour of the US entity, the governor met with Katie Hobbs, and he shared with her the projects that are being developed to turn Sonora into a logistics ecosystem.

NEWS BY STATE

GUANAJUATO

The state government informed that there are 6,800 hectares available for productive activities in 46 industrial parks, with which Guanajuato is consolidating its position in the real estate market for attracting in vestment. The Ministry of Sustainable Eco nomic Development (SDES) informed that the state, in coordination with the private sector, is promoting the development and consolidation of industrial parks available for the arrival of national and foreign com panies. Ramon Alfaro Gomez explained that the objective is to increase the supply of land available for industry inside and outside the industrial corridor to bring de velopment to the entire state territory.

SAN LUIS POTOSI

The automotive industry, like the vast ma jority, has suffered supply chain disruptions due to the global environment, first with the COVID-19 pandemic and then with the geopolitical problems in Eastern Europe, but the challenge continues towards elec trification. In Mexico, the automotive in dustry plays a very important role, as the country is the world’s 5th largest exporter, with a 32 percent representation in Mexi can manufacturing. Ninety-one percent of the cars produced in Mexico are exported and despite the disruptions, in which due to the semiconductor crisis production was reduced by 800 thousand vehicles in 2021, compared to 2019, the industry has remained one of the most important in the world. The industry will be fully regularized until 2025, so it is important that Mexico continues working on its competitiveness, with the introduction of clean energy, at tracting investment and more competitive costs.

CDMX

The Plenary of the Congress of Mexico City approved in ordinary session its An nual Operating Program Project, as well as the Expenditure Budget Project for the fiscal year 2023, with an amount of 1,766 million pesos. The approved bud get represents an increase of 166 million pesos with respect to the amount allo cated in 2022. Precisely, the Secretariat of Administration and Finance of Mexi co City informed that of the amount approved for this year for the local Con gress, which is 1,600 million pesos, from January to September it has an advance of 72.6% of resources exercised. Accor ding to the project for 2023, an amount of 1,282 million pesos is considered for the expense concept 1000, in the ma tter of “Personal Services”, and 36 mi llion pesos for chapter 2000 related to “Materials and Supplies”; in addition, 114 million pesos are projected for the mat ter of “General Services.”

STATE OF MEXICO

Toluca became the first municipality to publish its Municipal Climate Change Program (PROMACC) and to assess cli mate vulnerability at the local level. The PROMACC was presented to the City Council by the United Commissions of Environment and follow-up to the Im plementation of the 2030 Agenda and approved unanimously, as part of the concrete actions to improve air qua lity. According to a press release, the purpose of this instrument is to lay the groundwork for implementing specific adaptation measures at the municipal level and propose actions to slow down greenhouse gas emissions that cause global warming.

INVESTMENT NEWS

NORTHEAST

- HERSHEY’S

On Monday, November 21, Hershey’s Mexico announ ced an investment in Monterrey and Guadalajara to increase its production capacity. It will invest $135 million dollars.

- HEB

On Thursday, November 17, HEB announced an ex pansion in which they plan to open 5 distributed sto res and remodel 15 in the Bajio area, Nuevo Leon, and Nuevo Laredo. The amount of the investment is more than $2.5 billion pesos.

- JOHN DEERE

On Friday, November 18, John Deere announced an expansion of its plant in San Pedro Garza Garcia, Nuevo Leon. The amount of investment is $55 million dollars, and 400 new jobs will be offered.

- CVG

On Tuesday, November 15, CVG announced an ex pansion at its plant in Coahuila. The amount of the investment is $5 million dollars.

NORTHWEST - MAVAL

On Wednesday, November 16, Maval announced the inauguration of the first stage of its operations plant in Nuevo Laredo, Mexico. The amount of investment is $2 million dollars, and 200 jobs will be generated.

NATIONAL

- EVERGO

Through the acquisition of the Mexican company E-Drive, Evergo announces a US$200 million invest ment for the installation of 15,000 electric vehicle charging stations in Mexico.

- NIDEC CORP

On Friday, November 18, Japanese electric motor manufacturer Nidec Corp, plans to invest US$715 mi llion for the construction of a new factory in Mexico. Construction is expected to begin in April 2023.

INVESTMENT

NEWS CENTRAL MEXICO

- BOSCH

On Friday, November 18, Bosch announced an ex pansion of its manufacturing center in Celaya, Gua najuato. The amount of the investment is $4.5 billion pesos, and 1,500 jobs will be generated during the next 7 years.

- REHAU

On Wednesday, November 16, Rehau announced the start of construction of its third plant in Apaseo el Grande, Guanajuato. The investment amounts to US$25 million and will generate 300 new jobs.

- FALCON SHEET METAL INDUSTRIES

On Thursday, November 17, Falcon Sheet Metal In dustries inaugurated its plant in Apaseo el Grande, Guanajuato. The amount of the investment is 10 mi llion dollars, and 200 new jobs will be generated.

- STANDARD PROFIL

On Wednesday, November 16, Standard Profil ope ned its second factory for sealing systems in Guana juato. It will create 300 new jobs.

CDMX

- ARCELORMITTAL MEXICO

On Tuesday, November 15, Arcelor Mittal Mexico un veiled plans for a $3 billion pesos investment to in crease iron ore production capacity at its Las Truchas mine in Michoacan.

- PANORAMA DISTRICT

On Monday, November 14, Distrito Panorama announ ced the development of an industrial park in Cuautitlan, Mexico. Distrito Panorama has clients such as LEGO, Kimberly Klark, etc. And strengthen the sec tor’s project portfolio.

- WALMART

On Tuesday, November 15, Walmart announced that it will open 19 new stores in Puebla during 2023 and 2024. The amount of the investment is greater than 1.5 billion pesos and thousands of jobs will be gene rated.

- HERSHEYS

- SUMITOMO RIKO

On Wednesday, November 16, Sumitomo Riko an nounced an expansion of its plant for automotive an ti-vibration tires in Queretaro. The investment is wor th US$18.8 million.

- ATOTECH

On Friday, November 18, Atotech, a German company in the chemical industry, inaugurated its facilities in Queretaro. The investment amounted to $169.4 mi llion pesos and 100 new jobs were generated.

On Tuesday, November 15, Hershey announced an in vestment to increase cocoa plantations in the state of Chiapas. The amount of the investment is $309,687 USD, and 144 producers will be integrated into the project. SOURCE: MEXICO INDUSTRY, CLUSTER INDUSTRIAL, MEXICO NOW

LABOR

UPCOMING APPROVAL OF THE 2023 MINIMUM WAGES IN MEXICO

The national commission of the minimum wages will begin on Thurs day Nov, 24 the conversations to approve the minimum wages that will be in force in Mexico starting January 1, 2023.

Most probably in the following days the commission will reach an agreement which will be published in the official gazette of the federation during the month of December.

We can expect that the minimum wage for Mexico will increase from the current $172.87 pesos to no less than $199 pesos and no more than $217 pesos. Regarding the minimum wage for the north ern border area, the salary will increase to no less than $283 pesos and no more than $325.50 pesos. The representatives of the workers and representatives of the employers will approve the final amount.

Company budgets, not only for 2023, but for the following years, should plan for entry level wages for the unskilled positions at a level no less than twice the well-being line published by CONEVAL.

ALVARO GARCIA HR, Vice President

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