Weekly Review I February 15, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I February 15, 2023

RELEVANT NEWS

NEARSHORING WILL BOOST CONSTRUCTION

Mexico’s construction industry will rebound in 2023, driven by nearshoring with the construction of industrial buildings and growth in the commercial sector, mainly retail, according to Luis Herrera, head of Procore’s Latin America region.

The construction management software company highlighted that by 2022, 40% of construction benefited from the relocation of companies from Asia, mainly suppliers of U.S. and Canadian companies.

Luis Herrera said that despite the fact that inflation will cause prices of public and private construction materials to rise 20% more compared to 2022, the trend is growing in the industry due to economic factors and the implementation of digitalization.

He mentioned that large clients such as Palacio de Hierro and several retail stores had adopted 3D technology, as well as drones for planning and building, which allows 48% higher productivity in the sector.

“Construction in the industrial sector will continue to grow and we see it with Tesla’s announcement that it will manufacture in Mexico, where there is a great capacity to invest from abroad, and they see Mexico as a viable option,” said the Procore executive.

In addition, there is the development of industrial parks, where companies of different capitals are arriving, and whose construction boom is of new investments.

The director of Procore expressed that during 2022 the construction industry had advanced, but as it comes from a slow recovery after the pandemic that

hit the sector, which is combined with the increase in prices, good general results have not been achieved yet.

The pandemic delayed investment in the sector, which in 2020 reached 221,962 million pesos, in addition to 333 projects involving resources of 33,506 million pesos.

In Mexico, the public sector has been dedicated to promoting the development of different emblematic construction projects, such as the Mayan Train, the Felipe Angeles Airport, and the Dos Bocas refinery.

In contrast, by 2022, “almost 40% of the value of private sector production came from industrial buildings and services, while 29.6% of investment came from housing,” he said.

Sam Rodriguez, marketing director for Latin America at Procore, noted that the industry will face new challenges, where the augmented reality that will be seen in construction will influence new projects.

SOURCE: EL ECONOMISTA

RELEVANT NEWS

U.S. GOVERNMENT AND COMPANIES WILL SUPPORT MEXICO’S ENERGY TRANSITION: KEN SALAZAR

The U.S. government and clean energy companies will support Mexico’s climate commitments and the energy transition to reduce global warming, said U.S. Ambassador to Mexico, Ken Salazar, on Monday.

His statement comes one month before the seventh visit of U.S. Special Climate Envoy John Kerry and in the midst of Mexico’s effort to increase its electricity generation matrix based on renewable sources.

“U.S. companies support Mexico’s clean energy goals and recognize the importance of transmission,” Salazar said in a statement following a meeting with leading U.S. clean energy companies.

Ambassador Salazar recognized the importance of focusing efforts on energy transition and climate action in North America to position this region as the leading economic power.

“By doing so, we will not only protect the planet, but also our nations will benefit from better-paying jobs and economic benefits while doing the right thing for the planet,” he said.

In this regard, he insisted that the U.S. government will continue to “support the Mexican government’s ambitious climate commitments established at the United Nations Climate Change Conference (COP27)”.

On February 8, Mexican President Andres Manuel Lopez Obrador announced that Kerry and Mexican legislators will visit southeast Mexico between March 19 and 21 to analyze wind energy projects.

The visit will be part of the follow-up by both nations to the Isthmus of Tehuantepec, an area in southeastern Mexico where the Mexican government is promoting an industrial corridor with 10 wind farms, four of which will be for wind energy.

President Lopez Obrador has also acknowledged that there is an agreement between Mexico and the US for US and Mexican companies to build these wind farms.

In his last visit to Mexico, Kerry was in the northern state of Sonora, where Lopez Obrador proposed the construction of the “largest solar energy plant in Latin America” and a plan for Mexico and the United States to jointly manufacture electric cars.

In accordance with the global commitments signed by Mexico, such as the Paris Agreement and its Energy Transition Law, the country’s goal is for 35% of its energy matrix to be from renewable sources by 2024.

SOURCE: FORBES MEXICO

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

February 8-14, 2023

POLITICAL AGENDA

• Social Programs: The President of the Republic mentioned that in every municipality of the country, at least one social welfare program is being provided, and shared some data about the coverage of the programs, such as 1.2 million people receiving disability pensions, 4 million high school students receiving scholarships, 11 million elderly people receiving a pension, and 11 million students receiving a scholarship from preschool to postgraduate level. Additionally, he informed that a children’s rehabilitation center will be built in the Sierra de Guerrero in collaboration with Teleton.

• Social Media Regulation: Regarding the question of whether the Federal Government will implement actions to require social media platforms in the country to disclose the algorithms they use, in order to benefit the dissemination of content for children and young people, the President mentioned that the health authorities will respond on the matter, particularly regarding the use of fentanyl. This comes after reports of the viral use of the medication clonazepam among young people on TikTok.

ECONOMY

• Inflation: Andres Manuel Lopez Obrador mentioned that the increase in inflation in the last two months is expected to be the last. He declared that the inflation issue will continue to be addressed but does not consider it alarming. Regarding the Bank of Mexico’s monetary decision to increase the interbank interest rate, he stated that these are autonomous decisions that are respected by the federal government. However, he mentioned that he would like the monetary authority to also focus on promoting growth. Finally, the President declared that the toll charges at toll booths increased by 7.8% according to inflation, but there are four highways located in Nayarit and Sinaloa where the concessionaires increased it even more, and it will be corrected.

HEALTH

• Health: The Mexican Subsecretary of Health, Hugo Lopez Gatell, reported a six-week decline in COVID-19 cases and hospitalizations, with the current wave being the least lethal. He also addressed the “clonazepam challenge,” warning about the

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

dangers of misusing the controlled medication, including addiction, respiratory problems, and an increased risk of serious side effects or death. Lopez Gatell recommended that parents monitor their children’s use of social media and video games by maintaining open communication, implementing clear rules, and configuring parental control systems to reduce exposure to inappropriate content.

• Medicine shortage: In response to a question about the upcoming visit of the Cuban president to Mexico, President Lopez Obrador reminded that there were 10 companies selling 100 billion pesos worth of medicines to the government. He mentioned that the medicine supply has been resolved until 2024 through international purchases.

INTERNATIONAL

• “Safe Third Country” Program: The Mexican President, Lopez Obrador, responded to a reporter’s question about former Mexican ambassador to the US, Martha Barcena’s statement that the Mexican Foreign Minister, Marcelo Ebrard, caved to US pressure in implementing the “third safe country” program. Lopez Obrador dismissed the allegation, saying it was unfounded but part of Barcena’s right to freedom of expression. He also accused conservative media of attempting to smear Ebrard. Ebrard explained that the US government pressured Mexico to implement the “third safe country” program, but Mexico resisted and negotiated a unanimous political agreement to avoid tariffs and the program’s implementation. He added that the negotiation was transparently shared with the President and the Senate, and not a secret agreement.

• Humanitarian aid to Turkey and Syria: The Mexi-

can Foreign Minister, Marcelo Ebrard, announced that the Turkish government has informed them of the decision to withdraw rescue equipment due to the start of large-scale demolition work. The Secretary of Defense, Luis Crescencio Sandoval, stated that the Turkish Disaster Center will oversee the evacuation of the teams. For this purpose, the Mexican Air Force plane is ready to depart tomorrow with the country’s delegation. Moreover, Marcelo Ebrard, stated that the earthquake in Turkey and Syria has been the most devastating in the last century, with over 35,000 fatalities and more than 85,000 people injured. In this regard, Mexico will donate $6 million to Syria through the UN. Regarding aid in Turkey, the Secretary of National Defense (SEDENA), Gen. Luis Cresencio Sandoval, reported that 150 elements have been deployed to assist in the rescue of 4 people and transport 3 tons of provisions, among other actions.

• Migration and Cuba: The President of Mexico, Andres Manuel Lopez Obrador, stated that Mexico’s foreign policy has long condemned the blockade

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

INFRASTRUCTURE

• Tren Maya: The Director General of FONATUR, Javier May, announced that the Southern Section 5 of the Tren Maya will have two stations (Playa del Carmen and Tulum) and a maintenance base (Chemuyil), covering a distance of 67.7 km and creating 6,500 local jobs. The company Alstom delivered the first 4 train boxes to FONATUR, and the protection of the environment and archaeological sites during construction was emphasized. The Governor of Quintana Roo, Mara Lezama Espinosa, thanked the Federal Government for the construction of the Tren Maya and the Tulum International Airport, which will help to boost the economic and social development of the region, and is expected to attract 21 million tourists by 2023.

against Cuba, which is supported by a minimal number of nations, and the vast majority of governments are against it. He emphasized the importance of addressing the issue from a human rights perspective, as no one can blockade a people for political and ideological reasons, which damages the image of the United States. The government will seek to collaborate in resolving the issue and prevent the mistreatment of migrants who have contributed to the development of various nations. If Mexican migrants are mistreated, a call will be made not to vote for those who promote such actions. The President expressed his respect for President Joe Biden, who did not propose the construction of a wall between the United States and Mexico and abstained from promoting raids against migrants.

• Industrial Development: The Federal Executive emphasized that industrial development is being promoted, particularly in the automotive sector, energy parks, and the Sonora Plan. Likewise, he specified that 4 of the 10 industrial parks in the Isthmus of Tehuantepec will be dedicated to the production of clean energy, as this is a commitment with the US government. In this sense, US legislators will come to Mexico in March, together with John Kerry and Ken Salazar, to visit wind farms in the region with possible financing from US banks.

NEWS BY STATE

BAJA CALIFORNIA

Two lithium deposits were located in Baja California, so now authorities are looking for foreign investors to extract it, and in this way add to the manufacturing chain of electronic vehicles, said Kurt Honold Morales, head of the Ministry of Economy and Innovation.

He mentioned that last week they held a remote meeting with Pablo Taddei, director of Lithium for Mexico, a decentralized dependency of the federal government, in charge of elaborating programs for the exploration, exploitation, and use of the resource in the country.

SONORA

The Federal Electricity Commission (“CFE”), Carso Energy, and Sempra Infraestructura signed a memorandum of understanding to advance a potential strategic alliance necessary for the joint development of natural gas transportation infrastructure between the states of Sonora and Baja California.

According to Sempra, the objective is to increase the CFE’s electricity generation capacity in those states, as well as to strengthen the natural gas industry in the northwest region of the Republic, supporting the country’s energy security and the objectives of the Mexican government.

NUEVO LEON

Mexico’s Supply Chain event will be held for the first time in Mexico, on August 16 and 27, so that large companies that have arrived in Nuevo Leon and the region as a result of nearshoring can meet with potential suppliers and identify new commercial partners.

COAHUILA

The event Innovation 4.0 SLW, Smart Cities & Manufacturing, Digital Transformation Hub, organized by the Saltillo City Council, in coordination with the technology company Siemens, started this Wednesday, February 15.

The event has the purpose of continuing with the growth in the industrial and educational sectors accompanied by high technology.

TAMAULIPAS

The Tamaulipas economy grew by 5,712 formal jobs during the month of January, according to statistical data from the Mexican Social Security Institute.

At the end of January, the data indicates a registration of a total of 706 thousand 636 formal jobs in the different companies, businesses, and industries established in the entity.

SOURCE: EL ECONOMISTA, VANGUARDIA, EXPRESO

GUANAJUATO

From February 11 to 19, 2023, officials from Guanajuato will travel to the Republic of Singapore to learn about economic development strategies in that country and implement them in the state. In detail, Guanajuato officials are visiting Singapore to learn about the economic strategies, public policies, and programs that have contributed to the development and economic growth of that country. Through a press release, the delegation indicated that the intention is to generate economic benefits that contribute to improving the quality of life of the people of Guanajuato.

SAN LUIS POTOSI

Juan Carlos Valladares Eichelmann, Secretary of Economic Development (Sedeco) of San Luis Potosi, assured that the installation of the new BMW plant will be accompanied by seven direct supply companies, whose investment will be up to 300 million dollars each and could generate 200 to 300 direct jobs in the first stage. “San Luis will become a long-term investment pole, where the companies that arrive will make our state their permanent home,” said the San Luis Potosi government official.

QUERETARO

As part of the visit, which took place on February 9 and 10, the Secretary of Sustainable Development (Sedesu), Marco Antonio del Prete Tercero, met with the Mexican ambassador to the United States, Esteban Moctezuma Barragan, where the qualities of the state to attract new investment projects were discussed; they also agreed to strengthen the relationship to influence the growth of the state. As part of the trip, state officials attended the meeting of the International Affairs Commission of the National Conference of Governors (Conago) in Washington, where Queretaro’s strengths and competitive advantages were also presented. Similarly, the head of Sedesu, as president of the Mexican Association of Secretaries of Economic Development (AMSDE), held a meeting with MetLife executives and agreed to sign a memorandum of understanding to strengthen the financial capabilities of the country’s micro, small, and medium-sized enterprises (MSMEs). Also, as president of the AMSDE, the state secretary met with Ken Monahan, International Vice President for Economic Affairs of the National Association of Manufacturers of the United States (NAM).

SOURCE: EL ECONOMISTA

CDMX

The International Research Program on Metabolic Syndrome, a health condition of worldwide epidemiological relevance that affects at least 50 percent of the national population, was presented at a round table on the high-impact initiatives of the company EtCurae. The event was attended by more than 30 renowned physicians from the country and the world, who exchanged ideas to implement actions for the health of Mexicans in the next 15 years. One of the most important announcements of the event was the creation of the 25 Center of Excellence in Metabolic Syndrome to carry out clinical analysis on metabolic diseases in patients of large healthcare institutions

in Mexico. “The initiative will focus on the most relevant diseases for the country: metabolic health and hepatology, oncology, cardiology, renal diseases, women’s health, infectious diseases, pediatrics, respiratory diseases, dermatology, and orphan diseases,” said Sitaramaraju Yarramraju, co-founder of EtCurae.

STATE OF MEXICO

After indicating that the future of the State of Mexico and the country will be at stake on June 4th, Alejandra Del Moral Vela, PRI pre-candidate for the state governorship, pointed out that she heads the project of unity and not of confrontations. In the facilities of the former fairgrounds, and before the former governor Arturo Montiel Rojas; Ernesto Nemer Alvarez, former general minister of the state government; Carolina Monroy Del Mazo, former municipal president of Metepec; Ana Lilia Herrera Anzaldo, national delegate of the PRI and Fernando Flores Fernandez, mayor of this municipality, Del Moral Vela thanked the support of the people of Metepec, who will support her to obtain the triumph in the next elections. During this event, which was also attended by Manuel Cavazos, former governor of Tamaulipas, and Alejandro Ozuna, pre-campaign coordinator, Alejandra Del Moral called for an alliance with the people.

SOURCE: MILENIO, EL SOL DE TOLUCA

INVESTMENT NEWS

FORD WILL INVEST $3.5 BILLION TO BUILD A BATTERY PLANT IN MICHIGAN

Ford Motor Co will build a new lithium iron phosphate (LFP) battery plant in Michigan as part of a $3.5 billion investment plan, the automaker and the state said Monday.

The plant will be located in Marshall and will eventually employ at least 2,500 workers. Reuters, citing sources, reported Friday that Ford was expected to build the plant with Chinese firm Contemporary Amperex Technology Co Ltd (CATL) as a technology partner.

Ford said the new battery plant will be a wholly owned subsidiary of Ford and will begin producing batteries in 2026 for a variety of vehicles. Michigan competed against numerous states and countries for the plant, said the U.S. company’s director of economic development, Gabby Bruno.

Building LFP batteries in Michigan also gives Ford an opportunity to obtain significant subsidies for U.S. battery manufacturing, which could help it reach a target of 8% profit margins on its electric vehicle operations by 2026.

The Michigan Strategic Fund on Monday approved up to $210 million in grants for the project along with other incentives.

Automakers and electric vehicle battery producers are racing to set up manufacturing in the United States to take advantage of federal subsidies that could

generate up to $45 per kilowatt hour to offset production costs.

Michigan Economic Development Corporation official Josh Hundt said Ford jobs at the plant will pay between $20 and $50 an hour. “It will also have a positive impact on the supply chain for key components of battery technologies in Michigan,” according to Hundt.

SOURCE: EL ECONOMISTA

INVESTMENT NEWS

CENTRAL MEXICO EL CRISOL

El Crisol distribution center announced a $15 million investment in Queretaro in the upcoming months creating around 100 direct jobs.

NORTHWEST

VIRGINIA TRANSFORMER

Virginia Transformer, a high-power transformer construction company, has opened a new plant in Chihuahua City with an $80 million investment, creating 600 jobs.

NORTHEAST

UNILEVER

Unilever, the British multinational company dedicated to the home goods, is investing $400 million to construct a new operations center in Salinas Victoria, Nuevo León, this investment will generate over 1200 new jobs.

THERM-X

Therm X, an electronic device manufacturing company, has opened a new plant in Nuevo Laredo, Tamaulipas, with a 25 million investment, creating 90 jobs in the zone.

NATIONWIDE

NATURGY

Naturgy, an energy commercializing company, announced a $75 million investment to expand its operations across Mexico, including $15 million destined directly for Coahuila state, more specifically Saltillo and Ramos Arizpe.

SOURCE: EL ECONOMISTA