Weekly Review I February 22, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I February 22, 2023

RELEVANT NEWS

VERACRUZ ALSO RAISED ITS HAND TO HOST NEW TESLA FACILITY

EFE - Authorities in the Mexican port of Veracruz, on the Gulf of Mexico, raised their hand to get Tesla’s new electric vehicle plant, which is being disputed by several states in the country, to be installed in the area, after President Andres Manuel Lopez Obrador questioned the company’s decision to set up in Nuevo Leon due to an alleged water shortage.

The mayor of the municipality of Veracruz, Paty Lobeira de Yunes, offered the investors enough water and electricity to operate the car factory that is being disputed by the states of Nuevo Leon, in the north, Hidalgo, in the center, and Michoacan, in the Pacific.

In view of Lopez Obrador’s proposal that Telsa should be located in the southeast of the country, the councilwoman offered all the facilities to set up and reminded that Veracruz is the first port in Mexico, with port infrastructure, suitable facilities, and qualified personnel for the transfer of vehicles to the whole world.

“We have the most important port infrastructure in all of southeastern Mexico, we have the ideal facilities and qualified personnel for the transfer of vehicles. So much so that we already have more than 40 years of experience transporting automobiles to the United States, Europe and South America,” he said in a message released today.

He recalled that the port offers privileged geolocation for the transfer of goods throughout the country and abroad, as well as technology from around the world, which would guarantee the arrival of parts and tools at a lower cost.

“We have sufficient water and electric power and we meet the optimal conditions for the car factory to work 365 days a year without interruptions,” he pointed out.

Since 2018, the federal government and the private sector have promoted the construction of the expansion of the port of Veracruz, with an investment of 70 billion pesos.

Upon completion of the project, there will be 35 berthing positions for state-of-the-art ships and a Logistics Activities Zone (ZAL) that will operate as a Strategic Fiscalized Precinct.

The work contemplated the breakwater and the construction of 5 berthing terminals and later 9 terminals, as well as the navigation channel, with which they seek to increase from 28 million tons per year of cargo movement to 95 million upon completion of the project in 2030; and to grow from 2,200 ships received per year to 3,200.

The mayoress considered that Veracruz has everything necessary for Tesla to establish itself, operate, and reach its greatest potential. As an example, she mentioned the multinational brewery Constellation Brands, which is being successfully installed in the municipality.

SOURCE: FORBES MEXICO

RELEVANT NEWS

Ignacio Lacunza Magaña, national president of the Mexican Association of Real Estate Professionals (AMPI), said that 2023 will be a record year for the industrial real estate sector, as there is a high demand for industrial warehouses by companies attracted by nearshoring in the northern border zone, the Bajio and towns near the Transisthmus Corridor and the Mayan Train.

This record demand for industrial space is also due to the growth of e-commerce, said the real estate developer.

At the end of the third quarter of 2022, border industrial markets such as Tijuana, Mexicali, Ciudad Juarez and Nuevo Laredo, as well as the northeastern and western regions of the country, with cities such as Monterrey and Guadalajara, had historic absorption figures with leasing of industrial space of over 200,000 square feet, he said.

At this moment there are vacant spaces of less than 1% of the total inventory of industrial buildings for rent, the AMPI president reminded.

He added that the Mexican economy has a skilled labor force, world-class infrastructure and excellent services to receive all the first class companies seeking to establish themselves in an agile, orderly and formal way to start their operations.

Thanks to the increase in supply chains derived from the exponential growth of digital commerce, he added, Mexico has become a magnet for the arrival of

SOURCE: FORBES MEXICO

IN 2023, A RECORD NUMBER OF INDUSTRIAL BUILDINGS ARE EXPECTED TO BE SOLD IN THE BORDER AREA AND THE BAJIO REGION

RELEVANT NEWS

new companies due to its proximity to the United States, which facilitates the logistics of their day-today operations.

According to the Inter-American Development Bank (IDB), nearshoring opportunities in the short and medium term for Latin America mean 78 billion dollars in new exports of products and services, particularly in industries such as pharmaceuticals, renewable energies, textiles or automotive.

Mexico would be taking around 35 billion dollars, which makes the country one of the greatest beneficiaries in the region if it knows how to take advantage of this great opportunity, said the businessman.

The National Council of the Export Manufacturing Industry (Index) reported that Mexico will receive 11 billion dollars in new investments in 2023, which come as part of the nearshoring boom.

The national president of AMPI pointed out that three regions of the country are the ones that will benefit the most from the “nearshoring” phenomenon: the northern border area, the Bajio region, and the towns near the trans-isthmus and Mayan trains.

In the case of the northern markets, he said that they have the advantage of being on the border with the United States, so the companies that set up there can be in both markets, Lacunza Magaña said.

In May 2022, Monterrey received 356 new nearshoring projects, of which 17 of them were Chinese, he said.

The Bajio region, which includes the states of Guanajuato, Queretaro, San Luis Potosi, and Aguascalientes, has an available inventory of around 3% of worldclass industrial buildings, he said. Industrial buildings are practically ready to receive companies looking to set up in Mexico, he added.

SOURCE: FORBES MEXICO

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

February 15-21, 2023

POLITICAL AGENDA

• Elections 2024: The President declared himself in favor of the opposition alliance since it is favorable for democracy. He asked for the candidate selection process to be defined and if Claudio X. Gonzalez will lead the alliance. Although he emphasized that he is convinced that it will not be enough to win the elections against MORENA. Likewise, he highlighted that Lilly Tellez is the preferred one according to the polls and resolved that the alliance should not exclude the PRI in the designation of the presidential candidate.

• Modernization of the AICM: The Head of Government, Claudia Sheinbaum (MORENA), commented that the Mexico City International Airport (AICM) continues to be open thanks to the construction of the Felipe Angeles International Airport (AIFA) and the cancellation of the airport in Texcoco. In this way, he commented that, from 2019-2023, an investment of 8,016.9 million pesos has been made for the modernization of the AICM. Regarding Terminal 2 of the AICM, he pointed out that there is a budget of 475 million pesos for its rehabilitation, 75 million more than the original budget.

• Extraordinary elections in Tamaulipas: Regarding the extraordinary election for the senatorial seat in Tamaulipas, the President pointed out that

there was a very low participation, 21.62%, due to the fact that it was an election. After the advance of 99.4% of the PREP, the candidate of MORENA would win the election with 71.3% of the votes.

• Quintana Roo Food Security Agency: Likewise, Mara Lezama announced the creation of the agency with the intention of articulating integral public policies to advance food sufficiency and security in the state. She reiterated that small producers in the region will be boosted and the state’s capacity to supply and distribute sufficient food will be increased. In this sense, the freight cars of the Mayan Train will contribute to the transportation of this food.

• Sonora - tour of the state and security report: The Governor of Sonora, Alfonso Durazo, detailed the tour that President Lopez Obrador made over the weekend in the state. In this regard, he mentioned the photovoltaic park in Sonora, which marks a before and after in the generation of electricity from solar energy. He also acknowledged the progress made in the construction of the welfare branches and in security issues, such as the 10% reduction in intentional homicides.

• “Internet for All” Program: President Lopez Obrador, at the beginning of his conference, mentioned that he will talk about the progress in the coverage of internet connection through the “Internet for

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

All” program. He affirmed that it is a commitment of his government to expand the coverage of internet access, since close to 500 municipal capitals did not even have a network to make cell phone calls. Through an informative video, it was shared that the objective of the development of the “CFE internet for all” program is to extend internet coverage to around 20 million Mexicans who were in a situation of digital marginalization, integrating them to the 118 million who already have access to internet service. It was mentioned that CFE infrastructure will be used to provide internet access to areas that have been marginalized until now. It was also mentioned that “ATLAN Redes” is one of the companies that will have one of the most important participations in the program.

• Plan B, Electoral Reform: When asked about the expectations regarding the constitutional controversies presented in relation to the electoral reform, AMLO assured that the Court will resolve whether the proposed electoral law is constitutional or not. He assured that the purpose of the first reform proposal, which was rejected, was to reduce the expenses applied to the execution of the different bodies such as parties, deputies, etc. When asked by a reporter if he considers that the reform is strong enough to be approved, he affirmed that it is, since it is minimal.

SECURITY

• Security: In the security update, it was shown that there are currently a total of 353,597 elements of the Armed Forces deployed in the country: 166,514 SEDENA troops; 55,850 from SEMAR and 128,233 from the National Guard. Admiral Jose Rafael Oje-

da, head of SEMAR, highlighted search and rescue operations, as well as security operations in the inter-oceanic railroad of the Isthmus of Tehuantepec.

• Acts of corruption in the SEDENA: When questioned about the awarding of contracts to a conglomerate of companies headed by Patricia Romero Rodriguez, especially in matters of clothing for the National Defense Secretariat (SEDENA) and spare parts for military vehicles, the President stated that the accusations are false and that, during the day, he will report on the matter.

INDUSTRY

• Tesla’s investment in Mexico: The President commented that Mexico is among the 3 best countries for foreign investment. He pointed out that it is necessary to organize growth and investments: there are places in the country where there is not enough water for investments, such as Nuevo Leon. This order will not be exclusive for Tesla, but for all new investments and to transmit information about those entities that have sufficient water and electricity. In this sense, President Lopez Ob-

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

actions will be taken. Likewise, he indicated that the government stopped collecting debts with the Airport, SAT, INFONAVIT and other agencies. On the one hand, they are seeking to support the 500 workers of the airline. Finally, he commented that it is not possible to rescue the company due to all the financial problems and debts it has, and added that work is progressing for the operation of Mexicana Airlines at the end of this year.

ENERGY

• Energy sovereignty: The President defended the rescue of the Federal Electricity Commission (CFE) and reiterated the continuity of energy policies after the presidential succession.

rador highlighted that 70% of the country’s water is in the southeast of the country, so the decentralization of investments is of great importance. Finally, the President pointed out that the Chancellor, Marcelo Ebrard, and the Secretary of Finance and Public Credit, Rogelio Ramirez de la O, are in charge of this new order to be able to guarantee the water supply for investments.

• Aeromar: When asked by a journalist about the bankruptcy of the AEROMAR airline, President Andres Manuel Lopez Obrador stated that it was a poorly managed company. However, the President of the Republic mentioned that the workers are being supported. Regarding the closing of AEROMAR’s operations, he commented that there are situations in which companies go bankrupt, but not the businessmen against whom legal

• Sonora - Lithium Plan: President Andres Manuel Lopez Obrador commented that it is being defined in the United States that by 2030 all cars will be electric, so it is necessary to reconvert the entire automotive industry, and this will require a strategic metal that Sonora has, which is lithium for batteries. He recalled that less than a year ago the U.S. government invested in Arizona, on the border with Sonora, for the production of semiconductors, since they do not want to depend on Asia for these chips. This means investments, it started with this plan in Peñasco for solar energy, but it can be replicated in 5 sites in Sonora. The President emphasized that he would enforce the Lithium Nationalization Law, so that battery manufacturing plants and the automotive industry can be established in Sonora. He also mentioned that in 2023 and 2024, 50 billion pesos will be allocated to Sonora, which will mean jobs and investment for Sonora.

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

INTERNATIONAL

• Peru: The President was questioned regarding the transfer of the presidency of the Pacific Alliance, President Lopez Obrador stated that what happened was considered a technical, illegal and arbitrary coup d’etat. Regarding the presidency, he said that he will instruct Foreign Minister Marcelo Ebrard to notify the members of the Rio Group what can be done with the presidency of the Alliance, since he does not want to hand it over to a government that he considers spurious. The President indicated that he plans to make a trip to Colombia, Argentina, Brazil and Chile in September. Today he will speak with the President of Brazil on import and export issues and the fight against inflation.

HEALTH

• Reasons for the ban on trans fats and transgenic corn: A reporter questioned the president about the reasons for the decision to ban trans fats. President Andres Manuel Lopez Obrador assured that the reason that led them to make this decision was to put the citizens’ health first, not prioritizing the commercial and lucrative aspects. He assured that the campaigns against junk products that affect health will continue, as well as in the case of transgenic corn. He reaffirmed that transgenic corn cannot be used for Mexican food, it can only be used for fodder. Studies continue to be carried out on the content of transgenic corn.

NUEVO LEON

After this Monday the President of the Republic, Andres Manuel Lopez Obrador, suggested that a big company could not settle in Nuevo Leon due to lack of water, the Secretary of Economy in the state, Ivan Rivas, stressed that no company has had problems due to the water in the entity and indicated that there are no risks for investments in Nuevo Leon, noting that.

The State Government administration is already developing various projects to guarantee the supply of vital liquids, both for the population and for the industry.

COAHUILA

Governor Miguel Angel Riquelme Solis presented the “Invest in La Laguna” platform, which was launched with the aim of strengthening the economic promotion work carried out in Coahuila and Durango to increase investments in the region.

SOURCE: MVS NEWS, EL ECONOMISTA

GUANAJUATO

The tour of the Government of the State of Guanajuato to Singapore concluded successfully, where experts from the Singapore Cooperation Enterprise shared the strategies and programs that have contributed to the development and growth of their country, considered one of the most important economic powers in the world. This exchange of knowledge is intended to generate economic, technological, environmental and public policy conditions and benefits that contribute to improving the quality of life of the people of Guanajuato. With this rapprochement and cooperation, the State of Guanajuato consolidates its position as the entity with the most collaboration from Singapore, a fact that was recognized by the Mexican Embassy in that country.

SAN LUIS POTOSI

San Luis Potosi will participate in the Hannover International Fair in Germany, the largest industrial meeting and exchange event in the world, which will allow projecting the State to expand the work of exchange and investment, as defined by the Government of Change headed by the Governor of San Luis Potosi, Ricardo Gallardo Cardona, announced the head of the Secretariat of Economic Development (Sedeco), Juan Carlos Valladares Eichelmann. The head of Sedeco, announced in this context, a working tour of Governor Ricardo Gallardo Cardona to Germany and Japan, which will be a juncture to expand this purpose where not only the arrival of new companies to the State is subscribed, but the great possibility that the Potosinos enter those markets with the right foot. The entity will have a space in the Hannover Fair (the largest industrial fair in the world) that takes place in Germany annually and attracts close to six thousand exhibitors and 200 thousand visitors, from April 17 to 21, with the work of Sedeco, which will start an important work tour in different countries, “which places us as an outstanding actor in the investment and exchange destinations”, expressed the official. Valladares Eichelmann revealed that in meetings that have been held through the AMSDE (Mexican Association of Secretaries of Economic Development), routes have been opened to position the State as a protagonist in various international events, such as the one that will be held in April.

SOURCE: STATE GOVERNMENT GUANAJUATO LA JORNADA SAN LUIS

QUERETARO

Marco Antonio del Prete Tercero, head of the Secretariat of Sustainable Development in the state, announced that Queretaro’s economic recovery is identified with new jobs, and he assured that during January the Mexican Institute of Social Security (IMSS) reported that it had 6,300 new formal job registrations; which, compared to the growth of 2022 on the same date, represents an increase of 50 percent. He explained that, according to projections for 2023, it is presumed that they will generate more than 33 thousand jobs, “to achieve this goal, from the State Government, Queretaro is promoted as a point for attracting investment and, in this sense, 98 billion pesos in investment portfolio have been identified that could be materialized in the coming months.” “In January 2022 we had just over 4 thousand new jobs reported by the IMSS, it is to be understood that we were still living in a pandemic situation, but for the same period of 2023, we were informed that 6 thousand 300 jobs had already been generated. Our goal is to at least surpass last year’s figure of 33,633 jobs and we are sure we will achieve it”.

JALISCO

The Government of Jalisco capitalizes on nearshoring opportunities to attract more Chinese investment. From 2018 to 2023, 22 investment projects from China have been attended, and 8 have been consolidated. This year, 5 potential new investment projects from companies in the automotive, electronics, and food sectors have been identified.

SOURCE: PLAZA DE ARMAS, STATE GOVERNMENT JALISCO

CDMX

2022 was the best year for Mexico City in terms of Foreign Direct Investment (FDI), with a historic 10,923.3 million dollars. According to the Ministry of Economy, the city attracted the highest amount of capital possible since at least 1989, the year the federal database began. The closest date was 2001 with 10,219.5 million dollars, the other two years with the best FDI attraction were 2019 with 8,738.2 million, and 2011 with 7,507.5 million. In addition to this, in 2022 the country’s capital was also positioned as the leading entity in FDI attraction, surpassing other states such as Nuevo Leon with 4,397.3 million dollars, Jalisco with 2,894.9 million, Baja California with 1,877.3 million and Chihuahua with 1,875.9 million. The attraction of foreign capital also meant the largest amount since the administration of Claudia Sheinbaum Pardo began, with which it already surpassed in this indicator all previous local governments; in 2019 the city attracted 8,738.2 million dollars, 2020 -the year with the pandemic- 6,990.9 million, and 2021, the year in which the economic reactivation plan was implemented, attracted 5,478.6 million.

STATE OF MEXICO

Various groups based in the State of Mexico and with a national presence announced the second march in defense of the National Electoral Institute (INE) in view of the proposed Plan B for Electoral Reform, which they consider an attack against democracy. According to Misael Romero Lagunas, general coordinator of the organization Somos Toluca Libre, the mobilization which will take place on Sunday, February 26 at the Glorieta del Aguila in Toluca, State of Mexico, will be replicated in more than 70 cities nationwide. He pointed out that Plan B of the Electoral Reform promoted by President Andres Manuel Lopez Obrador, puts democracy at risk, as it violates the effective suffrage and the work carried out by the 300 district boards proposed to be eliminated, which guarantee viable and reliable electoral rolls.

SOURCE: EL ECONOMISTA, EL SOL DE TOLUCA

INVESTMENT NEWS

NATIONAL: AMERICA MOVIL

The communications company has announced its intention to expand its operations by investing $8 billion during 2023, which would be a national-scale operation.

ARCA CONTINENTAL

The Coca-Cola production and distribution company is set to invest $70 million in a national-scale operation

CENTRAL MEXICO EVERCAST

The automotive component manufacturing company has announced an expansion of its facilities in the municipality of Irapuato, Guanajuato, which could potentially lead to new job opportunities.

WEBASTO

The Webasto corporate opened its third plant in the Vymsa Industrial Park, Guanajuato, where they will manufacture mobile chargers for electric cars and installation equipment. For 2023, they will have an investment of extra equipment for around $5.5 million dollars. They currently employ 164 employees and will close with 239 this year.

FINSA

This complex, with an area of 73 hectares located to the north of the city of Queretaro, has capacity for 22 companies and the generation of 19,500 direct and indirect in a period of three to four years.

NORTHEAST BENDIX

The automotive component manufacturing company has officially announced an investment of $57 million in the city of Acuña, Coahuila, which will create 180 jobs.

STELLANTIS

Stellantis has announced in a statement in Michigan that it will invest nearly $200 million in its plant in Saltillo, Coahuila, for the manufacturing of the ProMaster.

TERNIUM

The steelmaking company has officially announced its intention to invest around $2.2 billion in the development of a new plant in the municipality of Pesqueria, NL.

NAGARRO

Nagarro, a global company specializing in Information Technology and digital engineering, announced an investment of 10 million dollars in the expansion of its operations in Nuevo Leon, with the creation of 500 jobs.

MEOR

With an area of 35,000 square meters and an investment of 300 million pesos, this project is expected to house national and international companies from the manufacturing, automotive, and logistics sectors. The location is in Apodaca, Nuevo Leon.

SOURCE: CLUSTER INDUSTRIAL, MEXICO INDUSTRY

CONTRACTS CAN BE LEGITIMIZED UNTIL JULY

Unions that by May 1 have processed the legitimization of their collective bargaining agreements will have the right to carry out the entire process even after this deadline.

The legitimization of collective labor contracts, through a free and secret vote of the unionized workers of each company, is an obligation pursuant to the reform to the Federal Labor Law, compliance with which is also a commitment to be fulfilled before the partners of the Treaty between Mexico, the United States and Canada (USMCA).

“It should be clarified that this is not an extension of the deadline that expires on May 1 to legitimize collective bargaining agreements, but if on that date a union has already filed with the Federal Center for Labor Conciliation and Registration to carry out this voting process, it may do so even after that date.”

Vice President

ALVARO GARCIA HR,

The Federal Center for Labor Conciliation and Registration issued an agreement by which it disclosed the deadline for the registration and processing of the procedures for the legitimization of existing collective bargaining agreements.

The date for the registration of Collective Bargaining Agreements expires on May 1, 2023. Likewise, the date for the resolution of the consultations related to the procedures for the legitimization of existing collective bargaining agreements expires on July 31, states the agreement of such labor registration body.

Pursuant to the Federal Labor Law, unions of Mexican companies must submit to a vote of their workers their agreement with the permanence of the union holding the collective bargaining agreement in order for it to be legitimate or otherwise call for open elections for them to choose a labor center by majority vote.

Originally there was an estimate of 500,000 collective bargaining agreements in Mexico that was purged to about 150,000 with union activity, but so far about 13,000 of them have fulfilled this requirement.

One of the most active states in this process is Nuevo Leon, even in my case, all the companies we have advised have already completed the process.

ALVARO GARCIA

HR, Vice President