Weekly Review I March 15, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I March 15, 2023

RELEVANT NEWS

TESLA’S GIGAFACTORY IN NUEVO LEON WILL BOOST THE CONSTRUCTION OF 13,000 HOMES

The installation of Tesla’s Gigafactory in the state of Nuevo Leon will require the construction of some 13,000 homes in the municipality of Santa Catarina to provide housing for its employees, according to the director of the state’s Housing Institute (IVNL), Eugenio Montiel.

The state official highlighted that given Santa Catarina’s proximity to the municipalities of Saltillo, Ramos Arizpe, and Arteaga, in the neighboring state of Coahuila, it is contemplated that part of the personnel to be hired by the electric car manufacturer will also come from that state.

“Currently the state is receiving a significant flow of both Mexican and foreign migration, just from 2010 to 2020, Santa Catarina experienced a population growth rate of 13.9% and almost a quarter of this growth are young people, who will demand housing to avoid relocations,” said Montiel.

Two weeks ago, during the celebration of “Investor Day 2023”, held in Austin, Texas (USA), Tesla’s CEO, Elon Musk, confirmed the installation of a plant in Mexico, in the state of Nuevo Leon, in the north of the country.

According to the state governor, Samuel Garcia, the mega-plant will generate between 35,000 and 40,000 direct and indirect jobs.

The director of the IVNL stated that given the number of jobs that could be created, “it is very likely that all

housing segments will experience an upturn in Santa Catarina and surrounding municipalities to a greater or lesser extent”.

He stated that in order to supply this demand for housing, the role of public agencies will be fundamental, but also that of real estate developers and banks.

He proposed the vertical format as an option for the optimization of housing in Santa Catarina.

He added that given the existing roads and travel times, in addition to the increase in housing demand in Santa Catarina, other municipalities likely to experience growth are: Garcia, General Escobedo, Monterrey and San Nicolas.

For now, there is no certain date for the Nuevo Leon assembly plant to start operations, but it could be by the end of 2023 or the beginning of 2024.

The plant will be Tesla’s first automobile production plant in Latin America and the fifth in the world, after those already operating in Fremont and Austin (United States), Shanghai (China) and Berlin (Germany).

SOURCE: FORBES MEXICO

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

March 9-14, 2023

POLITICAL AGENDA

• 8M: The President expressed his solidarity with the women’s struggle. He recognized the important role they play in Mexico, both those who act in public service in positions at the Secretary level and those who do it from their villages. Today, out of 25 million people benefiting from welfare programs, 13 million are women. In the scholarship program (11 million) the majority are women, the same case as in the pension for senior citizens; they also participate in programs such as Sembrando Vida and Produccion para el Bienestar (Sowing Life and Production for Wellbeing).

• Judicial Branch Budget: The President informed that the Judicial Branch maintains a trust fund of 20 billion pesos and has instructed the Secretary of the Interior to request INAI to ask INE for information on how much money they have in their trusts and what use those resources have had. In addition, he compared the budget managed by the Presidency of the Republic in 2018 with last year’s budget, which had a significant decrease, compared to the Judicial Branch, where excessive expenses in pensions, private medical expenses insurance, support funds, among others, were identified.

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

BILATERAL RELATION

• Meeting with US legislators: The President revealed that he received a letter from President Biden reiterating that his government will continue to treat Mexico “on an equal footing”. He noted that today, March 13, he will meet with U.S. legislators to discuss the TMEC issue, and said that on March 19 he will meet with other U.S. legislators to go to the Isthmus and Veracruz to show them the projects being developed.

• U.S.-Mexico bilateral relationship: The President reported on his meeting with the White House Homeland Security Advisor, Elizabeth Sherwood-Randall, where they discussed the issue of fentanyl, weapons and respect for Mexico’s sovereignty. In addition, he announced that on Monday a meeting will be held in Washington presided by the Secretary of Foreign Affairs, Marcelo Ebrard, with all Mexican consuls in the United States to report on the government’s actions to prevent the entry of fentanyl, and that a record amount of drugs have been confiscated during his administration. He also mentioned that Mexicans residing in the consulates will be denounced and informed about the initiative to be promoted in the U.S. Congress for the intervention of the armed forces in Mexico.

SECURITY

• Insecurity and relationship with the United States: President Lopez Obrador agrees with Ambassador Ken Salazar on the importance of ensuring security and combating drug trafficking in Mexico and the United States. An investigation into what hap-

pened in Matamoros remains open and the president asks not to engage in politicking. Education programs are promoted to combat the fentanyl problem. The president criticizes arms trafficking from the United States and Genaro Garcia Luna’s relationship with U.S. officials and U.S. agencies must be investigated to know the full truth.

• SEDENA spying program: President Lopez Obrador responded to questions about the report on SEDENA’s alleged spying on civilians, saying that an investigation has to be done but that there is no illegality. He affirmed that SEDENA is not spying, but intelligence, with the purpose of knowing the movements and operations of organized crime. He pointed out that espionage refers to political persecution, such as that carried out by Claudio X. Gonzalez and the Berlin group against the current government when they were opponents, while intelligence is used to prevent acts of sabotage and crimes. He also mentioned that today there will be a report on an alleged purchase of Pegasus, and that CNI Director General Audomaro Martinez will not be present at the morning conference.

• Tamaulipas March: Lopez Obrador informed that a march is being called on social networks in Tamaulipas and Nuevo Laredo to supposedly defend the

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

Army for the investigation of the death of 5 young men. The President asked that no one be fooled, as this call may be promoted by delinquency. In addition, a thorough investigation is being carried out on the death of the Americans in Matamoros, as it was discovered that they had criminal records in the United States, and Rosa Icela and the Tamaulipas Prosecutor’s Office are in charge, and they are analyzing “bringing” the case to the Attorney General’s Office.

• Security: In a conference from the Federal Police Intelligence Center, better known as Genaro Garcia Luna’s Bunker, the President stated that violence cannot be confronted with more violence. He pointed out that a member of the Republican party in the U.S. raised the possibility of presenting an initiative for U.S. forces to confront organized crime in Mexico. In response, the President of the Republic indicated that he will not allow any type of foreign interference. If such interest continues, he will launch an informative campaign so

that citizens know that this is an offense to national sovereignty and will promote a campaign so that people do not vote for this party.

INFRASTRUCTURE

• Isthmus of Tehuantepec: President Lopez Obrador is working on the construction of three major highways in Mexico: from Ciudad Hidalgo to Ixtepec, from Salina Cruz to Coatzacoalcos, and from Coatzacoalcos to Palenque. The port of Salina Cruz is also being modernized, the railroad is being modernized, and 10 industrial parks are planned along the corridor. The president will seek progress in the works, including gas pipelines, water system and fiscal policy in terms of subsidies for companies to set up and generate jobs. Legislators from the United States will come to learn about the Tren Maya and Ismo projects on March 19. In addition, the port of Veracruz and other ports in the south-southeast of Mexico are being promoted as alternatives for companies. The President also pointed out that Mexico faces significant water problems in the central and northern zones, so the feasibility of using the water available in the south-southeast should be considered.

ECONOMY

• Remittances: PROFECO’s Ombudsman reported that in January 2023 there was an increase of 12.45% in the receipt of remittances compared to January 2022 and an increase of 34.03% compared to January 2021. He also noted that, in January 2023, remittance receipts were the highest in the last four years. Likewise, he pointed out that the remittance company ULink was the most conve-

nient for migrants sending money to Mexico, while SIGUE was the worst. Regarding the services offered to the remittance recipient, he indicated that Financiera del Bienestar covers the largest number of municipalities, while OXXO has more branches and better opening hours.

ENERGY

• Energy Sector: The President of the Republic reported on the inauguration of the first stage of the Puerto Peñasco solar park in Sonora and said that more solar cells will be installed in the region, as well as work will continue on the laying of distribution lines to connect the north of Sonora and Baja California. He also mentioned that on March 21 he will have a meeting in Oaxaca with John Kerry, U.S. special envoy for climate issues, to discuss renewable energy, Plan Sonora and wind energy. Finally, he promised that CFE technicians will explain the entire plan for Sonora.

• Energy Sector: President Lopez Obrador received the Secretary General of OPEC to discuss Mexi-

co’s oil policy and the importance of refineries and self-sufficiency. Work must be done to reduce the use of fossil fuels and take better care of the environment, but this must be done gradually. The capacities of existing refineries are being increased and two large plants are being built to convert fuel into gasoline. There is also a need to train more technical professionals for the energy sector, in the construction industry, and petroleum engineers and chemists are being recruited to work in the refineries. The boost for the southeast is necessary since it has contributed a lot to national development through oil extraction. Mexico’s development should be oriented to the southeast because it is where there is water, while the availability of water from the center to the north is very low.

HEALTH

• Health Report: The Undersecretary of Prevention and Health Promotion, Hugo Lopez-Gatell, indicated that the reduction of the pandemic in Mexico has been slower in the last five weeks compared to the first weeks of the year, but that hospital occupancy has remained at 5% and mortality has dropped. For his part, Zoe Robledo, director of IMSS, announced the recruitment of 634 doctors for IMSS-Bienestar and the opening of a call for retired doctors to work in IMSS-Bienestar. He also pointed out that Hidalgo has joined the process of federalization of the health system. In addition, the Secretary of Health, Jorge Alcocer, mentioned that the National Institute of Indigenous Peoples is promoting community health and traditional medicine in the country’s indigenous and Afro-Mexican communities.

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

NEWS BY STATE

BAJA CALIFORNIA

Officials from the German embassy in Mexico visited Mexicali, Baja California, as part of Probaja’s effort to promote nearshoring and industrial development in Mexico. During the visit, the embassy representatives met with government officials to foster a better understanding of the area and strengthen ties with important government chambers and state representatives, such as Norma Alicia Bustamante, mayor of the city of Mexicali.

SONORA

Sonora has focused on attracting investment, looking for semiconductor companies, automotive manufacturers, production of cell phones and other technological products, so that since Mexico is a strategic ally of the United States, the location of the entity could serve as a complement to the economy of the neighboring country to the North, especially when it comes to more labor-intensive companies.

Jesús Gámez García, president of the National Council of the Maquiladora and Export Manufacturing Industry (Index) in Sonora, highlighted that with the announcement of the installation of a Tesla plant in Nuevo León, there is an important opportunity to participate in the supply chain.

SOURCE: MEXICALI EDC, EL SOL DE HERMOSILLO

NUEVO LEON

It is expected that the installation of the new Tesla plant in Nuevo Leon will increase by 450% the current number of companies installed in Mexico that are already suppliers of the Tesla factory in the United States.

In Mexico, there are already around 127 Tesla suppliers for its Texas plant.

COAHUILA

A total of 700 young people from seven universities in the region are the beneficiaries of the scholarships that the Municipal Government of Saltillo in conjunction with the Siemens company offer in order to study a specialization in new technologies.

The technological innovation company, Siemens, will invest over 50 million pesos in these industry specialization scholarships.

TAMAULIPAS

The establishment of clusters of the aviation and aerospace industry throughout the country promotes Mexico as a potential direct supplier of companies in this sector. For this reason, the Tamaulipas Aerocluster has been created, which, in the first instance, will seek to contribute to increasing the state’s air connectivity both in cargo and commercially.

GUANAJUATO

With an investment of more than 3.3 billion dollars and a commitment to generate more than 21,600 jobs, 51 domestic and foreign companies have expanded their operations in Guanajuato during the current state administration. The companies that have expanded their operations inside and outside the Industrial Corridor in municipalities such as Apaseo el Grande, Celaya, Irapuato, Leon, Salamanca, San Jose Iturbide, San Miguel de Allende, Silao and Villagran. Some of the companies that have renewed their confidence in the state are: Pirelli, Mazda, Michelin, Denso, Ferrero, Volkswagen, Nestle-Purina, Procter & Gamble, Kromberg & Schubert, among others.

QUERETARO

Aguascalientes, Guanajuato, Jalisco, Queretaro and San Luis Potosi formed the Agency for Central-Bajio-West Economic Cooperation (ACBO). The purpose of this new agency is to create joint strategies and actions to promote the economic development of the region, highlighting the competitive advantages of the entities that comprise it. With this objective, it seeks to have an impact on the attraction of new investments. The agency will work in four areas: energy capacity; the development of skilled labor for demand; the development of new supply chains; and the exchange of best economic practices. The five entities also plan to work on generating higher-paying jobs, promoting support for entrepreneurs, attracting investment and improving regional competitiveness.

SAN LUIS POTOSI

“The supply companies that will soon be installed in the State must be updated to electromobility; we must guarantee a balanced growth to continue attracting investments”. The head of the Secretariat of Economic Development, Juan Carlos Valladares Eichelmann, spoke of the privileged moment that San Luis Potosi is experiencing with the arrival of more and more companies, with investments that will generate growth in the state; as well as his personal and political aspirations. The official warned: “The situation we are living, both in the country and in the State, is privileged in terms of industrial attraction, this speaks of the goodness and the vocation that the State has in this matter. At the same time, an announcement of this magnitude shows that things are being done well and that there is certainty in terms of investments”. This is something beneficial for the whole sector, he added, and at the same time, more good things are to come.

SOURCE: EL ECONOMISTA, PORTAL MOVILIDAD

CDMX

The Metropolitan region of the country is the most relevant in terms of the commercial potential of nearshoring with neighboring countries in North America, according to Banorte’s analysis area. Following the publication of the report Nearshoring could unleash Mexico’s potential, the banking group conducted an analysis of the commercial dynamics related to the relocation of the country’s supply chains and subnationals. Banorte divided the country into six regions: Metropolitan, Peninsular, Central, North, Northwest, and West. According to the study, in the context of nearshoring, the Metropolitan region has the greatest opportunities at the sectoral level because it concentrates an automotive cluster that covers 23.6% of the total export market in this sector.

STATE OF MEXICO:

During its first year in office, fifteen of Mexico’s 125 municipalities contracted debts at different terms and for different amounts, such as simple credits or shortterm obligations. However, as of the first days of March 2023, no new acquisition of credits has been reflected. The municipalities that have contracted debt in this administration are: Villa del Carbon, Almoloya de Juarez, Timilpan, Tlalmanalco, Cuautitlan, Teoloyucan, Amecameca, Joquicingo, Toluca, Valle de Chalco, Soyaniquilpan, Otumba, Texcaltitlan, Zinacantepec, and San Jose del Rincon. Most of them are to be paid in this fiscal year 2023, or in 2024, that is to say, within his administration, and while some are for productive public investment, that is to say, to carry out works, others have been acquired to cover temporary liquidity shortages. The amounts range from more than six million in the case of six million for Joquicingo, to 170 million pesos for the municipality of Toluca.

SOURCE: EL ECONOMISTA, EL SOL DE TOLUCA

INVESTMENT NEWS

CENTRAL MEXICO CHRISTUS MUGUERZA

The hospital Christus Mugerza Altagracia opened a new facility with an investment of $70 million dollars, generating 500 new jobs in Guanajuato.

XINQUAN

The Chinese company, announced an expansion in their facility in Aguascalientes, with an investment of $30 million dollars, and 600 new jobs. It specializes in high-tier automotive components. It will be located in San Francisco IV Industrial Park.

NORTHWEST BANKAOOL

Mexican bank Bankaool, announced a $120 million dollar expansion in Chihuahua, expanding its presence in the northwest region of Mexico. This investment will contribute to the growth of the banking sector and the local economy.

GPO

Chemical company, GPO, announced a significant expansion in Los Mochis, Sinaloa. This expansion involves a $5 billion dollar investment and is expected to contribute to the growth of the chemical industry of the region.

NORTHEAST PHILLIPS

The company will expand its operations in Arteaga, Coahuila, investing $35 million dollars, and creating 1600 jobs.

GRUPO FIVES

French manufacturing company, announced a $10 million dollar expansion in Ramos Arizpe, Coahuila, creating 160 jobs.

CDMX

SATEX TEXTILE

Mexican textile company announced a $15 million dollar expansion in Lerma, located in the central region of Mexico, between Mexico City and the State of Mexico. This investment will generate 2,500 jobs.

SOURCES: CLUSTER INDUSTRIAL, LIDER EMPRESARIAL, EXPANSION, INMOBILIARE, LUZ NOTICIAS

LABOR RIGHTS OF ELDERLY PEOPLE

The Mexican senate has unanimously approved a bill to modify the labor law regarding the rights of elder workers.

The approved bill now needs to be discussed and voted by the lower house of the Mexican Congress.

If approved by both chambers the law will now require employers to have a minimum of 5 percent of its total headcount of workers being aged 60 years old or older.

It is still uncertain when this potential change to the law can happen and what would be the transition time for the employers to achieve this new age quota.

ALVARO GARCIA HR, Vice President