Weekly Review I April 19, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I April 19, 2023

RELEVANT NEWS

NUEVO LEON EXPECTS THE ARRIVAL OF 150 COMPANIES DUE TO NEARSHORING

Nearshoring seems to be smiling on Nuevo Leon. The northern state of the country expects that in the medium term between 100 and 150 new companies will arrive to set up operations in the territory also chosen by Elon Musk, co-founder and CEO of Tesla, to build his fifth manufacturing plant worldwide and the first in Latin America.

“(Many technology and software companies will arrive, we are also working on a semiconductor strategy and we want all the technology industries in the hub (of Nuevo Leon),” says Emmanuel Loo, Undersecretary of Economic Development of Nuevo Leon, in an interview after participating in the panel “Industry 4.0 and digital transformation as an accelerator of development for Latam countries”, organized by the company Siemens at the Hannover Fair.

At the world’s largest industrial fair, held in Germany, the presence of Nuevo Leon has aroused the interest of some of the attendees in view of last month’s announcement of the construction of the new Tesla plant in that state, whose investment is estimated to exceed 5 billion dollars.

“We are in finishing (with the process of starting the construction of the plant of) Tesla and that everything goes well, but we are working with many workers from Tesla and other industries, so soon we will give you another surprise,” says the state official.

The government of Nuevo Leon is present at the Hannover Fair, Germany, through a stand and a representation of state officials, which is headed by Samuel Garcia, governor of the state.

The Nuevo Leon government estimated last February that it would capture close to $9,000 million dollars by 2023 through nearshoring, a phenomenon that translates into the relocation of industrial plants to countries with lower production costs and adequate logistical conditions, as is the case of Mexico.

Within the framework of the Hannover Fair, Nuevo Leon assures that 72.2% of the country’s nearshoring is in the state, surpassing Coahuila, with 6.1%, as well as Chihuahua and Mexico City, both with 3.9%, according to GBM data based on the demand for space in Mexico.

On the other hand, Emmanuel Loo also assures that he seeks to boost dual education projects, which is part of the German apprenticeship system and is already implemented in Nuevo Leon as part of the efforts to continue generating trained personnel to serve the state’s industry.

“We want more innovative industry and more technology since we want the industry of the future and to be socially responsible, sustainable, with new innovations. We want to become the hub of innovation and technology, software, semiconductors, and electromobility,” says Emmanuel Loo.

SOURCE: FORBES MEXICO

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

April 12-18, 2023

POLITICAL AGENDA

• National Institute of Access to Information (INAI): President Lopez Obrador mentioned that the INAI is irrelevant and that it was created only to simulate the fight against corruption. In the same line of criticism of the institutions, he highlighted the case of Lorenzo Cordova, who upon finishing his term of office joined Latinus with Carlos Loret de Mola, questioning the legitimacy of INE’s defense.

• Customs: Mr. Lopez Obrador shared that a plan is being developed for the improvement of customs, especially in the state of Tamaulipas, adding that corruption in these agencies is being cleaned up, due to the fact that they have been placed under the control of the Ministry of Defense.

• Autonomous Bodies: The President mentioned that it is better that these bodies do not exist because he considers them inoperative, adding that they were created for the benefit of big companies and not for the people. He considered that these organisms require a large amount of budget which prevents them from continuing to promote more social programs.

• Mining Law: President Lopez Obrador defended the reform to the Mining Law to avoid the monopolization of large extensions of the subsoil and to protect the environment. He mentioned the case

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

of Grupo Mexico and the delivery of the Cananea mine for little money, as well as the tax exemption on mineral extraction. He also pointed out the difference in salaries between Mexican and Canadian workers and the environmental damage caused by some mining companies. He affirmed that the reform is not expropriatory and that concessions are preserved, but that it seeks to avoid financial speculation and commercialization of the same. The President also emphasized the importance of taking care of water and will present the progress regarding the damage to the Sonora River.

• Vicente Fox Business: Garcia Vilchis presented evidence of former President Vicente Fox’s business dealings with cannabis, including 65 authorizations for 11 companies granted by Cofepris 5 days before the end of Enrique Peña Nieto’s administration. It was also revealed that Fox is a member of the Board of Directors of Kuida Life Mexico, a subsidiary of Khiron Life Sciences Corporation, which obtained permission in 2018 to market dietary supplements with cannabis. In addition, Fox is listed as a Director of Khiron Life Mexico and partnered with the Paradise company in businesses in the same line of business.

• Cabotage: President Lopez Obrador mentioned that the initiative in this regard is on pause as agreements are being sought with workers. He added that the initiative that is currently in process does not include cabotage, and called to celebrate those who were looking for this to be stopped.

SECURITY

• Security situation: The Secretary of Security and Citizen Protection, Rosa Icela Rodriguez, report-

ed on the actions taken to improve security in school communities of 399 high school campuses, impacting 618,450 students. Security patrols, urban services, prevention talks, and workshops have been implemented. Operations have also been carried out to sanction the sale of alcohol to minors and to dismantle drug sales points, verifying 19,487 black businesses. Regarding the theft of hydrocarbons, savings of $261,111,791,316 pesos have been achieved, and a reduction of 92.9% in the theft of barrels per day.

• Espionage: President Lopez Obrador affirmed that the government is being subject to espionage, referring to what was made public by the Washington Post, related to information from the Pentagon. He reiterated that the information of the Ministry of Defense and the Ministry of the Navy will be protected for national security.

• National Guard Law: Regarding the statement made by one of the ministers of the SCJN, regarding the possibility of challenging the Law in which the National Guard is assigned to the Ministry of Defense, Mr. Lopez Obrador mentioned that it would be necessary to observe what happens,

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

however, he considered that this would alter the security of the country, therefore, he does not defend it.

INTERNATIONAL

• Meeting with LATAM: Lopez Obrador shared that 10 presidents and government representatives met. They agreed to meet again in Mexico in person. The objective of the meeting was to facilitate trade, imports, and exports of food and other goods to benefit the countries’ consumers. He mentioned that they will seek to eliminate tariff barriers and will invite businessmen from the region so that trade can be exchanged and commercial operations can be made possible.

INFRASTRUCTURE

• Progress on the Mayan Train: A new Civic Center is being built in Palenque, which will have a central plaza and commercial premises. In addition, in section 1, 74% of progress has been made in the construction of 4.98 km of urban viaducts. In Palenque, Chiapas, El Moral, Tabasco, and in El Tigre, Campeche, archaeological zones, exploration, research, and preservation works have been carried out.

• Interoceanic Corridor: The President informed that the interoceanic corridor project is strategic and connects the Pacific with the Atlantic, offering competitive advantages over the Panama Canal. Investment is being made in expanding the Port of Salina Cruz, rehabilitating the train for cargo and passenger transportation, and building 10 industrial parks in the corridor. In addition, investments are being made in energy generation in the area,

including the acquisition of a wind power plant in the region.

ENERGY

• Quesqui and Tupilco oilfields in Tabasco: The President informed that a significant investment has been made in the exploration of oilfields, which has allowed the discovery of new oilfields and guaranteeing the supply of oil. Efforts are being focused on extraction in new wells to cover what is no longer being achieved in the old ones, which has led to an increase in production, mainly in Tabasco. This increase has brought with it an important development in the region, something that had not been seen in previous decades.

• Oil production: Regarding oil production, President Lopez Obrador, stated that it has recovered. He explained that as of 2020 it began to increase production from 1 million 700 thousand barrels to 1 million 800 thousand barrels currently, and there are possibilities of reaching 2 million barrels per day.

• Construction of Coker plants: The President informed that the Olmeca Refinery is in the testing period and that the operation phase will re-

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

• Cancellation of the Financiera Nacional de Desarrollo Agropecuario, Rural, Forestal y Pesquero (FND): The President commented that it was decided to cancel it because it is directly supporting producers. He mentioned that the actions being implemented are the establishment of guaranteed prices in the production of corn, beans, wheat, and milk; 1 million tons of fertilizer will be delivered this year to benefit two million small and medium-sized producers; and direct economic support is also being given to the two million producers.

HEALTH

quire less personnel. He assured that construction workers will be relocated to coker plant construction sites. He stated that the decision was made to conclude the construction of the coker plant at the Tula refinery and that the work will be completed this year. In addition, a coker plant is under construction in Salina Cruz, Oaxaca.

• Purchase of Iberdrola’s plants: Mr. Lopez Obrador commented that his adversaries are unhappy with the acquisition of the plants that were part of this company, due to the fact that the previous objective was to privatize the electricity industry market, affecting consumers due to the lack of regulation of electricity rates. The President added that, thanks to the purchase of these plants, the State will be able to produce 55% of the electric energy.

• Preventive anti-drug campaign: A national preventive campaign against drug use is launched, focused on high school and college students, through videos and guides on the harm caused by drugs, especially fentanyl. During the presentation, they linked up with the governors of Sonora, Veracruz, Colima, and Chiapas. President Lopez Obrador emphasized the importance of addressing the causes of drug use, such as problems of anxiety and emptiness, and highlighted his focus on welfare policies and investment in young people. He also criticized Plan Merida and the “Fast and Furious” operation and clarified that Mexico does not produce fentanyl, but that it comes from Asia, and that they are cooperating with U.S. authorities to address the problem of fentanyl consumption in both countries.

NEWS BY STATE

BAJA CALIFORNIA

In order to strengthen bilateral ties between the United States and Baja California, as well as advocate for initiatives and policies that benefit the economy and well-being of both sides of the Cali-Baja border mega-region, the Ministry of Economy and Innovation participates in the agenda of the San Diego Regional Chamber of Commerce (SDRCC) that will carry out activities from April 16 to 19 in Washington, D.C., reported the head of the agency, Kurt Honold Morales.

SONORA

Due to the nearshoring strategy, two industries in the electronic field began their installation in the industrial parks of Sonora, which will generate employment and economic dynamism. The president of the Maquiladora and Export Manufacturing Industry, Jesus Gamez Garcia, reported that the plants that manufacture electric car chargers and antennas are in the installation phase to start operations this year.

SOURCE: BAJACALIFORNIA.GOB.MX, ELIMPARCIAL.COM

NUEVO LEON

During the event Hannover Messe, the State Governor of Nuevo León stated that the state captures 72% of the nearshoring that reaches the entire country. The state has developed projects in infrastructure and customs, factors that are a key element for foreign companies to invest in the entity.

COAHUILA

The Chinese company Jiaxipera, dedicated to the manufacture of high-efficiency refrigeration compressors, inaugurated its plant in Ramos Arizpe, Coahuila.

With an investment of 60 million dollars, it will generate 600 new jobs in the entity to produce 6 million compressors per year.

GUANAJUATO

In view of the competition that states will face in attracting capital from Asia, within the framework of nearshoring, Guanajuato was positioned as the entity with the greatest attraction of Asian Foreign Direct Investment (FDI) in 2022, with 832.8 million dollars. According to information from the Ministry of Economy, 53.2% of the capital received by the state in 2022 was of Asian origin, of which 819.2 million dollars came from Japan and 13.6 million from China. In 2021, Guanajuato received 666 million dollars of FDI from Asia, which, compared to the 832.8 million captured in 2022, represents a 25 percent growth. In second place in terms of Asian FDI reception, last year in Mexico City, which attracted 734.9 million dollars, of which 353.7 million came from Japan, 249.3 million from South Korea, 96.6 million from China, 27.1 million from Hong Kong and 8.3 million from Singapore. Compared to 2021, when the country’s capital captured 860.1 million dollars, there was a 14.6 percent drop. The podium is completed by Baja California with 352.3 million dollars, of which 182.3 million are from Japan, 142.7 million from South Korea, 26.7 million from Hong Kong, and the rest from China.

SAN LUIS POTOSI

State Governor Ricardo Gallardo Cardona is already in Germany and the first images of his tour in Europe have been released, where he is accompanied by members of his cabinet, the heads of the Secretariat of Economic Development (Sedeco), the Secretariat of Finance and the Technical Secretariat, as well as leaders of business chambers in San Luis Potosi such as the Mexican Chamber of the Transformation Industry (Canacintra) and the National Chamber of the Industry of Development and Housing Promotion (Canadevi). Days before the tour, Ricardo Gallardo revealed that his entourage would include Juan Carlos Valladares Eichelmann from Sedeco and Jesus Salvador Gonzalez from the Ministry of Finance for the signing of agreements with BMW; however, the technical secretary of the cabinet, Noemi Proal Huerta, will also be present.

SOURCE: EL ECONOMISTA, EL UNIVERSAL

QUERETARO

The inauguration of the Mexican delegation to Hannover Messe took place this Monday, with the participation of the head of the Secretariat of Sustainable Development (SEDESU) Queretaro, and the president of the Mexican Association of Secretaries of Economic Development (AMSDE), Marco Antonio Del Prete Tercero. Hannover Messe is held in Germany and is one of the largest industrial fairs in the world, bringing together around six thousand exhibitors and receiving more than 200 thousand visitors. Therefore, Del Prete Tercero acknowledged the work carried out between the states and the Federal Ministries of Foreign Affairs and Economy to present the country’s capabilities as a group, where he highlighted that Mexico’s manufacturing sector is a champion in competitiveness and labor.

CDMX

The price of LP gas in Mexico City will increase from April 16 to 22, per kilo and per liter, with respect to last week, according to the list of costs published by the Energy Regulatory Commission (CRE).

According to the CRE, in Mexico City’s 16 municipalities, the cost per liter of LP gas will be 9.55 pesos, 10 cents more than the previous week.

STATE OF MEXICO:

The gubernatorial elections of the State of Mexico will be held in less than two months, so the proposals of the candidates who are campaigning, Alejandra del Moral and Delfina Gomez, should be known, for which the first debate between both will be held. In the first debate for the governorship of the State of Mexico will participate the candidates of the alliance “Juntos Haremos Historia” and the coalition “Va por el Estado de Mexico”, who started campaigning since April 3, 2023. The Electoral Institute of the State of Mexico (IEEM) announced that the debate between Delfina Gomez and Alejandra del Moral will be broadcast 100% live on April 20 at 8:00 pm through the official Youtube account of the electoral body.

SOURCE: MILENIO

INVESTMENT NEWS

NATIONAL

• ARRA

The U.S.-based automotive and electric startup, ARRA, has announced the inauguration of its company with a start-up investment of $20 million by bringing its first electric vehicles into the Mexican market.

CDMX

• EMERSON

U.S.-based electronics manufacturer, Emerson, has announced the inauguration of a $24 M. expansion project in Metepec, Mexico State. The expansion is focused on electronics manufacturing,. Emerson is committed to investing in the region and strengthening its presence in the Mexican market.

• ZF

ZF announced an investment of 39.6 million euros to build a manufacturing plant in Toluca, focused on the production of components for electric passenger vehicles.

CENTRAL MEXICO

• WTECH

Mexican automotive manufacturer, WTECH, has announced an expansion project worth $201 million in Guadalajara, Jalisco in Mexico. The expansion will create over 4,000 new jobs in the area and will focus on auto parts manufacturing.

MG MOTOR

Chinese automotive manufacturer, MG Motor, has announced an $18 M. investment for expansion into the state of San Luis Potosi. The company specializes in

automobile manufacturing and is expected to generate new job opportunities in the area.

NORTHEAST NORCAST

Mexican steel and metal company, Norcast, has announced a $25 M. expansion project in Torreon, Coahuila in Northeast Mexico. The investment is expected to create 390 new jobs in the region. Norcast specializes in steel and metal manufacturing.

TECK AND AGNICO

Canadian mining companies, Teck and Agnico, have announced a joint investment of $580 M. for an expansion project in San Nicolas, Zacatecas. The companies specialize in mining and are committed to expanding their operations in the region by dividing the project 50/50

LEAR

Lear, inaugurated the Torreon 2 Plant, in Matamoros, Coahuila, where it will manufacture harnesses for electric vehicles. The brand invested 34 M. USD and will create 4,000 new jobs.

JIAXIPERA

Jiaxipera inaugurated its plant in Ramos Arizpe, Coahuila, with an investment of 60 M USD, generating 600 new jobs.

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