Weekly Review I April 26, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I April 26, 2023

RELEVANT NEWS

NEARSHORING WILL BOOST STEEL CONSUMPTION

Mexico has a favorable outlook for the steel industry, since with the relocation of companies due to the nearshoring trend, as well as the return of production and manufacturing of goods, called reshoring, the consumption of this metal will grow above the estimated average for all of Latin America.

Alejandro Wagner, executive director of the Latin American Steel Association (Alacero), told Forbes Mexico that demand is expected to grow 2.5% in 2023 and 2.6% in 2024, making it the country that will benefit the most from this regionalization.

The forecast for Latin America is that in 2023 it will grow an average of 1.8% and in 2024, 2.5%, so Mexico would have a better performance in steel consumption, driven by foreign direct investment that will arrive in the next 24 months due to nearshoring and reshoring.

Mexico will not only grow more than Latin America this year in steel demand, but also more than the world, as the global increase is expected to be 1.7%.

“With the current conditions that comprise our region (Latin America), we have a Brazil with a very low or almost zero growth for this year, an estimate that will not exceed 1%, but with a Mexico that definitely drives more steel growth by possibly increasing nearshoring foreign direct investments (...) In Mexico what will drive steel demand in the next 12 to 24 months, unlike other years, is more manufacturing than construction,” Wagner explained.

For the executive director of Alacero, new investments, for example, the case of the installation of the Tesla plant in Monterrey, which is not the only one, will have a positive impact on the steel industry.

“These investments are obviously very much driven by the North American market and by the post-covid trend that already existed before, but that began to accelerate after the pandemic, with many companies and countries understanding that globalization made the cost of production the main decision driver and as a consequence locating companies or manufacturing outside the region looking for cost savings, but the pandemic put this in doubt, understanding that the lowest cost is not always the best option”, he said.

SOURCE: FORBES MEXICO

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

April 20-25, 2023

POLITICAL AGENDA

• Health of the President: The Secretary of Health, Jorge Alcocer, informed that the President’s infection with COVID-19 was confirmed shortly after he presented symptoms. shortly after he presented symptoms. The infection is mild and has improved. Although the President has a history of having suffered a heart attack, his blood pressure has even been controlled downward. downward. He specified that the rest of the studies show normal results and in a few days he will be discharged. Through the Secretary of the Interior, Adan Augusto Lopez, said that there is nothing to hide and that there is a lot of misinformation.

• Reform to the Mining Law: During the process of discussion and approval of the reform to the Mining Law presented by the Federal Executive, concerns arose both from investors and the Chamber of Mines, as well as from social groups dedicated to the defense of indigenous communities, the environment and water. After several meetings between representatives of different ministries and interested groups, important modifications to the initiative were agreed upon, such as giving priority to the human right to water, establishing a 30-year duration for the first water concession for mining use with the right to an extension, measuring water consumption and authorizing its use

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

for human consumption when necessary. It also established the obligation to consult with indigenous communities to grant an exploration concession and mentioned the importance of approving the Indigenous Consultation Law pending in the Senate. In summary, the initiative was adjusted to regulate mining activity and it is expected to be further adjusted in the coming years.

• Pending Legislative Agenda: The Secretary of the Interior met with the Senate’s parliamentary groups to analyze the pending legislative agenda, which includes reforms approved in the Chamber of Deputies, such as the one that converts the crime of arms trafficking into a crime subject to unofficial preventive imprisonment and the one that reduces the age for the election of young people to federal deputies and state secretaries. Ignacio Mier (MORENA) and Sen. Ricardo Monreal (MORENA) to discuss the issues to be discussed in both chambers. In addition, he has had meetings with members of the JUCOPO and members of the Mining Chamber of Mexico.Energy

• Acquisition of power plants: The President informed that the purchase of power plants from Iberdrola will allow the CFE to become the majority power generation company in the country. The purchase includes 13 plants, 12 combined cycle and 1 wind, and will cost approximately US$5.943 billion. The operation will be 51% financed by the National Infrastructure Fund and the rest will be acquired through debt and financing. The objective is to meet the country’s peak demand for electricity and to ensure that FONADIN holds the majority of the risk capital assets related to this acquisition.

• Welfare Programs: The Welfare Secretariat reported that as part of the Production for Welfare program, direct support has been delivered to producers in Chiapas, Tabasco, Campeche, Yucatan and Quintana Roo, mainly for the cultivation of coffee, sugar cane, cocoa and honey. Information was also provided on other programs, such as the Pension for Wellbeing, Pension for the Disabled, Support for Working Mothers, Benito Juarez Scholarships, Youth Building the Future, School is Ours, Sembrando Vida, Fertilizers for Wellbeing, Support for Fishing and Housing. In total, these programs benefit millions of people in Mexico and represent a significant investment by the government.

• Initiative to eliminate or merge agencies: The President mentioned that as far as workers are concerned no one will be fired, they will have their jobs guaranteed, what will happen is that these agencies will be liquidated since they are not necessary and only use public budget. All that is saved will be returned to the people, since the budget is the citizens’ money and not the government’s or the officials’ money as previously thought.

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

HEALTH

• Federal Law for the Control of Chemical Precursors: The Undersecretary of Prevention and Health Promotion, Hugo Lopez Gatell, pointed out that the Chamber of Deputies yesterday approved the Federal Law for the Control of Chemical Precursors, Essential Chemical Products and Machines to Manufacture Capsules, Tablets and/or Tablets. The regulation is very important because it will contribute to the drug control strategy and will allow flexibility so that new formulas, which organized crime develops, can be monitored and dealt with in a timely manner. With this reform, Mexico will have the broadest law on the matter. He also stated that the entire pharmaceutical industry will be obliged to monitor the use of precursors and to notify COFEPRIS through a platform that was developed with the help of the Secretariat of the Navy.

• Latin American and Caribbean Drug Agency: Alejandro Svarch also pointed out that within the framework of the National Week Against Health Risks, tomorrow, April 26, the Declaration of Acapulco will be signed, which will be signed by the regulatory agencies of Mexico, Colombia and Cuba. This represents the first step in the constitution of the Latin American and Caribbean Medicines Agency (AMLAC). This agency, which already has the support of 10 countries in the region, will enable self-sufficiency and sanitary sovereignty, as it will provide access to good quality medicines and vaccines in less time. AMLAC will serve to establish common standards to guarantee the quality of inputs used in the region, eliminate regulatory duplication and promote clinical research and innovation.

INFRASTRUCTURE

• Conflict with Calica and Tren Maya: The report refers to the progress of the Tren Maya project in Mexico, including the construction of section 2 in Campeche, which is expected to be inaugurated in December 2023. The project has generated more than 12,000 jobs and is the subject of international and local litigation. In addition, mention was made of a dispute between Calica and CEMEX for an early termination of the contract for the use of the Cozumel dock, but the supply of food or medicines to the island has not been affected. The issue of environmental devastation was also addressed, and it was reported that Calica’s stone benches have been closed by the current government after reviewing the conditions of the permits granted by previous governments.

• Veracruz Governor’s Report: Governor Cuitlahuac Garcia reported that investments have grown thanks to the promotion of the Isthmus of Tehuantepec, of which Constellation Brands stands out.

• Review of concessions: President Lopez Obrador accused former presidents Fox and Calderon of having given millions of hectares in mining concessions to companies, without charging them

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

with the local police is fundamental to fight crime. He criticized the position of the Supreme Court of Justice of the Nation in declaring unconstitutional the transfer of the National Guard to SEDENA, pointing out that its decision was based on conservatism and politicking.

taxes for gold and silver extraction, resulting in the period where the most gold and silver has been extracted from Mexico. Concessions granted in public-private partnerships to hospitals are being studied, and the payment of tariffs for gas pipelines and private prisons was reduced, which represented a savings of 10 billion pesos. We are also continuing to review issues related to the electricity and oil industries.

SECURITY

• Violence in Guerrero: The President mentioned that the construction of barracks for the National Guard is important to occupy territories where local security forces are not present and assured that 280 of the 500 that are intended to be built have already been completed. He emphasized that the National Guard and the Army are present in all regions of the country, and that their collaboration

• Transfer of the National Guard to the Ministry of Security: The Supreme Court of Justice of the Nation (SCJN) declared unconstitutional the transfer of the National Guard to the Ministry of National Defense (SEDENA), which was criticized by President Lopez Obrador as a decision based on political criteria. The President announced that he will not abide by the ruling until January 2024 and that he will increase the salaries of National Guard agents to avoid their desertion. He also announced that he will present a new constitutional reform in September 2024 to consolidate the changes sought within the National Guard. The President highlighted the problems of corruption in the Federal Police, which would justify his decision to keep the National Guard under the control of the Secretariat of Security and Citizen Protection (SSPC).

• Supreme Court Ruling and the National Guard: The President accused eight ministers of the Court of acting politically against the interest of the people, after they rejected the transfer of the National Guard to SEDENA. The President stated that he trusts that the Congress that will be integrated in September 2024 will have a qualified majority with legislators linked to the Fourth Transformation and will present a constitutional reform initiative to insist that the National Guard will depend on SEDENA. The President informed that he would keep David Cordova Campos as commander of the National Guard and that the military will maintain their salaries, as public safety is a government priority.

NEWS BY STATE

BAJA CALIFORNIA

Last week, six French companies from the aeronautical sector visited the entity of Baja California. The objective of this mission is to make the participating companies aware of the attractions of Baja California in terms of attracting investment, particularly in the aeronautical and space sector, and, to present the products and services offered by French companies to the companies in the aeronautical sector established in the State, particularly in Mexicali and Tijuana.

SONORA

State Governor Alfonso Durazo, said that they are working to be the main link with Arizona on the issue of semiconductors to create better conditions and strengthen the binational relationship to a historic level, the governor of Sonora mentioned. It has been an honor to be part of the Tucson Hispanic Chamber of Commerce Summit, he added.

CHIHUAHUA

In order to promote competitiveness, develop talent and boost innovation, the Instituto de Apoyo al Desarrollo Tecnologico (INADET) signed a collaboration agreement with the Hi-Tec Group, whose headquarters are located in London, England.

In the facilities of the High Technology Training Center (Cenaltec), the official signing took place between Cenaltec and Renato Novoa Perez, legal representative of the Hi-Tec Group, which will facilitate the training of men and women, who will receive specialized training in state-of-theart machinery and cutting-edge technology, which will increase productivity.

NUEVO LEON

During Hannover Messe in Germany, Nuevo Leon’s state authorities confirmed that two international companies in the automotive industry could arrive in Nuevo León in the coming months.

COAHUILA

The State Government will announce a couple of new industrial parks next week, to provide infrastructure to various areas of the state, said Claudio Bres Garza, Coahuila’s Secretary of Economy.

The park that is going to be announced for the municipality of Frontera has an area of 76 hectares for the industry.

TAMAULIPAS

According to the statistics of the National Council of the Maquiladora and Export Manufacturing Industry in Nuevo Laredo (INDEX), the expectation of growth in the industrial sector projects the expansions of three companies that will respresent an investment of more than 150 million dollars. With this, there will also be an increase in employment, for a total of 3,500 new job opportunities for these first months of 2023.

SOURCE: HERALDO DE CHIHUAHUA, TELEDIARIO, EL DIARIO DE COAHUILA, HERALDO DE MEXICO

GUANAJUATO

Guanajuato’s exports increased from 27 to 31.8 billion dollars by the end of 2022. This figure represents an 18% increase compared to 2021, said Luis Ernesto Rojas, Director of the Foreign Trade Promotion Coordinator (Cofoce), during yesterday’s presentation of the Claugto Automotive Forum. In particular, auto parts recorded a 15% growth compared to 2021. Meanwhile, non-automotive products increased by 18%: footwear, food, handicrafts, among others. These results, said the official, are part of the public policy that has been promoted by the state government. Ramon Alfaro Gomez, head of the Secretariat of Economic and Sustainable Development (SDES), said that the attraction of investments has been successful. He said that for this year the projections exceed 33 billion dollars. The automotive sector contributes 15% of the Gross Domestic Product, he added. The sector has 2,700 companies located in the state, which generate 193,000 jobs. In Guanajuato, there are 500 supplier companies, 9% of the supply chain is national, at least two thousand SMEs.

QUERETARO

With the attraction of new investment projects, Queretaro faces the challenge of responding to the demand for personnel for the industry. The director for Latin America of The Association for Manufacturing Technology (AMT), Carlos Mortera, emphasized that the arrival of investments in the state is correlated with meeting the needs of trained personnel. “This is how we will be able to ensure that the revenue stays in Queretaro, if the talent is trained, if the talent is developed,” he said. In this regard, he stated that Queretaro is usually one of the industrial states of interest for global companies seeking to enter the market, due to the economic and industrial growth conditions that characterize the state. “I work with more than 300 international clients, which are global companies that supply Latin American markets and the rest of the world, one of the industrial states where we focus on penetration issues is Queretaro, due to the accelerated economic and industrial growth it has experienced,” he said.

CDMX

The head of the Mexico City Government, Claudia Sheinbaum, denied that she is the driving force behind the National Women’s Front ‘Por ella Todas’, which has expressed its support for the presidential aspirations of the local leader. Sheinbaum said that they are women who support that a woman could win the poll to define Morena’s presidential candidate, heading for the 2024 elections, and thanked them for expressing their sympathy. This week, female legislators, academics, political scientists, and businesswomen presented the Front and stated that it is a movement made up of women from all over the country who embrace the feminist struggle and gender equality, in order to bring the first woman to the head of the Federal Executive.

STATE OF MEXICO

The debate between the candidates for the governorship of the State of Mexico, which took place on Thursday, April 20, did not have a clear winner, since the electorate’s opinions, especially those who are non-partisan, were divided. A poll by El Financiero indicates that 50 percent of those interviewed who followed the debate considered Delfina Gomez the winner and 43 percent, Alejandra del Moral. Among the non-partisan segment, which represents 53 percent of the state electorate, 46 percent mentioned the Morenista as the winner and 43 percent the PANPRI-PRD-Panal alliance candidate as the winner, practically a tie, if the margin of error of the survey is considered. The poll was conducted by telephone on April 21 among 500 adults, 66 percent of whom said they had seen, listened to, or heard about the debate.

SOURCE: MILENIO

INVESTMENT NEWS

NORTHEAST TITANX

The Indian company, TitanX, which produces cooling systems for automotive engines, has announced an expansion of its facilities in Ramos Arizpe, Coahuila. The expansion project is expected to generate 250 new job opportunities in the region.

LUMINAR

Luminar, an American technology start-up, has announced the launch of its new high-volume automated factory in Nuevo Leon. The factory has begun manufacturing and delivering its first sensors. Luminar specializes in developing advanced sensor technologies for autonomous vehicles.

CENTRAL MEXICO GESTAMP

The Spanish company, Gestamp, focused on manufacturing systems and components for the automotive industry, has announced its intentions to expand in San Luis Potosi.

WIKUS

German company Wikus has announced an expansion project in Queretaro. Wikus is a leader in metal cutting for the aerospace, automotive, construction, and energy industries.

CDMX RECKITT

British company Reckitt, which produces products such as Chocomilk drink powder and Lysol disinfectant, has announced a 26 million dollar investment to be exercised in Mexico this year.

NATIONAL CPKC

BULLSAFE

Spanish company Bullsafe will invest 8.8 million dollars to install operations in Queretaro, manufacturing armory for vehicles. The project is expected to create 200 job opportunities in the region.

Canadian Pacific Kansas City (CPKC), announces that they plan to invest 573 million dollars in Mexico over the next two years as part of the merger between Canadian Pacific, and Kansas City Sothern. They also committed to generating one billion dollars in revenue within three years. SOURCES:

TALENT DEVELOPMENT

DIVERSITY AND INCLUSION

Diversity and inclusion in companies is about valuing and respecting differences among people, including cultural diversity and sexual orientation, and creating an inclusive work environment where everyone can contribute to the success of the company. In this context, it is fundamental to recognize that the implementation of policies to promote diversity and inclusion within a company are necessary for a beneficial development in the working life of the participants.

TALENT DEVELOPMENT

DIVERSITY AND INCLUSION POLICIES

BENEFITS

Increase in Innovation

Increase in sales

WHAT ARE COMPANIES DOING?

Motivation Security

HOW DOES IT AFFECT?

FREE SPACE:

Greater diversity in terms of ideas, opinions and processes.

EMOTIONAL WELFARE:

The employee feels more valued by his/her surroundings and will be able to grow as a person.

TEAMWORK:

Working in a team provides all those involved with different approaches.

INCLUSIVE POLICIES AND PRACTICES

Companies are implementing policies and practices that promote diversity and inclusion in the workplace, such as hiring without discrimination, respecting cultural differences and including people with disabilities.

SOURCE: PRODENSA

TRAINING AND AWARENESS-RAISING

Training and awareness programs are being conducted for employees on issues related to diversity and inclusion.

SOCIAL RESPONSIBILITY

Companies are assuming greater social responsibility in promoting diversity and inclusion in society.

TALENT DEVELOPMENT

STRATEGIES TO IMPROVE INTERNAL TALENT FROM THE MANAGEMENT OF DIVERSITY, EQUITY AND INCLUSION PROJECTS

Nowadays, work teams are more global, so implementing successful training programs from the perspective of diversity, equity and inclusion (DE&I) is essential for organizations to ensure that the work environment and professional growth are safe for all employees.

Sofía Rojas, engagement and D&I Manager of CETELEM, expressed in the webinar “How to enhance internal talent from the management of diversity, equity and inclusion projects”, organized by the Mexican Association of Human Resources Management (Amedirh), that currently there are benefits within organizations to bet on promoting a DE&I project, since the good practices of applying a culture based on these values, improve the work environment and employees feel integrated into the dynamics of the companies.

He said that inclusion is a philosophy that embraces the idea that everyone has something of value to contribute and that everyone has the right to belong. According to Deloitte data, 78% of leaders believe that diversity, equity and inclusion is a competitive advantage. In addition, 58% of employees say that DE&I has an impact on a more positive and stimulating work environment.

It is worth noting that in Mercer’s Survey of Priorities, Diversity, Equity and Inclusion in MX, 72% of organizations in Mexico are focused on improving DE&I issues, but only 40% have a strategy to carry it out.

Sofía Rojas expressed that Diversity, Equity and Inclusion have an internal impact on companies in the following aspects:

• Creativity and innovation

• Commitment and retention

• Productivity and Performance

• Talent attraction

How can they move forward from the Human Resources department?

He stated that organizations must have a clear ‘purpose’ to design a high-level strategy; implement an ‘inclusion journey’ where they seek to adapt the employee journey, focusing on human resources objectives combined with those of DE&I, in order to know the barriers, commitment actions, awareness, processes that must be adapted or made more flexible.

She mentioned that it is necessary to establish a ‘sponsor+team’, since diversity and inclusion are more than a program and it is an issue for the whole organization, so it is necessary to put teams from different areas and generate commitment.

Sofía Rojas expressed that ‘leadership’ is fundamental in this aspect because it creates a commitment in a visible and active way, with positive and constant communication; as well as ‘updating and driving’ the strategies by defining the commitments of the annual plan and making the necessary updates, so the Human Resources department has the role of driving, sharing and generating trust to achieve Diversity, Equity, and Inclusion.

SOURCE: MEXICO INDUSTRY

UPCOMING CHANGES TO THE WORK-RELATED DISEASE CATALOG

The official list of workplace-related diseases is about to change in Mexico. The current list of diseases that can be attributable to exposure to occupational risk factors dates from five decades ago. To update the list, the Mexican government sent a bill to the Mexican congress to add new diseases to the federal labor law, such as cancers, mental disorders, and respiratory illness (including covid-19), among others.

The bill has recently been approved by the lower house of the congress. It is expected to be soon approved by the Senate. Be aware that the new catalog does not make any of the new diseases automatically be considered work-related. A connection between the disease and a work-related risk or exposure must be established by an official health specialist. After the approval of the new table, the Mexican government must create new technical medical documents (cedulas) to be used by the Social Security occupational health personnel to either approve or reject the work-disease connection.

It is imperative for employers to continue working with occupational safety and health specialists to promote safe and healthy environment, preventing any harm from hazards in the workplace.

Contact us to learn more about the new list.

ALVARO GARCIA HR, Vice President