Weekly Review I May 17, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I May 17, 2023

RELEVANT NEWS

MEXICO, THE UNITED STATES, AND CANADA ARE THE EPICENTER OF NEARSHORING AND FRIENDSHORING: CCE

Francisco Cervantes Diaz, president of the Business Coordinating Council (CCE), stated that Mexico, the United States, and Canada are the epicenter of the economic transformation known as nearshoring, friendshoring, allyshoring, and reshoring.

“What is certain is that this phenomenon is transforming the world and North America is the epicenter of this transformation,” stated the representative of the umbrella organization during a working visit to Washington, DC to participate in the North American Business Summit.

The industrialist will also meet with representatives of the private sector of the United States and Canada, as well as officials and diplomats, to highlight

the strengths and the historic opportunity that this region is experiencing to become the most competitive in the world.

During the meetings, the agreements reached last January in Mexico between the business sectors of Mexico, the United States and Canada, within the framework of the North American Leaders Summit, were highlighted at the highest level.

Political and business leaders from Mexico, the United States, and Canada committed to fully implement international instruments, such as the USMCA, to improve competitiveness and take advantage of the unique opportunities to attract investment to our region.

RELEVANT NEWS

“Today, we are meeting to discuss ways to continue to increase North America’s competitiveness,” said the CCE President.

In January 2023, the leaders of Mexico, the United States and Canada recognized that the region faces a “unique opportunity” to strengthen continental economic competitiveness and agreed to implement policies that put “North America First.”

One of the main challenges for today’s session is to map out the path to give substance to this commitment of our political leaders, said the businessman, who highlighted the role of nearshoring on the North American economy where it is already visible.

According to the businessman, nearshoring is a reality that attracts billions of dollars to Mexico.

“In 2022, new investments grew 25 percent over the previous year, and industrial parks in central and northern Mexico show a vacancy level of less than 1 percent,” said

He added that investments in sectors such as automotive in Canada show that the benefits of nearshoring are also materializing in that country.

The challenge is how to leverage the treaty so that North America emerges from nearshoring as the most competitive region on the planet for the next 50 years, he added.

“We are equipped with the tools to take advantage of this opportunity. Our trade agreement between

Mexico, the United States, and Canada is a strategic tool to achieve this goal,” he said.

Trade in goods between Mexico, the United States, and Canada exceeds US$3 million per minute, the CCE president noted.

“The United States has implemented a new industrial policy, which breaks with any scheme previously seen in this region,” added Francisco Cervantes Diaz.

This is the most important budgetary effort in the modern history of the United States, as it allocates more than 600 billion dollars to support the development of sectors that it considers fundamental for its economic growth and national security, he concluded.

SOURCE: FORBES MEXICO

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

May 10-16, 2023

POLITICAL AGENDA

• Elections 2024: When asked about Marcelo Ebrard’s statements that Morena should establish rules to choose the Morenista candidate who will run for the presidency, the President only assured that he respects freedom of expression and said that it is important to end with non-democratic appointment of candidates, with vote buying and with candidates imposed by the media.

• The head of the Federal Executive stated that the elections for the governorships of Coahuila and the State of Mexico “have national political repercussions”. He also informed that the elections will be held on June 4. He also called to beware of vote buying and to vote freely for a transformation, so that people do not allow themselves to be manipulated.

• Supreme Court of Justice: The President announced that he will send a constitutional reform so that judges, magistrates, and ministers are elected by the people. He affirmed that in this way he will seek to put an end to the dominance of the top positions and that it will be the people who really rule and govern in Mexico. He pointed out that it would be ideal that the 20 billion pesos trust fund of the Judicial Power is used to support

low-income students. The austerity policy has allowed this administration to grant more resources to social programs.

BILATERAL RELATION

• Call with Joe Biden: President Lopez Obrador indicated that his administration will cooperate with Joe Biden’s administration so that there is no chaos or confrontations at the border after the end of Title 42. Work is being done in the southeast of the country to guarantee protection for migrants and to promote legal channels of entry to the United States, where hundreds of thousands of visas are available for some Latin American countries. No agreement was reached with President Biden to send more National Guard elements to the border, and they are instructed not to use force against migrants. The American president is a friend of Mexico and they are working on the matter, despite the actions of the conservative bloc in the United States. The issue of fentanyl was also discussed and the Mexican government’s willingness to cooperate with the United States in addressing the problem of abuse of this substance was reaffirmed. Regarding the funding of Mexican civil society organizations, the President clarified that

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

this issue was not discussed with Biden, since it is done without his knowledge and has to do with agencies such as the CIA, DEA and the State Department.

• Migration: Mexico’s Minister of Foreign Affairs, Marcelo Ebrard, criticized Republican Senator John Kennedy for making statements that are unacceptable to Mexico and called him ignorant and persona non grata. Regarding the situation of migrants in Mexico’s northern border, Ebrard informed that there is a migratory flow without confrontations and that Mexico will not accept more than 1,000 deported migrants per day. The U.S. House

of Representatives approved the Border Security Act 2023, but it is difficult for it to be approved in the Democrat-controlled Senate. President Lopez Obrador stated that a policy of good neighborliness with the United States will be maintained and that the construction of the wall is pure publicity. He also highlighted that Mexico is the country that has contributed the most to prevent the delivery of fentanyl pills to the United States.

INDUSTRY

• Altos Hornos de Mexico: The situation of Altos Hornos is attributed by President Lopez Obrador to mismanagement, and it is noted that the company was sold during the neoliberal era. The company is in debt with the government, Pemex, CFE, Infonavit and SAT, and an agreement is being sought with other shareholders to restructure the debt and protect the workers. A productive rescue plan is proposed to modernize the company and generate a payment schedule for the debt, without resorting to a financial rescue as was done in the past. The debt is estimated between 3-5 MMDP.

• Meeting with Carlos Slim: In a meeting with the engineer, President Lopez Obrador highlighted Mexico’s good economic moment, with confidence for investments and a strengthening of the peso against the dollar. It was emphasized that the country is not indebted, there is a rule of law and governability, and the affirmation of Congressman Gabriel Quadri about the disappearance of certain states was rejected. In addition, mention was made of the formation of a block formed by PAN, PRI, PRD, and part of civil society, led by Claudio X Gonzalez.

KEYPOINTS OF PRESIDENT

ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

• Alvaro Delgado: In a video broadcast, Alvaro Delgado criticizes Claudio X Gonzalez and his father, pointing out that both defend the same interests. It is mentioned that the father is a partner in several companies and has been president of the Mexican Business Council. In addition, it is stated that the U.S. government and businessmen are financing the conservative bloc against the current government since they were benefited in the previous regime and did not pay taxes. It is mentioned that companies such as Kimberly Clark received tax remissions and a list of organizations that receive money to attack the government is shown, highlighting Mexico Evalua and the Mexican Institute for Competitiveness. Names of prominent businessmen are also mentioned in this block.

• Sale of Citibanamex: President Lopez Obrador informed that the sale process is going well and the bank’s board members were informed that the Mexican government has no objection to the sale since what is being sought with this sale is the payment of taxes for this operation and that the buyer be Mexican. The operation is being carried out in a positive way because it is complying with the Government’s request. If Grupo Mexico buys it, there is no objection.

ENVIRONMENT

• Water: President Lopez Obrador emphasized that his administration is working towards sustainable development and not affecting the environment. He commemorated the elimination of concessions for mining and energy exploitation with fracking and the introduction of transgenic corn. Regulations were imposed to guarantee water supply and the Constellation Brands brewery project in

Mexicali was cancelled. Horizontal growth is being sought in the southeast, where 70% of the country’s water is located, and there are plans to develop the coasts and towns where there is water and resources. A map of places with water scarcity and the need to be more careful with the issuance of permits was also shown.

ECONOMY

• Economy: Mexico’s president has highlighted some economic achievements in his country. There are a record 21 million workers enrolled in social security and 1.2 million new jobs have been created since before the pandemic. Unemployment is 2.8%. The peso has appreciated 13.7% during the six-year term and there has been a 10% increase in remittances this year. Mexico is the main trading partner of the United States and there is economic cooperation in the war industry. Inflation in April was 6.25%, but has been kept low with mea-

KEYPOINTS OF PRESIDENT

ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

highway from Palenque to Tulum and from Chetumal to Escarcega. In addition, progress has been made in the collection of archaeological materials, recovering significant quantities of ceramic pieces and human burials. The archaeological work is focused on the Archaeological Zones Improvement Program, which currently covers 26 zones in the states of Chiapas, Tabasco, Campeche, Yucatan, and Quintana Roo. It was also mentioned that next May 19 the New York Prosecutor’s Office will formally deliver Monument 19 of Chacaltzingo, Morelos, which was stolen by archaeological property traffickers in the 20th century. It has been a decades-long struggle for its return and the piece will be exhibited in the Palace of Cortes, possibly for a year.

sures such as agreements with producers and industries to establish a basic basket of 24 products. The minimum wage has increased by 88% in real terms and Mexico’s bank reserves have increased by 17.1%. Crude oil production has increased and the price of gasoline and LP Gas has decreased in recent times.

INFRASTRUCTURE

• Airport: President Lopez Obrador indicated that he did not address the issue of the recovery of the airport’s category 1 status during his call with his American counterpart, since it is already being resolved and the corresponding procedures have begun. He added that the country, with or without this category, is growing.

• Mayan Train: Anthropologist Diego Prieto informed that approval has been obtained for sections 1 to 5 and section 7 of the project to build the

• Urban Improvement: The Minister of Agrarian, Territorial and Urban Development, Architect Hector Roman Meyer, indicated that since the beginning of the administration, 162 municipalities have been intervened, providing 896 sports spaces to more than 5 million beneficiaries. He pointed out that the aim is for these facilities to always have a bioclimatic design, high-quality materials, low maintenance, vegetation, lighting, and signage.

HEALTH

• Private Clinics: In response to reports of private clinics charging excessive prices, especially in Navojoa, Sonora, the President announced that an investigation will be carried out. He will ask the Secretaries of Health and the Interior to review the cases of abuse. He highlighted the need to strengthen the public health system, noting that previously the entire health system, including ambulances, was being privatized, resulting in poor

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

SECURITY

• Security: The Undersecretary of Citizen Security, Luis Rodriguez Bucio, reported on judges who have freed criminals in cases such as “El Güero Palma”, the “Gato” Mayor of Piaxtla and the Ayotzinapa case. General David Cordova Campos, commander of the National Guard, mentioned that security in the transfer of fertilizers and in the Metro Collective System is one of its missions. Regarding the fight against the illicit fuel market, 83,565 liters of fuel and 53 clandestine outlets have been seized, totaling 2’819,717 liters seized so far in 2023. The Minister of Security and Citizen Protection, Rosa Icela Rodriguez, highlighted a reduction in federal crimes and a considerable decrease in intentional homicides and car theft, reaching a reduction of 50.2% and 93% respectively. The regularization of foreign vehicles will continue until June.

care. In addition, he mentioned that clinical analysis was being privatized or outsourced.

• Addictions: President Lopez Obrador announced that a fortnightly report will be given on addictions, led by Dr. Hugo Lopez-Gatell, to expose the damage drugs cause to young people and raise awareness. It was emphasized that narco-series show a false image of happiness. Dr. Lopez-Gatell stressed that drugs cause suffering and violence and that cocaine, a highly addictive substance, may be related to the transmission of HIV. Addicts may engage in criminal acts and risk factors include exposure to weapons, domestic violence and excessive alcohol consumption. In addition, it was emphasized that social inequalities are perpetuated by excessive drug use or addiction.

NEWS BY STATE

BAJA CALIFORNIA

In order to take advantage of the arrival of investments in Baja California in the coming years, we must seek to distribute new industries or expansions in the different municipalities, said the president of Index Zona Costa BC. Montejo Peterson indicated that reinforcing the value chain in all municipalities is fundamental to take full advantage of the interest of foreign companies and the characteristics of each site.

SOURCE: EL IMPARCIAL

NUEVO LEON

KIA is once again betting on Nuevo Leon, where it will produce the EV9 electric car. During the tour of South Korea by the governor of Nuevo Leon, Samuel Garcia Sepulveda, he announced that KIA Motors will make a millionaire investment to expand the Pesqueria plant, where two electric vehicle models will be produced, one by KIA and the other by Hyundai, consolidating the state as the Electromobility Hub.

TAMAULIPAS

Tamaulipas will have a new international bridge to boost trade. The new Mier-Rome bridge will strengthen the infrastructure for foreign trade between Texas and Tamaulipas, in addition to boosting North American trade. This bridge is part of the projects that the government of Tamaulipas is developing to promote binational trade.

CHIHUAHUA

Industrial activity in the state of Chihuahua increased by 14.7% at the beginning of 2023, compared to the end of last year, according to the Monthly Indicator of Industrial Activity by State (IMAIEF).

For the state of Chihuahua, the sector that presented the highest growth was construction (43.5%), followed by manufacturing (10.8%), electric power generation (7.4%) and mining (2.3%), according to statistics from the Private Sector Competitive Intelligence Platform (PICsp) with data from INEGI.

SOURCE: EL ECONOMISTA, EL HERALDO DE CHIHUAHUA

GUANAJUATO

According to the Monthly Industrial Activity Indicator, the state of Guanajuato has the second largest number of manufacturing industries in Mexico, only after Chiapas.

Since industrial activity is one of the most relevant in the state, its growth has been reflected in important indicators in the country. Thus, in the measurements made by INEGI on a monthly basis, the state reports an increase in the percentage variation of the number of manufacturing industries, concentrating up to 12.4 percent in the country, until the first months of this year.

Likewise, it registered a considerable increase in its industrial activity, going from 0.6 percent to 10.3 percent in a period of only one month.

SAN

LUIS POTOSI

The Secretary of Economic Development of the State, Juan Carlos Valladares

Eichelmann, welcomed this Monday to San Luis Potosi the Chinese company Tecco Mex, a producer of tire components, and said that currently there is progress in the growth of Chinese firms in our state.

The official mentioned that “it is no coincidence that investments grew 51 percent from 2021 to 2022 in the state. This reflects the growing interest of companies in adopting nearshoring strategies to improve their operational efficiency and reduce costs”.

JALISCO

During January 2023, industrial activity in Jalisco grew 2.3% at an annual rate with original figure.

With seasonally adjusted figures, Jalisco’s annual variation was positive, at 1.7%.

Among the industries that make up this indicator, the mining industry grew 7.6% annually and manufacturing industries 6.0%.

QUERETARO

The National Institute of Statistics and Geography (INEGI) presented the Monthly Indicator of Industrial Activity by State (IMAIEF), with results corresponding to January 2023, where Queretaro registered a 7% growth compared to the previous month.

Likewise, in annual terms, Queretaro’s Industrial Activity also presented a growth of 9.1%, compared to January 2022.

CDMX

In order to take advantage of the current economic situation in the country, where nearshoring and the reactivation of domestic consumption stand out, the Economic Development Commission of the Mexico City Congress approved amendments to the Law for Local Economic Development.

According to the document, the project incorporates criteria for the promotion of groups of entrepreneurs and micro-enterprises, since it includes the definition of entrepreneurship “as the action of an individual or legal entity to initiate a process to create or transform a business project into a productive and entrepreneurial activity”.

It is also specified that the Secretariat of Economic Development of the capital of the country, as a new function, must promote the establishment of an action plan with the 16 municipalities, taking advantage of the vocation of each demarcation: for example, Azcapotzalco with industrial activity.

STATE OF MEXICO

The candidate for governor of the State of Mexico, Delfina Gomez, said she will implement a program to rehabilitate and strengthen the hydraulic distribution networks in communities to ensure that water reaches homes directly. During her visit to the municipality of Santo Tomas de los Platanos, the Morenista candidate stressed the need to improve and rehabilitate the hydraulic networks so that water reaches homes directly, she also said that the lack of this liquid is largely due to the mismanagement of previous governments.

SOURCE: EL ECONOMISTA, MILENIO

INVESTMENT NEWS

NORTHEAST

TUPY

Brazilian company Tupy, specialized in the manufacturing of gasoline engines and auto parts, will invest $36.8 million in Ramos Arizpe, Coahuila, to expand its operations, creating 250 new jobs.

FISHER DYNAMICS

Fisher Dynamics, a US-based company, will invest $81 million in Matamoros, Tamaulipas, to expand its operations in the “Las Ventanas Industrial Park”. This investment will create 1,000 direct jobs in the manufacturing of structures and mechanisms for vehicle seats.

MIBA

Austrian company Miba is investing $25 million in Ramos Arizpe, Coahuila, to manufacture automotive components, wind turbine turbines, and agricultural machinery. The investment will create 185 new jobs and cater to clients like John Deere and Caterpillar.

BREMBO

The Italian giant in design and manufacture of auto parts just announced an expansion in Escobedo that will turn out to be its biggest factory of calipers in the world with a $207-million- dollar investment, the jobs projected are over 500.

CENTRAL MEXICO TAXAN

Mexican company Taxan, a leader in the manufacturing of electronic cards for the automotive industry, has started the construction of its new facilities in the Millenium Industrial Park in San Luis Potosi. The project involves a $40.6 million investment and is expected to create 500 jobs

VAZ INDUSTRIAL

Mexican company VAZ Industrial will invest $30 million in the construction of Urban Industrial Park in Leon, Guanajuato.

The project will generate 530 jobs during construction and over 1000 jobs during operations.

DHL

German company DHL is investing $120 million to expand and automate its Domestic Air Operations Center located at Queretaro’s Intercontinental Airport. This investment will create 200 new specialized jobs.

TROUW NUTRITION

Nether company Trouw Nutrition just placed its first stone on what will be its first farm in Mexico to expand their services, the location is the state of Queretaro, the investment will be around $57 million dollars and it will strengthen the relationship between the Netherlands and the state according to the nether ambassador.

CDMX

DICKA LOGISTICS

Dicka Logistics entrepreneurs have announced their new project as a sign of confidence in the State of Mexico. This venture will create 94 new direct jobs in “Tepozpark III”. The investment for this project amounts to. $6 million.