Weekly Review I May 24, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I May 24, 2023

RELEVANT NEWS

MEXICO CAN GROW 4% IF THE POTENTIAL OF NEARSHORING IS BOOSTED: CCE

Francisco Cervantes Diaz, president of the Business Coordinating Council (CCE), called for strengthening confidence so that companies attracted by nearshoring invest in Mexico, as this could boost annual economic growth rates of up to 4%.

“If nearshoring is detonated to its full potential, it could make Mexico capable of growing at average rates of up to 4% annually over the next 15 years,” said the business leader.

If it materializes, the relocation of companies will help Mexico to continue to be among the 15 most important economies in the world and even have a better place, said the businessman.

There are four factors that characterize the arrival of the first quarter of the 21st century, said Cervantes Diaz during the inauguration of the 32nd Convention of the Mexican Association of Insurance Institutions (AMIS), in Mexico City.

“Firstly, an environment of greater concern for health, particularly after the lessons left by the Covid-19 pandemic,” he said.

He added that there is a more accelerated context of acute and prolonged catastrophic episodes derived from climate change.

Thirdly, he said, there is an environment of intense competition and abrupt changes in labor markets that have a direct impact on people’s economic lives.

“We are living in this future of evolution, a fourth fundamental aspect that is vital for Mexico as the relocation of supply chains, known as nearshoring,” said the business leader.

Nearshoring, he added, is offering Mexico the opportunity for large companies from around the world to come to the country to set up their production and supply plants, in order to take advantage of the proximity to the United States.

“This new trigger for growth and development will also open up opportunities for thousands of small companies to grow their businesses in such value chains throughout the country,” Cervantes Diaz said.

“Thus, this evolution that we are experiencing in investment will of course require a very solid and modern framework for insuring assets and the large volumes of merchandise produced, and thus continue to strengthen confidence in investing in Mexico,” he said.

SOURCE: FORBES MEXICO

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

May 17-23. 2023

POLITICAL AGENDA

• Grupo Mexico: President Lopez Obrador acknowledged that there is a difference with Grupo Mexico because the government is rescuing part of the concession in the Isthmus, to which the company responded with an exaggerated media campaign. He emphasized that talks with the company are still ongoing. He mentioned that in the current administration, approximately 500 expropriations have been carried out, using legal tools; most of them agreed. He commented that yesterday a tweet was reproduced by the conservative group in which it was said that German Larrea decided not to buy Banamex due to the lack of legal certainty, which proposes the possibility of creating a public-private partnership.

• SCJN: Regarding the decision of the Supreme Court of Justice of the Nation (SCJN) on invalidating the decree declaring some works as of national security and public interest, the President pointed out that he went ahead with another decree to protect himself from the Court’s interests. He emphasized that the SCJN is in favor of a minority in power, referring to the need for judicial reform.

• Federal Judiciary Council: President Lopez Obra-

dor indicated that a substantive way out has to be sought so that whoever wins the presidency, also has a qualified majority in Congress and constitutional reforms can be carried out so that it is the people who elect the judges. He proposed that when the reporters have information from the judges and magistrates about their assets, they should come to the morning conference and what happens should be shown in this space, so that there may be true transparency.

ECONOMY

• Peso - Dollar: The President pointed out that the appreciation of the peso against the dollar mainly helps the country; he recalled that the public debt is contracted in dollars, and this helps to lower it. He mentioned that there are sectors that are impacted, such as exporters, but in general, it is better to have an appreciation than a depreciation of the currency as it happened before. He indicated that the peso is the currency that has appreciated the most internationally, some analysts are calling it the new Mexican dream.

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

ENVIRONMENT

• Transgenic corn: When asked by a reporter about the market distortions created by the low price of transgenic corn, the President emphasized that there is no permit for the use of transgenic corn for human consumption. The President indicated that support is being provided to Sinaloa’s farmers through the purchase of one million tons of white corn at a guaranteed price. Likewise, the delivery of free fertilizer to farmers with less than 10 hectares is being extended. He indicated that other instruments are being analyzed, such as greater control of import and export permits to protect farmers and consumers.

• Popocatepetl: The President indicated that the volcano’s activity is being monitored. For the moment, the alarm remains at yellow phase 3, which is preventive and there are no plans to move to the next phase. Airlines are already reactivating flights.

• Water in Veracruz: The president was questioned about the water supply at the Yurib ia dam, to which he commented that an agreement must be sought between the communities from where the water is taken to Coatzacoalcos and to explore other sources of supply. This will be the responsibility of the state government and the federal government would be in a position to help. He pointed out that fortunately the area does not have a lack of vital liquid, there is ground water and surface water, it is a matter of investing in treatment plants. He commented that in the southern region there is close to 70% of Mexico’s water.

INTERNATIONAL

• Peru: Lopez Obrador expressed his gratitude for being considered persona non grata in Peru since this decision was made by the Congress and the Presidency, which do not represent the Peruvian people. He considered that it was not fair what the congressmen did by removing the legitimate president, Pedro Castillo, who was elected by the people. He expressed that the former president is unjustly and illegally imprisoned.

• Migration: The President commented that this week a program for Central American migrants will be presented so that they can have temporary visas so that they can work in Mexico. The President considered it important to fine tune public immigration policies, considering that it is not correct to be rejecting migrants when there is a need for labor force.

• Meeting with Latin American leaders: President Lopez Obrador revealed that yesterday he spoke with the President of Argentina, Alberto Fernandez, to discuss trade, and explained that the meeting he was to have at the beginning of May with several Latin American leaders was suspended due to agenda issues.

KEYPOINTS OF PRESIDENT

ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

the irreversible health risks associated with different types of inhalants, which are considered the second leading cause of drug use after marijuana. Regarding the drug “Redotex”, a video was shown explaining the risks of its components, reaffirming the health registrations by COFEPRIS. Finally, the Head of IMSS, Zoe Robledo, presented a report on the investments made in fourteen states in transition to IMSS Bienestar. Also mentioned was the incorporation of four other entities: Hidalgo, Quintana Roo, Mexico City and Tamaulipas.

INFRASTRUCTURE

HEALTH

• Health: In his speech, the President highlighted that positive changes are being implemented in the health system for the benefit of the vulnerable population. One of the measures highlighted was to allow retired doctors to participate in IMSS-Bienestar through a contract in addition to their pension. He also expressed his gratitude to the 700 Cuban specialists who are working in the country. The Minister of Education, Leticia Ramirez, presented advances in the “Classroom Strategy: Addiction Prevention”, which includes talks with health specialists and video capsules available on a microsite. The Undersecretary of Prevention and Health Promotion, Hugo Lopez Gatell, reported on

• Mayan Train: President Andres Manuel Lopez Obrador indicated that the Mayan Train is a project that seeks to integrate the southeast of the country. This work means the economic and social future of the southeast, its potential lies in tourism, because tourists can be brought to the south of Quintana Roo and, in the same way, they can be transferred to other states such as Campeche or Yucatan. In an effort to put an end to the amparos of the fifis and corruption, the decision was made to send a decree for this region to become a zone of national security and public interest.

SECURITY

• Missing migrants: President Lopez Obrador informed that the migrants who had been kidnapped in Matehuala, San Luis Potosi, have been rescued. General Crescencio Sandoval, head of SEDENA, informed that 33 migrants were located on highway 57 in the limits of S.L.P. and Nuevo Leon, who were transferred to the INM delegation in S.L.P. He stated that the search for the remaining migrants

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

will continue, and that the migrants located are expected to provide information about what happened. He also informed that the 650 elements of the National Guard that were deployed continue to carry out actions to provide attention to the migrants.

• Corruption in SEDENA: The President expressed confidence in SEDENA and in General Luis Crescencio Sandoval. He denounced the financing of groups investigating the armed forces by USAID. He rejected the attacks against his children and affirmed that he has the moral authority to resist them. He criticized commentators and media defenders of the former regime who have intensified attacks on the government. He denied claims in a report about his salary and proposed to exchange family assets with the journalist. He highlighted the support to sportsmen and mentioned that funds are delivered directly through the Institute to Return to the People what was Stolen. General Sandoval clarified the acquisition of an apartment and denied any relationship with a construction company. Regarding travels, he denied having traveled to Europe during his government and explained the continental destinations he has visited, accompanied by his family and assistants per protocol. He affirmed that he has not taken vacations in approximately 20 years.

NEWS BY STATE

BAJA CALIFORNIA

With the objective of promoting trade and investment between the states of Sinaloa, Durango, Sonora, Chihuahua, and Baja California Norte and Sur with the American Chamber of Commerce Mexico (AMCHAM), different representatives of the governments of said entities signed a new agreement which it will seek to improve the economy of the northwest. “This agreement that we celebrate today between the northwestern states with AMCHAM is very relevant, the United States is Mexico’s main trading partner, we are talking about 80 percent of Mexico’s exports going to that country, and foreign direct investment goes 40 percent,” said the economy secretary of Sinaloa.

SONORA

Alfonso Durazo, governor of Sonora, assured that his Sonora Plan promotes the electromobility industry in the Sonoran state. “The idea is to integrate, here in the state of Sonora, an electromobility industry to make optimal use of all those minerals that are essential for the industry; generate value chains, boost investment in large-scale renewable energy projects”, he mentioned.

SOURCE: EL SOL DE MAZATLAN , SDP NOTICIAS

NUEVO LEON

The Instituto Tecnológico y de Estudios Superiores de Monterrey (TEC de Monterrey) is promoting initiatives at the national level to contribute to the transition to electromobility and serve as a center of highly specialized talent for the hub of the vehicle industry electrical (EV) that will be established in Nuevo León with the arrival of an EV OEM and its suppliers.

TAMAULIPAS

Two new industrial parks will be installed to the west of Nuevo Laredo, Tamaulipas, as announced by the Secretary of Economic Development, Rolando Guevara Gonzalez, who mentioned that these actions demonstrate the confidence that exists in the municipality to invest.

Guevara Gonzalez informed that these industrial buildings come from a group of local investors, and another from the state of Coahuila.

CHIHUAHUA

The Ministry of Innovation and Economic Development (SIDE) participated in the Supply Chain USA 2023 Panel Networking event, organized by Reuters in Chicago, Illinois, to promote the state as a leader in attracting new companies, in the context of the phenomenon of relocation of supply chains from Asia to North America (nearshoring).

The event is one of the most important supply chain forums in Latin America, since it brings together more than 900 executives and representatives of international companies interested in expanding their capital in Mexico and other parts of the world.

The state official highlighted the competitive advantages of Chihuahua as an investment destination, which is the first place nationally in manufacturing employment with more than 518,000 workers, an attraction of 1.8 billion dollars in foreign direct investment and 53 industrial parks.

SOURCE: DPL NEWS, EL SOL DE TAMPICO, GOVERNMENT OF CHIHUAHUA

GUANAJUATO

Guanajuato ranked first nationally in vehicle production in 2022, with a total of 725,251 units, representing 21.9% of the national total.

Based on this data, Ramon Alfaro Gomez, head of the state’s Secretariat of Sustainable Economic Development (SDES), referred to the automotive sector’s contribution to the state’s economy.

Production has generated employment, boosted supply chains, exports, and technological development and innovation, he added.

SOURCE: EL UNIVERSA

QUERETARO

The President of the Queretaro Automotive Cluster, Renato Villaseñor Mendoza, added that they are aware of at least five new investment projects for the sector, Tier 1 and Tier 2 companies of European and Asian origin.

In addition to nearshoring, another component that has an impact on the industry’s productivity is the forthcoming entry into force of the regional content value rules of the Mexico-US-Canada Agreement (USMCA).

With the passing of the first four months of the year, the local automotive industry reports positive growth that strengthens the annual forecasts. The president of the cluster said that they started the year with a growth in a range of 4 to 6%, but currently, it is between 5 and 7%, which are variations that are within the growth projection that was set in a parameter of 5 to 10% to end 2023.

JALISCO

Of the 10 sectors evaluated in the second half of the year, businessmen and economists highlight the full recovery in six: technology, furniture, construction, commerce and services, agriculture and livestock, and the beverage industry. 100% of those interviewed agreed that the economy is doing better or just as well.

The sectors were affected by the pandemic of the new coronavirus, but construction maintains a positive streak due to the exchange rate, the stability in the supply of products, the prices of inputs and raw materials, in addition to the reactivation of public investment. In the first two months of the year alone, a record investment in public works was registered in Jalisco, with 1,216 million pesos.

SOURCE: INFORMADOR, EL ECONOMISTA

CDMX

Mexico City seeks to review with the National Water Commission (Conagua) an adjustment for the payment of water for large consumers, as part of the agreement that was made this year with the private sector to increase water capacity in the drought of 2023. After the event Acciones de Abastecimiento del Agua en la Ciudad de Mexico, the head of Government, Claudia Sheinbaum Pardo, explained that it has not yet been determined how much the charge for companies will increase, what has been specified is that it is part of the agreement signed in March of this year. According to local government information, in the city there are 18 concessions with Conagua, with a total of 11.6 million cubic meters per year; of these, after talking with the companies, 7.7 million additional cubic meters per year were obtained.

STATE OF MEXICO

In the second debate for the governorship of the State of Mexico, candidates Delfina Gomez of ‘Juntos Haremos Historia’ and Alejandra Del Moral of the alliance ‘Va por el Estado de Mexico’ confronted each other on several relevant issues. During the debate, members of the No Al Tarifazo Collective demonstrated to demand that the candidates commit not to authorize an increase in public transportation fares since the transportation companies have revived their demand to increase fares to condition their support in the electoral process. The collective reproached the carriers for not complying with the agreements dictated by the legislation, such as the installation of security equipment and the renewal of units. Regarding the absence of Alejandra Del Moral’s supporters in the debate, the PAN senator, Kenia Lopez, justified that the candidate is well accompanied and that they could not be physically present due to the conditions of the debate proposed by Morena. As for government proposals, Alejandra Del Moral promised to work on the use of clean energy and forest conservation. Delfina Gomez promised to address water scarcity, improve education through agreements with institutions and build a university in Tlalpan.

SOURCE: EL ECONOMISTA, MILENIO

INVESTMENT NEWS

NORTHEAST

SUNGWOO HITECH

The supplier plant of KIA in Pesqueria, Nuevo Leon, is currently undergoing its third expansion. Governor Samuel Garcia has confirmed the $300 million investment, which will create 1,500 new jobs, and will keep Korean and Mexican companies aligned.

MENCORSA

Mexican company Mencorsa, has initiated the construction of “Fundidores Industrial Park” in the municipality of Frontera, Coahuila. The 44-hectare development, with an investment of $6 million, will serve as a hub for companies entering the Nearshoring market.

WBTL

Chinese automotive industry supplier WBTL has inaugurated its first plant in the “Alianza Industrial Park” in Derramadero, with a $45 million investment. The new facility will create 550 jobs. They also confirmed a second investment of $165 million, creating a total of 1200 jobs.

METELMEX

Mexican company Metelmex, has announced a $5 million investment to build its plant in Monclova, Coahuila, aiming to expand its presence in the state. The new facility will create 485 new jobs and manufacture products for the heavy industry to companies in the railway sector located in the Central Region.

TECCO

Chinese company Tecco and part of the Himile group, will be manufacturing molds and equipment for renowned tire manufacturers such as Pirelli, Michelin, Continental, and Bridgestone. This expansion project entails an investment of $42 million and is expected to generate approximately 400 new jobs.

MAJOR LEAGUE INDUSTRIES

American company Major League Industries is investing $5 million to establish its operations in Tlahualilo, Durango. The company specializes in manufacturing automotive airbags and this investment is expected to create 1,500 direct jobs, thereby strengthening the presence of the state in the automotive industry.

LIDDELL

Liddell, a Mexican company, is expanding its manufacturing operations in Monclova, Coahuila in the northeast region. The expansion project, with an investment of an undisclosed amount, will create 300 jobs. This investment marks an important milestone for Liddell in Mexico.

LENNOX

Lennox, a company based in the United States, is expanding its manufacturing operations in Ramos Arizpe, Coahuila in the northeast region. The expansion project involves a $36 million investment and is expected to create 600 jobs. Lennox specializes in automotive manufacturing

KIA

Nuevo Leon’s governor Samuel Garcia claimed to have reached an agreement with Korean automotive company KIA which has a strong presence in the state, they will be making a billionaire investment in the manufacturing of their new electric vehicles.

NORTHWEST

MEGACABLE

Mexican company Megacable has announced its expansion in Sinaloa, in the northwest region, with a $131 million investment. This expansion project focuses on communication services and is expected to create 8,000 jobs over 2023.

CENTRAL MEXICO

BOSCH

German company Bosch has announced a $236 million expansion plan for its manufacturing and automotive center in Aguascalientes. This investment will contribute to the growth of the automotive industry in the region.

CDMX SCHNEIDER ELECTRIC

French company Schneider Electric reassured its presence in Mexico with an investment in its Tlaxcala plant where it is said to generate over 700 direct jobs over the course of their expansion and after it.