Weekly Review I September 6, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I September 6, 2023

RELEVANT NEWS

KEN SALAZAR RULES OUT THAT PANELS UNDER THE USMCA WILL AFFECT TRADE RELATIONS.

Ken Salazar, U.S. Ambassador to Mexico, assured that the labor disputes and panels opened under the USMCA are concerns of his country, but will not affect or impact trade relations.

At the request of the United States, a labor panel over a Grupo Mexico mine dispute and another panel over Mexico’s veto of GM corn are currently underway.

“It seems to me that with the years we have been working with the USMCA we have done well, we have concerns, but those concerns can also be resolved under the processes we have in the USMCA,” commented the also honorary president of the American Society of Mexico at the end of the organization’s Second Binational Convention.

The diplomat recalled that when the USMCA was agreed upon it was known that the United States, Canada, and Mexico established chapters to resolve differences between the countries.

Salazar praised North American trade relations and said that it is a region that has begun to become independent from Asia and Europe.

He added that nearshoring is fundamental for the integration of North America, after the Covid-19 pandemic.

“We know that we must have independence of supply from supply chains in North America,” the U.S. government representative commented.

Russia’s “brutal” war against Ukraine, he added, brought home again the importance of North American independence, Salazar commented.

“We know that the security of Mexico and the United States is linked, as we are linked in trade and the economy,” he stressed.

He added that on the issue of security, his country works every day hand in hand with the Mexican government, with Secretary Rosa Icela Rodriguez and Foreign Minister Alicia Barcena.

“We have a lot of work to do, but we are doing it with confidence,” said the ambassador.

SOURCE: FORBES MEXICO

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

August 30 – September 05, 2023

POLITICAL AGENDA

• Increase in year-end bonuses: President Lopez Obrador, in response to a question about increasing year-end bonuses from 15 to 30 days, has expressed his intention to review the matter. He reaffirmed his commitment to raising wages and highlighted achievements in enhancing salaries, ensuring profit sharing, eliminating subcontracting, and generating employment through public investment. While acknowledging that some just demands remain unaddressed, he emphasized the importance of continuing the transformation project beyond his presidency, focusing on institutional changes rather than the leader’s persona. In his remaining time in office, he aims to complete ongoing projects, particularly in healthcare, and strengthen social welfare programs, including a 25 percent increase in pensions for the elderly, all while maintaining fiscal responsibility. Additionally, efforts will be made to improve the income of public sector workers, such as teachers, to ensure they earn a minimum of 16,000 pesos.

• Morena Candidate: Andres Manuel Lopez Obrador has stated that he has not favored any candidate, emphasizing that the era of making decisions from the top-down has ended. The winner

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

will be determined by the people who were consulted in the survey. Tomorrow, the results will be announced, and he will support the individual chosen by the poll as a leading member of the transformation movement. Additionally, he will hand over the leadership staff to the chosen candidate for the movement’s guidance. This transfer of leadership will take place outside the National Palace either on Wednesday night or Thursday.

• Edo Mex: Rosa Icela Rodriguez, the head of the Secretariat of Security and Citizen Protection, mentioned that in response to a specific question about President Lopez Obrador attending the State of Mexico governor’s government report, the President noted the positive relationship with Governor Del Mazo. They have collaborated on infrastructure projects and the distribution of free textbooks. Additionally, he announced that on September 15th, the inauguration of the first section of the “El Insurgente” train will take place, with the presence of Governor Alfredo Del Mazo and Governor-elect Delfina Gomez.

• Judicial power reform: President Andres Manuel Lopez Obrador has not discussed a judicial reform in the State of Mexico with Ms. Delfina Gomez. He stressed the importance of initiating a federal-level reform that would allow judges, magistrates, and justices to be chosen through popular votes. He plans to send a constitutional reform proposal, but he is waiting for the results of the upcoming election to avoid potential opposition from the conservative bloc. This process would involve people’s participation through voting, followed by the reform’s approval and the selection of judicial members. Once this reform is implemented at the federal level, it could potentially

be replicated in the states. Lopez Obrador also expressed his belief that the conservatives have no future in returning to power.

• Presidential agenda: President Lopez Obrador announced that he will travel to Colombia and Chile on the upcoming Friday, September 8th.

• Changes in the government: It was announced that Secretary Javier May is stepping down from his position as the head of FONATUR (National Fund for Tourism Promotion) to pursue the governorship of

• Tabasco. President Lopez Obrador introduced General Oscar David Lozano Aguila as the new Director-General of the state-majority-owned company overseeing the Tren Maya project.

• Frente Amplio por Mexico: President Lopez Obrador expressed his disapproval of the selection of Xochitl Galvez as the presidential candidate for the Broad Front for Mexico, criticizing it as a topdown decision that goes against the democratic principles of political parties. He suggested that Claudio X. Gonzalez, a key figure, had influenced the decision. The President also accused the use of surveys to pressure opposition candidates to

KEYPOINTS OF PRESIDENT

ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

The President criticized the Court for claiming he wants to control it to tolerate corruption. He also highlighted instances of judges seemingly acting independently, leading to the release of alleged criminals. Regarding the Court’s budget, he criticized their arrogance and suggested an austerity plan instead. He stressed the importance of upholding the Constitution and proposed allowing citizens to decide the election of judges, magistrates, and justices through reform.

INTERNATIONAL

withdraw from the race, ultimately canceling the elections within the Broad Front. Lopez Obrador emphasized that his movement and Morena prioritize democratic processes and will let the people decide through surveys. Regarding the PRI’s decision to have its own candidate in the 2024 election, he criticized the party’s shift from its original principles and ideals, suggesting it had merged with the PAN party, forming what he referred to as “PRIAN.”

• Supreme Court of Justice: President Lopez Obrador discussed his approach to the Supreme Court of Justice of the Nation, stating that he won’t unilaterally reduce the number of justices as a past president did. Instead, he aims to reform the Court from within to combat corruption. He expressed disappointment with some of the justices he appointed and criticized their resistance to change.

• US-Mexico Relation: President Lopez Obrador highlighted the importance of maintaining good relations with other countries, particularly the United States, due to geopolitical factors, proximity, economic integration, and the significant Mexican population living in the U.S. He emphasized the intention to strengthen economic relations with Canada and the United States. He stressed the need for global trade balances and emphasized the importance of competitiveness, especially concerning China. The President also reiterated Mexico’s commitment to using the U.S. dollar as its currency and stated that there would be no experimentation with other currencies. Finally, he mentioned that he cannot predict future actions as he will step down from power in a year and a month.

• Migration: President Lopez Obrador discussed a meeting held on August 30, 2023, with key government officials and governors of several Mexican states to assess migration flows. He emphasized the importance of implementing Welfare programs in countries with high migration rates, citing their effectiveness in reducing migration.

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

He rejected the notion that the drug problem is solely Mexico’s responsibility and warned of a response to any attacks or threats. The President also highlighted Mexico’s investment of $150 million in Welfare programs in Central America and criticized the U.S. for its $40 million investment. Additionally, he reminded the U.S. government about the $246 million seized from a former Mexican finance secretary that has not been returned.

ENVIRONMENT

• Energy in Sonora: President Lopez Obrador announced that the Federal Electricity Commission (CFE) held a press conference to address the electricity situation in Sonora and CFE operations. He assured that electricity prices will not increase and explained that two power outages in the state were caused by vandalism and a transformer failure, not a general shortage of electricity. Additionally, he pledged to ensure the subsidy for electricity services in Sonora and seek a legal means to establish it.

SECURITY

• Corruption: In recent legal developments in Mexico, former Governor Francisco Javier N has been granted legal protection by Judge Octavo de Distrito in Tamaulipas, allowing him to have state security personnel reassigned to him, alongside other legal safeguards against organized crime charges. Similarly, the ex-Attorney General of Veracruz, facing accusations of kidnapping and forced disappearance, obtained a provisional suspension from Judge Andres Rossel Martinez in Veracruz, who deemed the Pretrial Detention Order (PPO) contrary to international treaties. This decision allows both parties to explore alternative precautionary measures. Additionally, in Guanajuato, Judge Jose Jesus Rodriguez Hernandez has absolved a recycling company of a substantial financial obligation, which was proven to have acted as a front for invoicing non-existent services, resulting in significant financial harm to the Public Treasury. These legal proceedings underscore various ongoing legal challenges and controversies within the Mexican judicial system.

• Security: Commander of the National Guard, David Cordova Campos, has reported that security operations have focused on supporting the search for missing persons, ensuring safety in the transportation of fertilizers, and establishing tourist assistance posts. Additionally, they have seized grenades, cartridges, and apprehended a total of 469 individuals. Regarding fentanyl, 20.3 kg have been confiscated from August 22nd to September 4th. In the fight against the illegal fuel market, over 46,000 liters of fuel have been recovered this year. These actions underscore the National Guard’s efforts in various security areas in Mexico.

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

INFRASTRUCTURE

• Tren Maya: Progress on the Tramo 3 (Calkini-Izamal) of the Tren Maya project was reported, with 159 kilometers of track already completed. The train is scheduled to be inaugurated in December. Ongoing testing and functionality trials of the trains have been conducted, particularly in sections 2, 3, and 4. The federal government emphasized that the Tren Maya is designed not only as a passenger transport but also as a freight transport system.

• Violence: President Lopez Obrador highlighted efforts to address the root causes of youth involvement in violence, emphasizing the importance of sufficient household incomes and opportunities for work and education to improve security. He also noted that media coverage may contribute to the perception of violence. The President expressed confidence in further reducing crime rates and believed that homicides would decrease by 20% by the end of his administration.

• Mexico City International Airport: President Lopez Obrador has declared that the “Benito Juarez” International Airport in Mexico City has exceeded its operational capacity, operating at 150% of its designed capacity. To address this issue and prevent potential problems, he has decided to reduce the number of daily operations from 52 to 43 per hour. He emphasized that this decision will not impact the airport’s Category 1 status, which he criticized as inconsistent. The President also communicated with Mexican airlines before the decision and mentioned that the agreement will take effect in November. He criticized the privatization of Aeromexico and highlighted mismanagement issues within the airline, as well as the involvement of foreign funds and employees. Additionally, he mentioned the history of airport projects, including the abandoned Texcoco airport plan.

NEWS BY STATE

BAJA CALIFORNIA

The governor of Baja California, Marina del Pilar Avila Olmeda, indicated that with 1,463 million dollars of foreign direct investment in the first half of 2023, the state is positioned in third place nationally, which represents an annual growth of 16.6% and the generation of new employment opportunities for the citizens of the state. 45% of the investment came from the United States, the second place is Japan with 33.6% and the third place is the Netherlands with 6.4%.

SOURCE: INDUSTRIAL NEWS BC

SONORA

Governor Alfonso Durazo Montaño met with representatives of the Institute for Industry and Technology Research, from Taiwan, to promote the generation of human resources and attract large investments to the entity. The state president mentioned that it is a leading institution in technological research with a workforce of more than six thousand employees, with the purpose of promoting industrial development, creating added value and improving social welfare through research and technological development.

SOURCE: EL IMPARCIAL

CHIHUAHUA

The manufacturing industry in the state of Chihuahua is consolidated as a leader according to its results during the years 2022 and 2023 and the official figures of Inegi and the Center for Economic and Social Information (CIES).

Among the results that Chihuahua has registered in terms of manufacturing, is its place in exports, compared to other states. As of the first quarter of 2023, Chihuahua ranks first with 16,933 MUSD, which represents 13.3% of the national total.

SOURCE: MEXICO INDUSTRY

NUEVO LEON

The aluminum industry in Mexico is growing and, in the case of Nuevo Leon, a hub has already been created that is considered the most significant in Latin America and is not far from becoming the most important aluminum hub in the entire continent, including North America, said Jorge Vazquez, general director of Harbor Consulting.

SOURCE: MILENIO COAHUILA

In the next few days, Governor Miguel Angel Riquelme Solis will start up three new industrial parks already under construction in the Mieleras-El Esterito corridor, on the border between Torreon and Matamoros, according to the head of the Coahuila Ministry of Economy, Claudio M. Bres Garza.

SOURCE: VANGUARDIA

GUANAJUATO

Guanajuato ranked fifth in Mexico for its economic growth and is consolidating its position as the Epicenter of Industry

4.0 in Mexico, said Governor Diego Sinhue Rodriguez Vallejo.

He said that in the last five years, the state’s economy has strengthened and now ranks fifth nationally, according to information from the National Institute of Statistics, Geography and Informatics (INEGI).

QUERETARO

The Secretary of Sustainable Development (SEDESU) of Queretaro, Marco Antonio Del Prete Tercero, inaugurated the highly anticipated international event CAPA Latin America Aviation & LCCS Summit 2023. This event has brought together more than 200 delegates, decision-makers, and aviation leaders in Queretaro, where they are participating in a valuable exchange of best practices and discussions on the importance and development of the aviation industry globally.

In his opening remarks, Secretary Del Prete Tercero emphasized the importance of highlighting Queretaro as a valuable aerospace hub in Mexico. He highlighted the region’s optimal ecosystem for the development of various strategic industries, especially in advanced manufacturing and systems development.

SOURCE: CLUSTER INDUSTRIAL

SOURCE: EL UNIVERSAL

AGUASCALIENTES

In order to publicize the competitive advantages offered by the state in technologies such as software development, artificial intelligence and virtual reality, members of the Secretariat of Economic Development, Science and Technology (Sedecyt) made a promotional tour of the city of Austin, Texas.

He added that this work tour seeks to strengthen and promote the state as an attractive destination to consolidate new foreign investments.

SOURCE: LIDER EMPRESARIAL

JALISCO

Jalisco will support the incorporation of small and medium-sized enterprises (SMEs) into supply chains as a strategy to take greater advantage of nearshoring.

The head of the Secretariat of Economic Development (Sedeco), Roberto Arechederra, indicated that the increase in regional content established by the Free Trade Agreement between Mexico, the United States and Canada (T-MEC) represents an unbeatable opportunity for Jalisco companies to become suppliers to the manufacturing industry.

SOURCE: EL ECONOMISTA

CDMX

Chinese entrepreneurs plan to invest in Mexico City for nearshoring, focusing on the automotive industry. They will establish corporate offices in the city while concentrating manufacturing in Hidalgo. This aligns with Mexico’s nearshoring strategy to boost Mexico City as a corporate hub. Additionally, the report emphasizes Mexico City’s strong financial autonomy, with increasing revenue from taxes. Infrastructure improvements are planned in Vallejo to attract more nearshoring companies.

SOURCE: EL ECONOMISTA

STATE OF MEXICO

In his sixth government report, the governor of the State of Mexico, Alfredo del Mazo, highlighted the achievements of his administration over six years and stated that despite the challenges, he leaves behind a fairer, stronger, and more equitable state. He recognized the governor-elect, Delfina Gomez, for her willingness to carry out an institutional and constructive transition, emphasizing the importance of maintaining development with equity and continuing to promote social justice programs. The President of Mexico, Andres Manuel Lopez Obrador, was present at the event, and Del Mazo thanked him for his commitment to the State of Mexico and highlighted the construction of the Felipe Angeles International Airport as an example of collaboration between his government and the federal government. This report marks the end of his term and the transition to Delfina Gomez’s administration, who will be the first woman to govern the state.

SOURCE: MILENIO

INVESTMENT NEWS

NORTHEAST

KUNTAI COMPAN

Korean company Kuntai, a leading automotive interior supplier, plans to invest $30 million in Durango, Mexico, creating 300 jobs. The company, a significant Tesla supplier, specializes in luxury car interiors for brands like Audi, Volvo, GM, Toyota, Nissan, BMW, and Tesla.

CENTRAL MEXICO

MR INFRAAUTO

Korean automotive supplier MR InfraAuto plans to invest over $30 million in a new manufacturing plant in Zacatecas, Mexico, creating 400 jobs. The plant, set to begin construction in 2024, will produce high-quality components for transmission systems, brakes, and seats for global automakers like Hyundai and Tier 1 suppliers.

HYUNDAI POLITECH

Korean automotive Tier 1 supplier Hyundai Polytech will invest approximately $20 million to build a plant in Zacatecas, Mexico, generating 300 new jobs, both direct and indirect. The plant will produce plastic injection parts for suspensions, sensors, motors, and electrical systems.

TRIS TUBES

Korean company TRIS Tubes is planning to invest approximately $18,6 million dollars in Zacatecas, Mexico, creating nearly 100 new jobs. This investment aims to establish a plant to produce high-quality seamless BA tubes and coils used in various industries.

CDMX

INDORAMA VENTURES

Indorama Ventures Mobility Puebla is investing $36 million to build a new facility in Huejotzingo, Mexico, specializing in fabric for automotive airbags used by brands like Tesla and Ford. This investment solidifies Puebla’s position as a major producer of airbag fabric in North America, with one in six airbags being made in the region.

SOURCES: CLUSTER INDUSTRIAL, MEXICO INDUSTRY