Weekly Review I September 27, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I September 27, 2023

RELEVANT NEWS

JAPANESE BUSINESSMEN CONFIDENT IN MEXICO’S MANUFACTURING INDUSTRY

According to Takao Nakahata, director general of the Japan External Trade Organization (Jetro) in Mexico, Japanese businessmen have great confidence in the future of Mexico’s manufacturing industry and consider it a strategic point for supplying North America.

“Mexico is a very important place for manufacturing production; its production volume is increasing every year,” he said.

Proof of this, added the general manager of Jetro in Mexico, is the boost given to major industries already established in the country, such as the automotive sector, as well as new technologies and the Internet of Things, which are being applied in solutions for the so-called Industry 4.0.

Nakahata emphasized that they are looking for Japanese companies in Mexico not only to set up their factories in the country to produce but also to add value to the Mexican maquiladora industry with technological solutions, automation, and services.

“We want to promote the technology of Japanese companies to solve or add more value to the Mexican manufacturing industry,” he said.

SOURCE: FORBES MEXICO

RELEVANT NEWS

MEXICO HAS FOUR MONTHS OF EXPORT GROWTH

Mexico increased its exports of goods for the fourth consecutive month in August, with a 3.8% year-onyear increase both in the month and cumulatively, Inegi reported on Wednesday.

On the contrary, Mexican imports have fallen for three consecutive months at an annual rate, with a 4.3% decline in August and a 0.5% decline in the first eight months of 2023.

Thus, the country’s foreign sales in August were 52,359.9 million dollars, while imports amounted to 53,737.0 million dollars, with a deficit of 1,377.1 million.

Exports were mainly driven by the automotive sector, which registered an 11% increase in August over the same period last year.

On the negative side, foreign oil sales stood out with a 4.6% year-over-year decline.

In seasonally adjusted terms, total merchandise exports registered a monthly decrease of 0.31 percent in August. This was due to a 0.93% decline in non-oil exports and an 11.39% increase in oil exports.

As for imports, those of consumer goods increased by 7.5% and those of capital goods by 18.2%, but those of intermediate goods decreased by 8.6%, measured from August to August.

With seasonally adjusted series, total imports showed a monthly increase of 1.48%, reflecting a growth of 0.83% in non-oil imports and 9.14% in oil imports.

By type of goods, with the same adjustment, there were monthly increases of 5.82% in imports of consumer goods, 0.83% in imports of intermediate goods, and 0.12% in imports of capital goods.

In the same month and not seasonally adjusted, ex-

RELEVANT NEWS

ports of manufactured goods amounted to 47.155 billion dollars, an increase of 4.3% at an annual rate.

The most significant increases were observed in exports of professional and scientific equipment (24.8%), electrical and electronic equipment and appliances (19.6%), household metal products (16.6%), automotive products (11%), and textile, apparel and leather products (5.4%).

In turn, the annual increase in exports of automotive products was the result of a 13% increase in sales to the United States and a 1.5% increase in sales to other markets.

In August, the value of petroleum exports was $3.042 billion. This amount was made up of $2.630 billion in crude oil sales and $413 million in exports of other petroleum products.

At the same time, the average price of Mexico’s crude oil export mix stood at 76.29 dollars per barrel, 5.60 dollars higher than the previous month, but 10.11 dollars lower than in August 2022.

The volume of crude oil exported was 1.112 million barrels per day, higher than the 1.070 million barrels per day in July and the 0.931 million barrels per day in August 2022.

The value of agricultural and fishery exports in the eighth month of this year was 1,388 million dollars, which implied an annual decline of 0.1 percent.

SOURCE: EL ECONOMISTA

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

September 20 – 26, 2023

POLITICAL AGENDA

• Judicial Power: The President is deeply concerned about the protection granted to the Morelos prosecutor, Uriel Carmona, by the Supreme Court through amparos based on his prosecutorial immunity. He stressed the urgent need for a significant overhaul of the judicial system, which he believes remains stuck in past practices and is influenced by political interests. The President called for a more democratic approach to selecting judges, magistrates, and justices, allowing the people to have a say in these appointments. He criticized the current system and its role in protecting individuals associated with past administrations. Regarding Juan Collado’s release, the President expressed confusion about the reasons behind it, considering Collado’s influential ties. He plans to propose a reform initiative to Congress, aiming to have judges and justices elected by the people. However, he will wait for the results of the upcoming election to assess the support for this reform, as it requires a qualified majority for a constitutional amendment. He intends to submit the initiative before the end of the next legislative session.

• Presidents’ agenda: The President confirmed his upcoming travel plans, which include a visit to the southern part of the country to inspect the Tren

Maya this weekend. He also has a scheduled tour of the State of Mexico for the following weekend and will return in two weeks to oversee the progress of the Tren Maya. Additionally, a visit to Baja California is on his agenda. Despite his busy schedule, he will attend the inauguration of the road in Badiraguato.

• Presidents’ approval: The President mentioned a weekly “Morning Consult” global approval poll for presidents that has been published for two years. He presented the poll results, showing that he ranks second with a 66% approval rating.

• 2024 elections: President Lopez Obrador stated that aspirants to candidacy should not hold government positions for ethical reasons, with around 10 individuals, including Lopez-Gattel and Rocio Nahle, notifying their intent to step down. The Electoral Tribunal has mandated a message before the president’s conferences, emphasizing their informational and non-political nature. The President also expressed his opposition to Manuela Obrador’s candidacy, citing a desire to prevent nepotism.

• Fiscal Reform: President Lopez Obrador expressed support for a potential fiscal reform to allocate 30% of the budget to States and Municipalities, highlighting the importance of reviewing revenue distribution formulas but acknowledging it might

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

be left for the next administration to address. He emphasized that increased funding for municipalities should directly benefit communities and improve their quality of life.

INTERNATIONAL

• US-Mex relation: President Lopez Obrador will not attend the APEC Summit in San Francisco due to a lack of a relationship with Peru. Instead, he has invited President Biden to visit Mexico, showcasing a significant gas export project in Altamira and other key infrastructure sites. If Biden cannot visit, Lopez Obrador is willing to travel to Washington to discuss bilateral issues. Failing that, they plan to meet at the January summit in Canada to address shared concerns, including development, migration, and drug trafficking.

SECURITY

• Ayotzinapa Case: President Lopez Obrador reaffirmed his commitment to continuing investigations into the disappearance of the normalistas (teacher trainees) and stated that he had met with lawyers and parents of the missing students. He pledged to provide them with all the gathered information and progress reports on the investigations.

• Migration: President Lopez Obrador discussed the need to address the migrant situation and highlighted the importance of developing a plan to support the countries of origin for migrants. He plans to discuss this issue with President Biden and advocate for a global plan to combat poverty and inequality, involving contributions from those

with greater resources. Additionally, he emphasized the need to strengthen Latin America and promote regional self-sufficiency.

ENVIRONMENT

• Water concessions: President Lopez Obrador addressed concerns about reviewing over 5,000 concessions, emphasizing the need to modernize irrigation systems and fix deteriorating water infrastructure. He also discussed efforts to monitor emissions by companies to prevent water source overexploitation. The President acknowledged the severe pollution of Rio Santiago and mentioned ongoing environmental efforts. Additionally, he highlighted the imminent increase in water supply for Monterrey, ensuring sufficient availability for the next six years.

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

INFRASTRUCTURE

• CIIT: President Lopez Obrador discussed ongoing development efforts in the communities of the Istmo region in Oaxaca and Veracruz, highlighting the allocation of resources for sewage system construction. He mentioned extensive infrastructure projects, including hospital equipment and housing initiatives. Regarding port expansion, he indicated no issues with Salina Cruz’s expansion, while Coatzacoalcos’ expansion is underway, with both ports expected to be ready within a year.

• Tren maya: The Tramo 1 of the Tren Maya, a 226-kilometer railway, is making significant progress in Chiapas, Tabasco, and Campeche, benefiting nearly 400,000 people and generating over 21,000 jobs. Work includes viaducts, bridges, and drainage systems, with a focus on standard train construction in Ciudad Sahagun, Hidalgo. The project aims to bolster regional economies, and President Lopez Obrador plans to travel on the Tren Maya in 15 days, with the goal of completing the project on time.

HEALTH

• PROFECO: The head of the Federal Consumer Protection Agency presented a study on soft drinks, analyzing 46 brands for sugar content, sweeteners, caffeine, calories, and labeling, finding that 35 of them contain sweeteners and 9 contain caffeine, which are not recommended for children, and 22 brands contain some form of harmful high-fructose corn syrup. The study also revealed discrepancies between label claims and actual product content, and any non-compliance with regulations would be addressed according to the law.

• Health: The IMSS-BIENESTAR program, providing free healthcare services, is advancing, with 23 states signing agreements to operate it. President Lopez Obrador emphasized that this new public healthcare system aims to ensure the right to healthcare for those without social security, offering free access to medical services, medications, tests, and surgeries. The goal is to have the system operational in 10,000 health centers nationwide by March. Additionally, improvements in the ISSSTE, including cancer detection centers and advancements in neuroscience for surgeries, were presented. Sanctions have been imposed on companies found engaging in irregularities, with 98 penalties issued and over two billion pesos in fines. The ISSSTE pharmacy system has achieved a 95.5% supply rate and is undergoing technological updates.

NEWS BY STATE

BAJA CALIFORNIA

Last week, the Tijuana Economic Development Corporation organized a panel “The Experts of Nearshoring” with the participation of Marco Kuljacha, President of Prodensa, Maria Cristina Hermosillo, President of Tijuana EDC, Mario Juarez, Director of Chihuahua Global, Adriana Eguia Alaniz, Regional VP of VESTA, and Elias Laniado-Laborin, Counselor of VESTA, industry leaders of the region. In this dialogue, the speakers shared their valuable insights and knowledge on the nearshoring trend.

SONORA

The leadership of Fecanaco Sonora recognized as a great economic support for hundreds of thousands of families in the state, the efforts made by Governor Alfonso Durazo to extend the electricity subsidy from the Federal Electricity Commission (CFE).

Martin Zalazar Zazueta, president of the Federation of National Chambers of Commerce, Services and Tourism in Sonora (Fecanaco), stated that the negotiation made by the state government with CFE will allow that the kilowatts consumed in Sonora homes will be cheaper and the amount of the subsidy will double.

SOURCE: PRODENSA, TIJUANA EDC

SOURCE: EL DIARIO DE SONORA

CHIHUAHUA

The Secretary of Innovation and Economic Development (SIDE), Manque Granados Trespalacios, participated as a speaker at the Third National Congress of Industrial Women held at the Cultural Convention Center in the city of Durango, where she presented the strengths of Chihuahua and the economic policy promoted by Governor Maru Campos.

The event was organized by the National Commission of Industrial Women, the National Chamber of the Transformation Industry (Canacintra) Durango Delegation and the Government of Durango, to strengthen and develop women entrepreneurs through expert panels, networking and master conferences.

COAHUILA

“In Coahuila, we know how to establish agreements and work as a team for the good of all”, reiterated Governor Miguel Angel Riquelme Solis during the inauguration of the “Paseo Capital”, a ceremony in which he was accompanied by the governor-elect, Manolo Jimenez Salinas, and Jose Maria Fraustro Siller, Mayor of Saltillo.

The State President emphasized that with the Municipality, first with the previous mayor, Manolo Jimenez, and now with Jose Maria Fraustro, they have joined efforts and added resources to address all the issues of development, growth, and well-being of the population.

SOURCE: GOVERNMENT OF CHIHUAHUA

SOURCE: GOVERNMENT OF COAHUILA

NUEVO LEON

During the month of August, the manufacturing industry in Nuevo Leon showed its best performance in the generation of jobs, where the number of workers indicator continued to be positioned in the expansion zone at 53.3 points.

According to the manufacturing industry expectations survey conducted by Caintra every month, this index remains in expansion since January 2021.

SOURCE: MILENIO

TAMAULIPAS

Foreign direct investment in Tamaulipas estimated for the following months is expected to reach 11 billion dollars in more than 130 projects destined for northern municipalities, Altamira, Ciudad Victoria, and even in El Mante, has the Secretariat of Economy in the entity when updating the agenda of plans of the international private sector.

Its head Ninfa Cantu Deandar indicated that of these, 73 are confirmed to be established in the short and medium term, with an amount of 5 thousand 690 million dollars, through several companies in different sectors of the productive sector, while the rest are being negotiated to be finalized later.

SOURCE: MILENIO

AGUASCALIENTES

The value of production of construction companies in the state of Aguascalientes increased during July, according to estimates released by the National Institute of Statistics and Geography (INEGI).

Preliminary figures released this Friday indicate that the production value of these companies in the entity increased by 1.8 percent compared to the results obtained in July last year, going from 740 to 753 million current pesos.

SOURCE: YAHOO NEWS

JALISCO

Between September, October, and November, Jalisco’s Secretariat of Economic Development (Sedeco) could announce the attraction of 1.6 billion dollars of new foreign investment in the state, announced the head of that agency, Roberto Arechederra.

He added that, at this moment, the agency has 150 prospective companies that have approached state authorities to express their interest in setting up in the state.

QUERETARO

The Manufacturing, Maquiladora, and Export Services Industry (INMEX program) in Queretaro accounts for 3.8% of all establishments in the country, making it the tenth largest nationwide, according to INEGI’s indicators of establishments with an IMMEX program.

This indicator shows the characteristics and evolution of manufacturing and non-manufacturing establishments during the month of July 2023. In the case of non-manufacturing establishments, it considers activities such as agriculture, fishing, commerce and services.

SOURCE: EL ECONOMISTA

SOURCE: DIARIO DE QUERETARO

CDMX

Omar Garcia Harfuch, the former Secretary of Citizen Security in Mexico City, has publicly announced his decision to participate in the selection process for the coordinator of the Committees for the Defense of the Fourth Transformation in the capital city. This move is part of the process to build Morena and its allies’ candidacy for the Head of Government of Mexico City in the 2024 elections.

SOURCE: EL ECONOMISTA STATE OF MEXICO

Senator Higinio Martinez Miranda, a member of the Morena party from the State of Mexico, announced that he has requested a leave of absence from his position in the Senate. He will be joining the government of the State of Mexico as the Chief of Cabinet and Special Projects under the leadership of Governor Delfina Gomez Alvarez. Although he was invited by the governor on September 13, he hadn’t requested leave earlier due to personal and Senate-related commitments, but he confirmed his integration into the first Morena administration in the State of Mexico.

SOURCE: EL SOL DE TOLUCA

INVESTMENT NEWS

NORTHEAST

SCHNEIDER ELECTRIC

French company Schneider Electric is investing $40 million to expand its Innovation Center in Apodaca, Nuevo Leon, further boosting the region’s reputation as a technology innovation hub.

DSV

Logistics company DSV has laid the foundation for its new industrial facility in Apodaca, Nuevo Leon, with an investment of $30 million. This will mark DSV’s fourth plant in the region, complementing its two existing facilities in Apodaca and one in Cienega de Flores. It is expected to create 350 new jobs in the area.

XUSHENG

Chinese die-casting firm, Xusheng, has begun construction of a $350 million plant in Saltillo, Coahuila’s Alianza Derramadero Industrial Park. The facility will create 1,200 jobs and produce precision aluminum alloy auto parts for the automotive and electromobility sectors, making it one of North America’s largest aluminum component manufacturing plants.

CDMX

KAPITAL

Mexican tech platform Kapital has acquired Banco Autofin Mexico S.A. (BAM) for $50 million, enhancing its offerings with cutting-edge digital financial solutions. This move not only strengthens its digital channels but also creates high-paying digital job opportunities, benefitting its users and boosting the quality of its services.

CENTRAL MEXICO

HIHO WHEEL

Korean company HIHO Wheel Mexico has inaugurated the first phase of its plant in Apaseo El Grande, Guanajuato’s Chuy Maria Industrial Park. This initial investment of $60 million covers a 45,000-square-meter industrial space and has already generated 200 direct jobs. HIHO Wheel plans to inject an additional $40 million in 2025 for the second phase, further expanding its production of aluminum rims for the automotive industry.

INVESTMENT NEWS

WORTH MENTIONING | NORTHWEST INDUSTRIAL GATE PACIFIC

The $205 million investment in the Industrial Gate Pacific in Tijuana is set to boost Baja California’s economy over the next five years by creating over 3 million square feet of industrial space. DHL Supply Chain’s construction of a 20,000-square-meter distribution center, ‘El Carrizo,’ is a key highlight. This development is likely to attract companies seeking industrial facilities in the region.

INVESTMENT WAVE PUSHIN THE NEED FOR INDUSTRIAL SPACES

Rapid investment is fueling the construction of industrial warehouses in Ciudad Juarez, Tijuana, and Monterrey. During Q2 2023, industrial site construction in Ciudad Juarez surged by 152.3% annually. Mexico is a prime destination for this investment wave due to nearshoring and global value chain reshaping. The resulting space shortage led to significant rent hikes, with rates increasing by 24.5% in Monterrey and 16.4% in Ciudad Juarez in Q2 2023. This scarcity is prompting increased construction, especially in the north, where formal construction employment is exceeding historical growth rates.

SOURCES: CLUSTER INDUSTRIAL, QUADRATIN, MEXICO INDUSTRY.