Weekly Review I October 25, 2023 by PRODENSA

GENERAL SITUATION IN MEXICO

Weekly Review I October 25, 2023

RELEVANT NEWS CANADIAN COMPANIES SPECIALIZED IN ELECTRIC VEHICLES WANT TO INVEST IN NUEVO LEON Canadian companies specialized in electric vehicles, mainly batteries, are showing a strong interest in investing in Nuevo Leon, due to the phenomenon of relocation or nearshoring, informed Stephanie Allard-Gomez, general delegate of Quebec in Mexico. “From an economic point of view, there are more and more companies from Quebec that are interested in doing business in Nuevo Leon,” said the official. “Quebec has a very important economic strength in the electric vehicle sector, especially in batteries, so there will be a lot more business in that sector in particular and in manufacturing in general,” she said. Nuevo Leon, an industrial hub in northern Mexico, has been on the automotive sector’s radar since Tesla announced in February that it would open its largest factory in the world in the state, with an expected production of one million electric vehicles per year and an investment of more than $5 billion. Although Tesla magnate, Elon Musk, warned on Wednesday that the plans have slowed down due to concerns about high-interest rates, as well as the outbreak of war conflicts, such as those in Ukraine and Gaza. Without considering this controversy, Allard-Gomez acknowledged that Nuevo Leon is experiencing an important phenomenon with nearshoring.

“As we see a lot of nearshoring happening here, there are also a lot of Quebec and Canadian companies that are interested in developing more business here in Nuevo Leon,” she said. SOURCE: FORBES MEXICO

RELEVANT NEWS STELLANTIS AND ORANO FORM PARTNERSHIP TO RECYCLE ELECTRIC VEHICLE BATTERIES Stellantis, the automotive manufacturer, has entered into a partnership with Orano, a French company specializing in nuclear materials, to recycle batteries and other waste from electric vehicles at the end of their useful life. The agreement will result in a joint venture that will begin production in the first half of 2026, using Orano’s technology to recover all lithium-ion battery materials and produce new cathode materials from them, the two groups said in a statement.

The raw material for the future hydro-metallurgical plant, which Orano will build in the French port of Dunkirk near the Belgian border, will come from Stellantis’ gigafactories in Europe and North America. In Dunkirk, these recovered elements will be refined for reuse in other batteries. SOURCE: FORBES MEXICO

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE October 18 - 24, 2023

INDUSTRY • VULCAN MATERIALS: When questioned by a reporter about the letter sent by Vulcan Materials to the U.S. Ambassador in Mexico, Ken Salazar, the President mentioned it’s an ongoing issue. The company wants to continue exploiting a materials bank in Quintana Roo that is damaging the forest, and they obtained permits improperly. Initially, they attempted to reach an agreement, stopping operations for a month for a viability study. However, they resumed work without notice, halting only when the President visited the area. He warned that before his term ends, he will resolve the problem, declaring the area as a Protected Natural Area and making the necessary compensation payments. • CUSTOMS AND COFEPRIS PROCEDURES: The President addressed concerns about the lack of equipment and staff in customs and the slow permit issuance by COFEPRIS. He acknowledged that new equipment is being procured, with an emphasis on making it similar to U.S. customs equipment. Regarding COFEPRIS, the President noted increased scrutiny to prevent the introduction of drugs and chemical precursors, a process that takes time but is actively being worked on. He expressed his trust in the heads of both COFEPRIS and the National Customs Agency of Mexico. He clarified that the delays are not due to corruption but rather the need to expedite procedures.

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

2024 ELECTIONS • GENDER QUOTA IN THE 2024 ELECTORAL RACES: President Andres Manuel Lopez Obrador predicted that the winner of the 2024 presidential contest will be a woman and that she will have more votes than the ones he obtained in 2018. Regarding the INE’s agreement concerning gender quotas in gubernatorial candidacies, the president expressed his support for women and clarified that this matter falls within the purview of the INE and political parties. JUDICIAL BRANCH • CANCELLATION OF THE JUDICIAL BRANCH’S TRUSTS: President Lopez Obrador revealed that the opposition will file a constitutional challenge, which will be resolved by the same Court. Also, in response to the invitation extended to Minister Norma Piña to attend the Senate of the Republic, the president criticized it as a spectacle and a lack of respect. He argued that the Judiciary’s trusts have not been used to support its workers’ pensions and benefits. Regarding the judicial branch workers’ strike, he acknowledged the workers’ right to protest but disagreed with their perspective, suggesting they are influenced by higher authorities. He also criticized the 700,000 pesos monthly salary of Supreme Court Justices and supported using 15 million pesos from the canceled trusts for 2 million scholarships for impoverished individuals.

INTERNATIONAL AFFAIRS • PALENQUE SUMMIT ON MIGRATION: The presidents of Cuba, Colombia, Honduras, Venezuela, Ecuador, and Guatemala, and the prime minister of Haiti attended to the Summit on Migration in Palenque, Chiapas, organized by President Lopez Obrador. The President mentioned he also intended to discuss an international plan for addressing migration with U.S. President Joe Biden. The summit included an agreement to promote bilateral dialogue between the United States and Cuba to resolve issues linked to the Cuban blockade. The proposal seeks economic cooperation for development to reduce the need for emigration. Additionally, the President applauded the dialogue between the U.S. and Venezuela to address migration, emphasizing the humanitarian nature of the issue and the necessity for a clear resolution. • APEC SUMMIT: The president confirmed he will be in San Francisco, USA on November 14 and 15 to attend the meeting of Pacific and Asian countries (APEC). Although the agenda and participants have not been finalized yet, the presidency of this summit will be assumed by U.S. President Joe Biden.

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE GOVERNMENT AFFAIRS • PRESIDENTIAL CABINET CHANGES: The president announced the resignation of Alejandro Encinas from the Undersecretary for Human Rights, Population, and Migration at the Ministry of the Interior. He expressed gratitude for Encinas’ support and wished him success as part of Claudia Sheinbaum’s campaign team. The President mentioned that the new Undersecretary is Maestro Felix Arturo Medina Padilla, former tax attorney. TECHNOLOGY • TECHNOLOGICAL SOVEREIGNTY: CONAHCYT head, María Elena Alvarez-Buylla, has explained that substantial savings will be achieved through the development of 100% national technology. That is why CONAHCYT has pushed for the creation of the state-owned enterprise “Innova Bienestar”. According to Alvarez-Buylla, it will enhance Mexican technological sovereignty and independence. Some national companies have collaborated to produce medical devices, such as prosthetic designs and drug-eluting stents, using Mexican resources, resulting in lower production costs compared to those obtained from certain companies. TRANSPORTATION • RAILWAYS: The President discussed ongoing efforts to introduce passenger transportation services by trains in Mexico. Invitations have been extended to cargo concession-holding railway companies to explore the potential for passenger transportation concessions. They are examining the application of a clause that would allow the Mexican state to use

the existing railway tracks for passenger train services nationwide. The President intends to establish the foundation for this service before the end of his administration, acknowledging the time required for train construction.

NEWS BY STATE

BAJA CALIFORNIA The state of Baja California is ranked first nationally in the industrial sector thanks to its dynamism and constant innovation, learn what made this happen and its role as an emerging industrial power. Baja California became the entity with the highest contribution to the industrial Gross Domestic Product (GDP) at a national level. Governor Marina del Pilar Avila Olmeda announced that this achievement is the result of the constant innovation and dynamism that characterizes the region. SOURCE: NORO

NEWS BY STATE

NUEVO LEON Governor Samuel García Sepulveda informed that he closed a 700 million dollar investment with Ningbo Tuopu Group and formalized a 260 million dollar investment with Hesai Technology, during the tour he led in the city of Shanghai, China. Ningbo Tuopu Group is a company listed on the Shanghai Stock Exchange, produces auto parts, is a technology leader, and is committed to R&D and manufacturing of electric chassis systems, interior and exterior systems, and intelligent driving control systems. SOURCE: EL ECONOMISTA

CHIHUAHUA In the framework of the International Manufacturing Day, the National Chamber of the Transformation Industry (CANACINTRA), started the second edition of the Manufacturing Expo in which more than 30 companies participate in order to strengthen commercial ties with customers from different parts of the country. A total of 32 stands from different types of industries such as dairy, metal mechanics, food, and automotive, among others, were set up at the facilities of the Tecnologico Nacional de Mexico Campus Cuauhtemoc and will remain for two days starting on Monday, October 23. SOURCE: HERALDO DE CHIHUAHUA

NEWS BY STATE

AGUASCALIENTES Upon announcing an investment of 8 million dollars for the expansion of the Japanese company Parker Corporation, the governor of Aguascalientes, Tere Jimenez, said that this entity is one of the best-positioned states among investors for maintaining high levels of security, being a logistical point of great importance and recognized for the highly trained human capital it has, this allows investments in Aguascalientes to have certainty. “Aguascalientes is and will continue to be one of the best places in Mexico to live and invest; we thank the businessmen for continuing to trust in Aguascalientes, rest assured that we will be at the height of what companies, production, and progress of our state require,” he said. SOURCE: EL ECONOMISTA

NEWS BY STATE

JALISCO The Mexican Coca-Cola Industry, together with the Government of Jalisco, announced the expansion of its Jugos del Valle-Santa Clara plant in Lagos de Moreno, to which it will allocate 133 million dollars. During the symbolic event in which the first stone of the project was laid, the collaboration between the company and the state for the development of a Local Milk Producers Program was also announced. SOURCE: MILENIO

QUERETARO Starting on October 18, suppliers and multisector buyers will be able to register for the Supplier Development and Business Linkage Program of the Secretariat of Sustainable Development of Queretaro, which aims to link SMEs to large companies and become part of their supply chain. Marco Antonio del Prete Tercero, head of SEDESU, explained that this program seeks to help SMEs learn what buyers require and develop as suppliers. SOURCE: LIDER EMPRESARIAL

NEWS BY STATE

GUANAJUATO The private works forum, organized by the Mexican Chamber of the Construction Industry - CMIC - Guanajuato Delegation, will be held on November 9, 2023, at the Hotsson Hotel facilities. The forum, called “Transition”, will address issues of technological incursion in the industry such as artificial intelligence, there will be panels, networking tables, and conferences.

SAN LUIS POTOSI The Secretary of Economic Development of the State Government, Juan Carlos Valladares Eichelmann, told congressmen that investments for 3,470 million dollars have been achieved, which underpins the growth of the development of San Luis Potosí. The manufacturing plant had an important participation, with a variation of 6.6 percent in 2022 and registered an important dynamism in 2023; manufacturing activities were strengthened, with the agreement of more than 2 thousand 932 million dollars, mostly related to the automotive sector. SOURCE: EL SOL DE SAN LUIS

In addition to the main intention of the event, which is to experience a business meeting to detonate the alternative business activity to public works, there will be a series of conferences related to business, environment, artificial intelligence, new trends, public, and private works. SOURCE: EL SOL DE LEON

NEWS BY STATE

CDMX The Ministry of Tourism has reported that the anticipated economic impact of the 2023 Mexico City Grand Prix Formula 1 event will be around 15,624 million pesos for the capital city. This economic boost will primarily come from a hotel occupancy rate of 78.8% in Mexico City and various related services. The Secretary of Tourism, Miguel Torruco, stated that the event is expected to draw around 232,000 tourists, with 52,000 being foreigners who will stay in hotels in the Greater Mexico City metropolitan area from October 27 to 29. SOURCE: MILENIO

STATE OF MEXICO Francisco Cuevas Dobarganes, the General Director of the Industrial Union of the State of Mexico (UNIDEM), has called for changes in laws to eliminate excessive regulations hindering the establishment of businesses in the State of Mexico. He emphasized that companies currently face a prolonged two-year process for administrative procedures, leading to investment outflows towards regions like Bajio and the northern part of the country. The aim is to streamline the business establishment process and reduce the bureaucratic burdens on companies. SOURCE: EL SOL DE TOLUCA

INVESTMENT NEWS NORTH YURA Yura is opening its first satellite plant in Mapimí, Durango, to expand its Torreon plant where automotive harnesses are manufactured. This investment, aimed at creating 600 direct jobs, will see recruitment starting in November and operations beginning in January 2024 INTRATECH Chinese company Xiamen Intretech Inc. is investing $210 million to establish a new plant in Apodaca, Nuevo Leon, specializing in vision systems and flexible PCB automation, as announced during the Governor of Nuevo Leon’s recent tour of Asia JLMAG JL Mag, specializing in magnet production for electric vehicles, is investing $100 million in Salinas Victoria, Nuevo Leon, with prospects of increasing the investment to $500 million in the medium term, as part of a broader trend of electromobility suppliers investing in the region. HESAI TECHNOLOGIES Hesai Technology, a Chinese firm known for sensor technology and perception solutions for autonomous vehicles, has invested $260 million in Monterrey, Nuevo Leon, initially creating around 500 jobs with potential to expand up to 4000 jobs. TUOPU Tuopu is investing $710 million in Salinas Victoria, Nuevo Leon, creating 10,000 jobs and consolidating the region as an electromobility hub, with an aim to establish a significant presence in the area.

POSCO POSCO International has inaugurated its electric motor plant, POSCO International Mexico E-Mobility, in Ramos Arizpe, Coahuila, with a $100 million investment, aiming to produce cores for electric motors with an initial capacity of 300,000 units per year, generating 200 new direct jobs. MALTEUROP Malteurop, a French malting company, has inaugurated its first malting plant in Meoqui, Chihuahua, with a notable investment of €112 million (equivalent to $120 million USD). This plant, with a production capacity of 120,000 tons of malt per year, marks Malteurop’s first investment in Mexico and entrance into the Latin American market. CENTRAL MEXICO PARKER CORPORATION Parker Corporation Mexicana is investing $8 million to expand its operations by constructing a new plant in Aguascalientes, focused on manufacturing components for air conditioning systems. The expansion, set to commence operations by August 2024, is expected to create around 200 jobs in the region. SOURCES: CLUSTER INDUSTRIAL, MEXICO INDUSTRY

LABOR

UPDATED LIST OF WORK-RELATED DISEASES

ALVARO GARCIA HR, Vice President

Mexican Congress recently approved a significant labor law reform aimed at modernizing and expanding the list of work-related diseases recognized by the country’s legal framework. The previous list of work-related illnesses had become outdated, failing to reflect the evolving nature of labor and its associated health risks. The revised table of work-related diseases now encompasses a broader range of health issues, including cancers, respiratory diseases, and mental disorders. This expansion reflects a more comprehensive understanding of the diverse occupational risks faced by Mexican workers across various industries. The inclusion of mental disorders is a notable development, acknowledging the importance of addressing psychological health within the workplace, which has gained prominence in recent years due to the stresses and challenges posed by modern work environments. Contact us to learn more about this recent legislative change.