Weekly Review I November 15, 2023 by PRODENSA

GENERAL SITUATION IN MEXICO

Weekly Review I November 15, 2023

RELEVANT NEWS NUEVO LEON ANNOUNCES TENDER FOR ACCESS WORKS TO TESLA GIGAFACTORY The government of Nuevo Leon this Wednesday launched the tender for the execution of the works included in the comprehensive access infrastructure project to the future Tesla plant, announced to begin construction in early 2024.

“This is how we prepare for the arrival of Tesla, with first-world mobility. A new bridge, the widening of three lanes of the highway, and new access ramps. This will be the entrance to Tesla! “Chulada!”, published Garcia.

In a statement, the state government said that the published tenders include the construction of an overpass, access ramps, and the expansion of a third lane on the Monterrey-Saltillo highway.

Last February, magnate Elon Musk, owner of Tesla, reported the installation of the plant in Santa Catarina, Nuevo Leon, with an initial investment of between 5,000 and 10,000 million dollars, and warned that it will be the largest of its kind in the world.

“These tenders are complementary to the studies and surveys carried out on previous dates,” said the note. He specified that the objective of the works is to address the projection of the increase in traffic flow that is expected to reach the state, “derived from the promotion strategies to attract foreign direct investment and take advantage of nearshoring”.

In mid-October, after the presentation of Tesla’s financial results, Musk said that until interest rates fall, Tesla will take it easy on the construction of the assembly plant it has planned for Mexico, for fear of another crisis like the one that almost wiped out manufacturers like General Motors (GM) in 2009. WITH INFORMATION FROM EFE

The governor of Nuevo Leon, Samuel Garcia, published on his social networks images of a possible design that projects how the works could look.

SOURCE: FORBES MEXICO

RELEVANT NEWS

VOLKSWAGEN TO PRODUCE ELECTRIC CARS IN MEXICO ON A LARGE SCALE WITHIN 3 YEARS It has been almost six decades since Volkswagen decided to produce in Mexico one of its most emblematic models: the Beetle, better known in the country as “Vocho”; now the German automaker plans to start producing electric cars at its plant in Puebla, a project that will require an investment of several million dollars. In an interview with Forbes Mexico, the president of the company in the country, Holger Nestler, assures that they have two investment packages to reach this point, the first for 763.5 million dollars, whose objective is to make their production processes more environmentally friendly, as well as to modernize and transform the way they operate to be more efficient. According to the executive of the German company, today it is not only about building vehicles, but also about thinking about the manufacturing process and future generations, that is, building cars in a more sustainable way. “What about electric vehicles in Mexico, are we going to produce them or not? Of course we are, but in order to sell them we have to start with a transformation of the industry, here in Mexico we are in that process where we are making different changes in Volkswagen Mexico,” he says. Nestler explains that the company is making changes within its facilities, updating them to the latest technology in order to develop new models, thanks to the large investments they will have in the next one to three years.

“We also have a project that will lead us to a vehicle that eliminates fossil energy or even gas energy, it will be an electric vehicle, but with renewable energy. By the end of 2024 we will have this renewable energy option, which will be much more sustainable and cleaner for our entire planet,” he said. In this sense, the CEO of Volkswagen Mexico explains that when the company talks about electrification, they are not only thinking about a product, but also about the process with which they manufacture the cars, so the objective of this first investment package is the infrastructure to be able to make the changes. Nestler says that within the first $763.5 million, nearly $350 million is earmarked for a new paint shop. Regarding the second package, the executive indicated that it is already contemplated and will have a significant amount of money; it will be revealed in the first 3 or 4 months of next year and involves the electric model that will be manufactured in Mexico. “You can count on it (that in 3 years they will already be producing electric cars on a large scale in Mexico), I cannot give the name or the line exactly, but what we are doing today is the preparation of the facilities so that they have the necessary qualifications to be able to produce this type of vehicles”, he mentions. SOURCE: FORBES MEXICO

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE November 8-14, 2023

NATURAL DISASTERS • Hurricane Otis. Laura Velazquez, National Coordinator of Civil Protection, reported that 16,500 military personnel and Air Force members have been deployed for the distribution of essential goods in the aftermath of Hurricane Otis. Infrastructure updates include 58 active gas stations, full restoration of electrical services, and the opening of Chedraui branches for basic necessities. There are ongoing search and rescue efforts, with 48 reported fatalities, 32 people still missing, and collaboration with businesses and hoteliers to aid recovery. Also, the President mentioned 230,000 households surveyed in Acapulco, stating that support will be provided in resources, not loans. Assistance will also include the purchase of appliances. An estimated MXN $15 billion will be used for housing, along with additional funds for appliances. Normalization of the situation is well underway with 80% of gas stations open, 70% water system service, complete electricity connection, and ongoing efforts to restore housing electricity. The President announced he is set to travel to Acapulco to oversee the ongoing reconstruction efforts.

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

LEGAL AND JUDICIAL • Resignation of Minister Zaldivar and Appointment of Replacement. President Lopez Obrador accepted the resignation of Arturo Zaldivar as a Supreme Court justice. Contemplating a nomination of three women to fill the vacancy, he criticized past nominees for what he perceives as betrayals of public interest. He mentioned the list of the three candidates will be sent to the Senate on Wednesday 15th and that he already has spoken with the three women. • Supreme Court of Justice of the Nation. President Lopez Obrador announced that before the end of his term, he will submit an initiative to reform the Constitution, suggesting the election of judges, magistrates, and ministers by the people. He recalled the cancellation of trusts by Congress and the subsequent call to use those resources for Acapulco flood victims. However, there were legal challenges with injunctions filed, creating a situation where the judiciary became both judge and party. The president mentioned receiving a letter from the Chief Justice, suggesting she might have had good intentions but faced difficulties in execution. ECONOMIC MATTERS • Budget for the federal government 2024. The Head of the Federal Executive, Andres Manuel Lopez Obrador, celebrated the recent approval of the federal budget, emphasizing its focus on well-being and the fight against economic and social inequality. This is the final budget in his administration, and he highlighted that all budgets have been approved without corruption. The approval signifies the allocation of funds for crucial projects such as the Tren

Maya, infrastructure projects for PEMEX and CFE, and the interoceanic train. • Taxation. Regarding Ricardo Salinas’ MXN $26 billion debt, Lopez Obrador mentioned the determination that he must pay. He mentioned he has addressed situations where large companies did not pay taxes, indirectly blaming the informal economy for tax evasion. Approximately MXN $500 billion were collected from such companies during this administration due to the elimination of tax write-offs, providing resources to address tragedies like Acapulco. The President highlighted that the government has been working to ensure that large companies pay their fair share of taxes. He specifically acknowledged Walmart and OXXO for rectifying their tax situations by paying substantial amounts owed. The president also mentioned ongoing legal issues involving Televisa’s alleged tax debt and emphasized that the efforts to address these matters are driven by a commitment to justice rather than personal animosity. The broader goal is to promote fiscal responsibility and equitable tax contributions from large enterprises. • Asia-Pacific Economic Cooperation Forum. The Secretary of Foreign Affairs, Alicia Barcena, out-

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE lined the agenda for the upcoming visit to San Francisco, California, for the Asia-Pacific Economic Cooperation (APEC) forum. On Wednesday, November 15, a ministerial meeting is scheduled in the afternoon, and President Lopez Obrador will arrive in San Francisco later that night. On Thursday, November 16, the President will engage in a series of events, including a bilateral meeting with Chinese President Xi Jinping, an official photo session, and participation in the inaugural meeting presided over by U.S. President Joe Biden. Additionally, there will be a bilateral meeting with the Canadian delegation led by Prime Minister Justin Trudeau, followed by an official dinner hosted by the U.S. government. The agenda concludes on Friday, November 17, with a bilateral meeting between President Lopez Obrador and President Joe Biden, culminating in the closing session of the APEC forum. ENVIRONMENT • Ecocide in Veracruz. A reporter inquired about the alleged ecocide in two lagoons in Veracruz, “La Ilusion” and “Ensueño,” caused by the water concessionaire Grupo MAS, which discharges contaminated water into these bodies of water. The President responded that he would request the Secretary of Environment and Natural Resources, Maria Luisa Albores, to investigate the matter. • Water Situation in Baja California. President Lopez Obrador announced the signing of an agreement with the Governor of Baja California, prohibiting the industrial use of water from Mexicali, particularly for breweries, prioritizing domestic use. He also stated that COPARMEX (Mexican Employers’ Association) is akin to a sector of the PAN (Partido Accion Nacional). He mentioned their dissatisfaction with using

water from Mexicali for people, stating that permits were given to companies like Constellation Brands, whose production was not intended for Mexican consumption. The company planned to export the water for its products to the United States, highlighting that 1 liter of beer requires 3 to 6 liters of water. Regarding sewage on Rosarito’s beaches, Governor Marina del Pilar Avila expressed concern and reported efforts to maintain the San Antonio de Los Buenos Wastewater Treatment Plant. The President mentioned a shift away from Public-Private Partnerships for treatment plants due to high costs for the public and greater private profits. POLITICAL AND SOCIAL ISSUES • Discussion with Biden over migratory, economic, and security issues. Regarding the migration topic, the president expressed his intention to address it further in his upcoming meeting with President Biden. He acknowledged Biden’s positive attitude toward migration, issuing humanitarian visas, and refusing to build a border wall. Lopez Obrador emphasized the importance of addressing the root causes to temper the flow of migration. The Foreign Minister, Barcena, disclosed that, beyond discussing migration, the bilateral meeting with the United States will cover economic cooperation and

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE the development of the border between the two nations. The agenda will also address the binational strategy against drug trafficking, with the presence of officials from the National Defense Secretariat and the Ministry of Economy. Emphasizing President Lopez Obrador’s interest, Barcena highlighted the intention to explore how the Mexican government can assist the United States in cooperation for the region’s development, particularly in countries experiencing high migration levels. • Marcelo Ebrard. Regarding Marcelo Ebrard’s political future and his decision to respect Morena’s internal process, President Lopez Obrador stated that he welcomed his decision, whom he described as responsible and consistent. • Murder of Aguascalientes Magistrate Jesus Ociel Baena. In response to the tragic death of Magistrate Jesus Ociel Baena, a prominent activist and advocate for electoral rights in Aguascalientes, officials conveyed their condolences and highlighted Baena’s significant contributions to the communi-

ty. Notably, Baena was the first person in Mexico to have identification, a passport, and academic titles with a non-binary gender designation. The President has directed close attention to the investigation into Baena’s death, emphasizing the importance of a thorough and unbiased inquiry. The government pledges full support and coordination with the ongoing investigation by the state prosecutor, with a commitment to exploring all possible lines of inquiry. INFRASTRUCTURE • Agreement between Oaxaca and Iberdrola. The President mentioned that he was not aware of the agreement between Iberdrola and the Government of Oaxaca for the lighting of monuments. However, he assured that, although there were differences with Iberdrola for having hired former President Felipe Calderon as an advisor, the government reached an agreement with the company to acquire 14 generation plants, which made it possible to move forward with the rescue of CFE and Pemex. • Infrastructure Projects. President Lopez Obrador noted that the Felipe Angeles International Airport currently handles more cargo than the airports in Mexico City or Guadalajara. He reiterated that the Tren Maya, covering 1,554 kilometers, will be inaugurated by the year-end, along with the opening of the Tulum Airport. He praised the work of the engineers from the National Defense Secretariat (SEDENA). • Progress in Passenger Trains. President Lopez Obrador announced plans to issue a decree on November 20, mandating the adaptation of all freight train tracks to accommodate passenger trains. Emphasizing the government’s legal authority, he

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE expressed a preference for existing freight train concession holders to propose track conditioning projects, signaling a potential shift to passenger train services. Companies are urged to submit projects by January, with the possibility of the government acquiring passenger trains if freight services persist. Ferromex received recognition for agreeing to the conditioning of the Istmo de Tehuantepec stretch. • Internet. It was reported that the government has made significant progress in installing CFE antennas, and the President aims to have 94% of fiber optic installation completed by the end of his administration. CORRUPTION • Segalmex. Elizabeth Garcia Vilchis stated that it is false that Seguridad Alimentaria Mexicana (Segalmex) is involved in any way with a drug shipment seized in Hong Kong. She added that Segalmex does not export products to other countries and cleared the public agency of any misuse of the agency’s acronym.

NEWS BY STATE

BAJA CALIFORNIA AMLO will launch an initiative to maintain VAT and ISR reductions on the border. He mentioned that he will present the initiative before the end of his term as president so that both taxes remain at 50%, he announced. These tax benefits are by presidential decree, which is effective until 2024, so now they seek to be established in the law. Baja California’s business sector requested that the decree be renewed and not leave a void in the transition of the change of the federal administration. The president of the Business Coordinating Council (CCE), Carlos Jaramillo Silva, said that this measure will particularly benefit local commerce throughout the northern border, by being more competitive with U.S. commerce, which has a maximum VAT rate of 7.25%.

SONORA The Maquiladora and Export Manufacturing Industry (Index) will close 2023 with between 32,000 and 35,000 new jobs in Sonora, and 18,000 to 20,000 of those will be in Hermosillo, said Jesus Gamez Garcia.

SOURCE: INDUSTRIAL NEWS BC

The state president of Index said that this year they will reach almost 215 thousand new jobs, which is a record figure in the history of Sonora’s manufacturing industry, due to the organic growth of the plants already installed. SOURCE: EL IMPARCIAL

NEWS BY STATE

NUEVO LEON Members of the State Congress met this Friday with legislators from the province of Zhejiang, China, with the purpose of exchanging legislative experiences that can be used to improve the regulatory framework.

CHIHUAHUA After a 4.2 percent drop in June 2023, industrial activity in the state of Chihuahua registered an increase of 3.3 percent last July, with respect to the previous month.

The president of the board of directors, Mauro Guerra Villarreal, pointed out that there are similarities between Zhejiang and Nuevo Leon since the Chinese province is also a leading region in industry and educational centers in his country.

This is according to Industrial Activity Indicators, analyzed by the Private Sector Competitive Intelligence Platform (PICsp), where it is also detailed that our entity was in the tenth place with the highest growth in its economic activity, in its last update.

SOURCE: CONGRESS OF THE STATE OF NUEVO LEON

SOURCE: HERALDO DE CHIHUAHUA

NEWS BY STATE

TAMAULIPAS Tamaulipas is Mexico’s new energy benchmark, as it concentrates 63% of the country’s prospective energy resources and is a spearhead in ultra-deep water exploration and gas extraction in the Burgos Basin, said Governor Americo Villarreal Anaya. “We have a very high potential for electricity generation, by renewable means and we stand out as one of the leading entities in electricity generation. We produce much more than what we consume and both in the north and in the south of the state, large projects are underway with private investment and public participation that have no precedent in Mexico and are even at the forefront internationally,” he said in his message during the civic ceremony of honors, this Monday, at the Polyforum of this capital. SOURCE: PROCESO

NEWS BY STATE

GUANAJUATO El Gran Bajio is the business promotion agency that promotes a global business agenda through a network of alliances and strategic positioning; this edition brought together more than 150 business leaders from the Bajio. “Guanajuato is a state that is prospering. We are speaking with results and not with rhetoric, we are silencing mouths with actions, numbers, and positive figures that show the development of Guanajuato,” said the Governor. The State Governor responded to questions by the President of El Gran Bajio, Julio Di-Bella, when he spoke about the ideas, creation, and application of Mentefactura; the strategy of the Government of the State of Guanajuato to promote business innovation. SOURCE: PERIODICO MIRADOR

AGUASCALIENTES As part of Governor Tere Jimenez’s interest in positioning Aguascalientes as a state at the forefront and a national reference, the Secretariat of Planning, Participation and Development of the State of Aguascalientes (Seplade) held the first Collective Intelligence Workshop “Vision Aguascalientes 2050”, a space for citizen collaboration where experts in various areas of state development met. The head of Seplade, Guillermo de la Torre Sifuentes, emphasized that the objective is to exchange ideas and proposals to address and solve the challenges faced by the different sectors facing the year 2050. SOURCE: EL SOL DE CENTRO

NEWS BY STATE

QUERETARO Meanwhile, Mara Morales, President of the State Council of Real Estate Professionals of Queretaro, pointed out that in the last year, an occupancy of 112 thousand square meters of available space for the industrial sector was reported, which represents an increase of 50% compared to last year. In addition, experts in the sector have identified the Queretaro International Airport (AIQ) and the parks located at the exit to San Luis Potosi as growth areas.

SAN LUIS POTOSI The National Institute of Statistics and Geography (INEGI) presented the Monthly Indicator of Industrial Activity by Federal Entity (IMAIEF) for the month of July, which monitors the behavior of secondary sector economic activities in the states on a monthly basis. Specifically in the manufacturing industry, the state of San Luis Potosi had a positive variation of 36.4% with respect to last year, which placed it in first place nationally in terms of growth during the month of July.

SOURCE: DIARIO DE QUERETA

JALISCO With the generation of 14,071 jobs during October, Jalisco adds 80,469 new jobs so far in 2023, and for the first time in its history, the entity exceeds two million workers registered with the IMSS. “Formal workers are part of the dynamic that exists in our entity and places us as the second entity with the most workers in this area,” commented the head of the Secretariat of Economic Development (Sedeco) of Jalisco, Roberto Arechedderra. SOURCE: EL ECONOMISTA

SOURCE: EL SOL DE SAN LUIS

NEWS BY STATE

CDMX Mexico City consolidates its position as First Place in Foreign Direct Investment Attraction during the Third Quarter of 2023 Mexico City has solidified its position as the top destination for Foreign Direct Investment (FDI) in Mexico during the third quarter of 2023. According to data from the Mexican Ministry of Economy, the capital attracted an impressive $10.58 billion in FDI, constituting 32% of the national total. This underscores the city’s robust economic growth across diverse sectors and its appeal to global investors. Fadlala Akabani Hneide, the head of the Secretariat of Economic Development (SEDECO), highlighted that major contributors to Mexico City’s FDI during this period were the United States, Spain, Canada, and Germany. The city continues to be recognized as a financial hub, attracting significant investments and serving as a preferred location for the relocation of production processes by major corporations.

STATE OF MEXICO SEDECO estimates more than MXN $26 billion of economic revenue in the State of Mexico for the Buen Fin The Secretary of Economic Development of the State of Mexico, Laura Gonzalez Hernandez, anticipates that the El Buen Fin discounts, scheduled from November 17 to 20, will have a substantial economic impact of over MXN $26 billion. The State of Mexico, in collaboration with Mexico City, constitutes the largest consumer market in the country, and the Buen Fin event is seen as a key driver for businesses of all sizes. The commercial sector, representing a significant portion of the state’s economy, is expected to benefit from Buen Fin, contributing to the income of micro, small, medium, and large businesses, as well as various chains. The program is considered a vital element for economic reactivation and stimulation, especially in sectors such as commerce, services, restaurants, and bars during the final quarter of the year. SOURCE: EL HERALDO

SOURCE: GOVERNMENT OF CDMX

INVESTMENT NEWS NATIONAL AUTECO Auteco, a Colombian company, is entering the Mexican market with a portfolio of five 100% electric vehicles and has announced a $102.5 million investment to establish a production plant in Mexico. They plan to target the business sector with a B2B sales and after-sales service approach. The plant’s installation is projected within four to five years, aiming to adapt to local market needs and preferences NORTH TIME INTERCONNECT TECHNOLOGY Time Interconnect Technology will invest $40 million to establish operations in Tamaulipas, focusing on the production of cables and accessories, primarily for the automotive industry. This initiative is expected to generate more than 500 jobs in its final phase and is set to begin operations in December 2023. BRP Canadian company BRP has inaugurated its third manufacturing plant in Ciudad Juarez, Chihuahua, which will generate 2,000 jobs. The company, which assembles off-road vehicles, watercraft, and snowmobiles for the international market, has contributed to Chihuahua attracting over $4.5 billion in foreign investment over the last two years.

WALMART Walmart has invested $34 million to open a new complex in Juarez, Nuevo Leon, which includes a Walmart Supercenter and Sam’s Club, creating over 300 jobs. The complex aims to cater to the growing population of Juarez, now exceeding 500,000 residents, by providing a diverse shopping experience with both stores located on the same property. OPTIMAS SOLUTIONS American company Optimas Solutions, a global industrial manufacturer and distributor, will establish a fastener manufacturing plant in Monterrey, Nuevo Leon, slated to start production in the second half of 2024. This move is to support regional operations and mitigate supply chain risks. The details of the investment amount were not disclosed. SOURCES: CLUSTER INDUSTRIAL, MILENIO

PRODENSA GOOD NEWS

CONGRATULATIONS TO OUR CEO, EMILIO CADENA, FOR BEING FEATURED ON THE COVER OF LIDER EMPRESARIAL MAGAZINE

In the interview, Emilio talks about his journey at Prodensa since 1996 and the evolution of the company from a micro-enterprise to a global enterprise. He also shares his perspective on nearshoring and the complexities and changes that are shaping today’s business world. You can read the full issue of the magazine at https://www.liderempresarial.com/revista-digital-nuevo-leon/