Weekly Review I November 22, 2023 by PRODENSA

GENERAL SITUATION IN MEXICO

Weekly Review I November 22, 2023

RELEVANT NEWS AT LEAST $15 BILLION IS EXPECTED TO BE INVESTED IN MEXICO’S AUTO PARTS INDUSTRY Francisco González Díaz, executive president of the National Auto Parts Industry (INA), predicted that the United States, Canada, China and South Korea will invest more than $15 billion in Mexico over the next two years. “In the early 2000s we were growing with (an investment of) 1.5 billion a year (in the auto parts industry), now it would be 15 billion in two years and it is a very strong growth,” said the businessman in the framework of the XXIX Mexican Foreign Trade Congress Challenges and Opportunities in Foreign Trade, a focus on innovation, organized by the Comce. In the coming months “we are talking about (the arrival of) 50 and even 100 new companies, but it is much greater because they are new lines in existing companies,” said the business leader. The auto parts industry is growing in the Central, Bajío, Western, Northern and Border regions, he said. The impulse of the auto parts sector is very important in Mexico because the growth of existing plants and factories is taking place, in addition to the arrival of new companies, he said. He recalled that today there is more consolidation in the integration of Tier 1, Tier 2 and Tier 3. The auto parts industry is growing hand in hand with the Mexican Association of Private Industrial Parks, which advises companies on where to locate, how to grow and what they need.

The companies that come with new investments need infrastructure, especially clean energy, human talent and the rule of law, said the president of INA. He said the auto parts industry is looking for new company names and consolidation: “What is it? In previous years, we had already invited almost all Tier 1 companies, and we will not find many new brands in the market”. At the moment, a company already established in Ciudad Juárez is expanding its production line, but it is “an investment that they had in another part of the world, especially in Asia, and they are bringing it to Mexico”. “What happens to an investment that was in Toluca or Leon, Guanajuato, and it doubles? Well, it is a completely new investment, even if it has the same name,” he explained. SOURCE: FORBES MEXICO

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE November 15-21, 2023

TECHNOLOGICAL INFRASTRUCTURE • CFE Telecommunications and Internet for All. Regarding the progress of the program, it was announced that a national coverage of 94.5% for mobile telephony was achieved. Also, regarding free internet service through access points, 84,397 have been installed in the country, with over 60,000 in schools, 15,423 in public spaces, 1,050 in health centers, among others. The National Optical Fiber Network has made progress with 11,411 km out of the 2023 goal of 22,728 km. INTERNATIONAL AFFAIRS • APEC Leaders’ Meeting. The President highlighted positive outcomes from the APEC 2023 Leaders’ Meeting. Discussions with China, the United States, and Canada focused on conflict resolution through dialogue and the importance of prioritizing people’s well-being over war. Future plans for using the “Patria” vaccine were discussed. • Argentine Presidential Elections. The President commented on Argentina’s recent shift in political leadership, emphasizing Mexico’s awareness and political consciousness to prevent a similar shift. He stated there would be no severance of ties with Argentina.

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

HEALTH • Trans fats. Dr. Ruy López Ridaura discussed the new policy on trans fats, emphasizing collaboration between COFEPRIS and the industrial sector. Supervision visits to sectors that manufacture packaged products are expected to begin in 2024 with the objective of verifying the elimination of trans fats, with potential impact in the next five to ten years. The octagon label indicating “excessive trans fats” will be maintained for now. He recalled that in October progress was made in the second phase of Standard Norm 051, noting that the recommendation is that the fewer the seals, the more advisable it is to consume these products. Finally, he indicated that progress will be made in the third phase of this health policy. • Vaccination. Dr. López Ridaura reported progress in the National Vaccination Campaign, with 10 million influenza doses administered out of 35 million projected. For COVID-19, almost 1.9 million out of 20 million planned doses have been given. COFEPRIS is considering the commercialization of vaccines approved by the New Molecules Committee. The “Patria” vaccine may be incorporated, and future plans involve its use in subsequent winter seasons. • Upcoming Health Initiatives. The President aims for a free healthcare system by March 2024 and announced the opening of a comprehensive pharmacy in Huehuetoca, State of Mexico. BIRMEX will manage it, ensuring nationwide access to medicines. The inauguration may occur on December 30, depending on certain factors.

NATIONAL POLITICS • 2024 Electoral Process. Concerning electoral supplies, the President urged the INE’s attention to the production and quality of the resources, addressing concerns about potential electoral fraud. Investigating claims and ensuring ballot integrity is crucial. • President’s Work Agenda. The President outlined his upcoming schedule, including inspections of the “El Insurgente” train, visits to Dos Bocas, Acapulco, Tlaxiaco, and meetings with municipal leaders in the Guerrero region. AID FOR RECOVERY AFTER HURRICANE OTIS • Federal Judicial Budget.Returning 15 billion pesos from 14 trust funds to the Treasury will support Hurricane Otis victims. The President acknowledged legal challenges preventing the funds’ immediate use. • Hurricane Otis Recovery.Ongoing recovery efforts for Hurricane Otis include substantial personnel engagement, provision of supplies, restoration of essential services, and upcoming security meetings. Important announcements regarding support for victims are expected on Thursday 23 of November.

NEWS BY STATE

BAJA CALIFORNIA Tetra Pak, a world leader in food packaging and processing solutions, has marked an important milestone by laying the first stone for the expansion of its plant in Mexicali, Baja California. The estimated investment for this project amounts to 750 million pesos, as announced to Governor Marina del Pilar Avila Olmeda last September. The Secretary of Economy and Innovation highlighted the investment as a result of local talent, stating that the joint strategy with the education and business sector will attract and encourage the growth of companies, providing job opportunities and improved salaries. SOURCE: UNIRADIO

SONORA To address the nearshoring phenomenon in the short term, there are eleven industrial buildings under construction in Sonora and three already completed; in addition, there are three parks in the project stage, revealed Jesús Gámez García. The president of the Industry (Index), informed that this year will be good for the State because they will close with more than 35 thousand new jobs, higher than the established goal; besides that in 2024 the growth rhythm will be maintained, and in 2025, the consolidation. SOURCE: EL IMPARCIAL

NEWS BY STATE

NUEVO LEON U.S. assembly plant strike affected some component lines in Nuevo León. Due to the strike of vehicle assemblers in the United States, -from September 15 to October 30, 2023-, some component production lines had to be stopped in Nuevo Leon, whose plants stopped operating in the American Union, but it was a partial halt; while for the Maquiladora and Manufacturing Export Industry in the state, it had no effect whatsoever. The director of the National Auto Parts Industry (INA), Armando Cortés, stated to the press that during the seven weeks of this conflict, there was a drop of 785 million dollars in the export of auto parts from Mexico to the United States. SOURCE: EL ECONOMISTA

CHIHUAHUA The president-elect of Index Chihuahua, René Espinosa Terrazas, stated that one of the main challenges in taking this position is to maintain Chihuahua as an ecosystem where this industry continues to be promoted, which has an impact on the generation of jobs. In this sense, he emphasized that Chihuahua offers the conditions for the installation of companies, so his intention is to continue working together between private initiative, government, academia and society. SOURCE: HERALDO DE CHIHUAHUA

NEWS BY STATE

COAHUILA The Mayor of Saltillo, José María Fraustro Siller, emphasized that the Southeast Region is positioned as a national leader in labor development, covering areas such as hiring, labor formality, specialization and training of workers. Fraustro Siller underscored the importance of the Southeast Region in terms of labor formality, economic activity and highly trained human capital. He emphasized that more and more companies are choosing this region to grow and develop, placing the area at the top of the national ranking in terms of competitiveness, labor formality and safety. SOURCE: VANGUARDIA

TAMAULIPAS Américo Villarreal Anaya, Governor of Tamaulipas, indicated that the state concentrates more than 63 percent of energy prospects in terms of hydrocarbons and renewable sources, for which reason they will seek to promote the attraction of investments with various actions, including the signing of a collaboration agreement with the National Hydrocarbons Commission (CNH). José Ramón Silva, head of the Secretariat of Energy Development, emphasized that the agreement established with the regulatory body is aimed at contributing to energy sovereignty through the oil blocks located in Tamaulipas and highlighted that companies such as Woodside Energy will be able to use the North Port to detonate projects in the lost folded belt. SOURCE: ENERGY21

NEWS BY STATE

GUANAJUATO The state of Guanajuato has been one of the leaders in manufacturing in recent years, so through the State Training Institute (IECA), the CAMANGTO Advanced Manufacturing Center was inaugurated in the presence of students from the Instituto Tecnológico Superior de Irapuato (ITESI), a place where it will aim to provide training services to the educational and business sector for the development of knowledge and skills, as well as to implement new technologies in the industrial, food, agricultural, automotive and aeronautical sectors. Daniel Gonzalez Arroyo, director of the IECA Irapuato Campus, mentioned that this institution has courses and workshops focused on four sectors and assured that it has an important labor force with updated information and the inauguration of this new center is an example of what is possible to achieve.

AGUASCALIENTES According to data reported by México Cómo Vamos, the state ranks third nationally in quarterly growth, with a growth rate of 3.94%. The president of the College of Economists, Dafne Viramontes, details that growth in the state is driven by factors such as the construction industry, mainly the “real estate boom”.

SOURCE: EL SOL DE IRAPUATO SOURCE: BI NOTICIAS

NEWS BY STATE

QUERETARO By the end of 2023, Querétaro’s automotive industry expects a 12% increase compared to last year, which could contribute to an accumulated national production of 117 billion dollars, according to Daniel Hernández Camacho, Director of the state’s Automotive Cluster. According to data from the Mexican Association of the Automotive Industry (AMIA), which Hernandez Camacho mentioned, its projection for 2023 is for a 6% increase in the production of light vehicles in the country. SOURCE: LIDER EMPRESARIAL

JALISCO High-tech industries installed in Jalisco import between 90 and 94% of the components they transform to be exported, said the head of the Ministry of Economic Development (Sedeco), Roberto Arechederra, noting that this is the size of the opportunity that local companies have to join the supply chains of global companies, and take advantage of the opportunities offered by both nearshoring and the T-MEC. The meeting seeks productive linkages in the automotive sector to increase regional content in the manufacture of automobiles so that a greater number of small and medium-sized companies from Jalisco can take advantage of the benefits of the trade agreement between Mexico, the United States and Canada. SOURCE: EL ECONOMISTA

NEWS BY STATE

STATE OF MEXICO Ten municipalities in the state of Michoacán contract debt

CDMX The CDMX Government delivers grants to 1,200 cooperative and domestic workers. Martí Batres Guadarrama, the Head of Government of Mexico City, oversaw the distribution of resources benefiting 2,200 individuals through programs promoting the “Social and Solidarity Economy” and “Employ Yourself.” The initiatives, led by the Secretary of Labor and Employment Promotion, focus on supporting domestic workers and cooperative members with a progressive vision. An investment of 20.88 million pesos was provided to 261 cooperatives to enhance their financial, organizational, and managerial capacities. Additionally, 318 individuals, mainly women, received 10,000 pesos each through the “Employ Yourself” program to improve productive processes in various projects. SOURCE: EXCELSIOR

In 2023, 10 municipalities in the State of Mexico have collectively contracted loans exceeding 239 million pesos from Banobras. The borrowed funds are earmarked for various public infrastructure projects. The municipalities, including Santiago Tianguistenco, Villa Guerrero, Jilotepec, Valle de Bravo, La Paz, Coatepec Harinas, Atlautla, Nicolás Romero, El Oro, and Ozumba, have opted for simple loans with repayment periods ranging from 444 to 617 days. Each municipality has requested an amount tailored to its credit capacity, with sums varying from 11 to 53 million pesos. Notably, all these loans must be settled by November 2024. The funds acquired are intended for productive public investments, primarily directed at public works. SOURCE: EL SOL DE TOLUCA

INVESTMENT NEWS NORTH INFAC AUTOMOTIVE South Korean automotive electrical and electronic components manufacturer INFAC Automotive México is investing $20 million to produce battery boxes for electric vehicles in Monclova, Coahuila, Mexico, generating 150 jobs. The investment reflects the growing demand for electric vehicles in Mexico, aligning with the government’s goal of making 50% of new car sales electric by 2030. DHL DHL Supply Chain has invested $25 million in a new logistics center in Nuevo León, Mexico, expected to generate over 2,000 jobs. The 100,000-square-meter center in Apodaca will provide warehousing, transportation, and distribution services for various industries, including automotive, aerospace, and healthcare. JABIL The inauguration of Jabil’s third plant in Chihuahua, Mexico, has generated over 10,000 jobs. The US-based company manufactures electronic components for various industries, including aerospace, automotive, and healthcare. The plant is one of the largest in the world, with a total area of 1 million square feet and over 10,000 employees. LEGO LEGO company will be expanding its plant in Nuevo Leon, Mexico with an investment of $205 million dollars. The expansion will create 1,000 new jobs and is expected to be completed by 2025. The new plant will produce parts for LEGO sets that are sold in the Americas. The expansion is part of the company’s strategy to grow its presence in Mexico and to reduce its reliance on China for manufacturing.

CENTRAL MEXICO VALEO Valeo, a French automotive supplier, will invest $200 million in its Querétaro, Mexico, technical center to expand its operations and create 510 new jobs. The investment will be used to develop new technologies for the automotive industry, such as advanced safety systems, LED lighting systems, and infotainment systems. SHACMAN The Chinese truck manufacturer Shacman will invest $10 million to build a new truck assembly plant in Querétaro, Mexico. The plant is expected to start producing trucks in mid-2024 and will have an initial capacity of 1,000 trucks per year. The company plans to eventually increase production to 10,000 trucks per year. AMPORTS DE MEXICO The Mexican company Amports de México will invest $5 million to build a new 12-hectare yard at the Port of Lázaro Cárdenas in Michoacán, Mexico. The investment aims to strengthen the company’s export capabilities, particularly for the automotive industry. The new yard will allow Amports de México to store and handle a larger volume of cargo, including vehicles, machinery, and other manufactured goods. SOURCES: CLUSTER INDUSTRIAL, LIDER EMPRESARIAL