Weekly Review I February 14, 2024 by PRODENSA

GENERAL SITUATION IN MEXICO

Weekly Review I February 14, 2024

RELEVANT NEWS FOUR OUT OF 10 COMPANIES INVESTED IN MACHINERY AND EQUIPMENT TO BE STRENGTHENED BY NEARSHORING: CAINTRA The Chamber of the Transformation Industry of Nuevo Leon (Caintra) revealed that every month of last year, almost 4 out of 10 companies invested in machinery and equipment to strengthen their capacity and face the demand for goods and services from the installation of large factories and plants attracted by nearshoring to the state. “The indicator of investment in machinery and equipment of the study of economic expectations set a new mark in 2023,” commented the agency, headed by Maximo Vedoya. “On average, 37 percent of companies made investments in machinery and equipment each month, the highest figure since the study was conducted in 2013, marking a moment in the growth and development of the industry in Nuevo Leon,” he commented. According to the market analysis, 2023 was an excellent year for the industrial real estate market throughout the year, for Nuevo Leon. “Monterrey’s industrial market registered the highest demand for space in all of Mexico, achieving a gross absorption of 17.92 million square feet distributed in 112 transactions (or space to install factories, production lines or plants),” the consulting firm added. The industries responsible for most of the industrial space leased through the end of the year in Nuevo Leon

were automotive, supply chain, electrical/electronics, construction, metalworking, furniture manufacturing, food and beverage, plastics and pharmaceuticals. “Since the months following the pandemic in 2020, when the indicator reached its lowest point, a steady increase in private sector investment began,” Caintra said. The upward trend suggests not only a robust economic recovery, but also continued business confidence in the stability of the business environment, and therefore investment in machinery and equipment, he said. “It is particularly noteworthy that these investments are in line with the nearshoring trend: companies are looking to strengthen their capacity to supply new companies that choose to establish themselves in our region, consolidating Nuevo Leon as an attractive investment destination and a key player in the regional value chain,” he detailed. He added that this remarkable increase in investments in machinery and equipment reflects the dynamism and adaptability of our companies. SOURCE: FORBES MEXICO

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE February 7-13, 2024

POLITICAL AGENDA • Executive’s Package of Initiatives: The Executive’s Package of Initiatives encompasses various measures aimed at addressing critical issues in Mexico. This package includes initiatives such as the Pension Initiative for the Elderly, which seeks to reverse previous reforms that left workers without pensions to ensure retirement with 100% of the salary through a solidarity complement. Additionally, the Minimum Wage Initiative is part of this package, aiming to guarantee that wage increases are not below inflation Furthermore, in response to legislative and judicial blockades, the Executive’s Package includes constitutional reforms to prevent the monopoly of state-owned companies like CFE. • Pensions Reform and Criticism: The President defended his pension reform initiative amid criticism, comparing it to previous successful initiatives like providing pensions for the elderly. He dismissed critiques as unsubstantiated and reiterated the feasibility of his proposal. • Autonomous Bodies and Infrastructure Projects: President Lopez Obrador reiterated his stance against autonomous bodies, proposing their dissolution to consolidate functions within the government. He also discussed ongoing infrastructure projects such as the construction of the Chontal-

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE pa-Dos Bocas route and highlighted advancements in the Tren Maya project, including plans for cargo transportation. Additionally, he addressed upcoming discussions regarding the Unidad de Inteligencia Financiera’s activities and progress on cases involving former government officials. • Revocation of Mandate and Judicial Reforms: The President presented a constitutional reform proposal to reduce the minimum voting threshold for binding referendums every three years, citing efforts to strengthen participatory democracy. He emphasized the need for a corruption-free judiciary, proposing a tribunal with judges elected by the people. He criticized vested interests influencing judicial decisions and underscored the importance of popular involvement in decision-making processes. ELECTIONS

INFRASTRUCTURE

• Electoral Process Concerns: President Lopez Obrador expressed concern about the prevalence of negative campaigning in the ongoing electoral process. He recalled instances from the 2006 campaign where private companies violated the law by financing a negative campaign against him through television advertisements, labeling him as a “danger to Mexico.” The President attributed these smear campaigns to discontent among certain business sectors with his government’s policies, particularly regarding the discontinuation of tax exemptions previously enjoyed by corporations. He reiterated a list of companies he believes benefited from these exemptions during the previous administrations, including Grupo Televisa, Banamex, Cemex, Carso, ICA, and Grupo Salinas. This list has been presented on multiple occasions throughout his administration.

• Infrastructure Projects: The President emphasized the importance of infrastructure projects, particularly the one linking ports in the Gulf with the East Coast of the United States, as it will facilitate trade between the two countries. He also discussed plans for water infrastructure in the southeast and highlighted the potential for investment in the region. Additionally, he mentioned ongoing initiatives such as the rehabilitation of the Estadio Azteca and preparations for the FIFA World Cup. • Constitutional Reforms in Health Matters: The President highlighted the prevalence of immoral practices among certain companies, such as hiring lobbyists and bribing judges, citing specific instances. He also discussed potential decrees related to electricity subsidies and the inauguration of infrastructure projects in Sonora, emphasizing their significance for regional development.

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE • Infrastructure Projects in Chiapas Border Area: President Lopez Obrador highlighted the construction of two bridges aimed at enhancing connectivity between Chiapas and the southern border zone, underscoring security provided by the National Guard. PRIVATE SECTOR • Statements from Carlos Slim: Regarding comments made by businessman Carlos Slim about the involvement of the Armed Forces in civilian tasks, the President reiterated disagreement, outlining the multiple missions of the army and expressing respect for Slim’s investments in Mexico. He also addressed Slim’s remarks about Telmex, stating the government’s lack of intention to purchase the company. SECURITY • Security and Judicial Power Reform: President Lopez Obrador emphasized that addressing insecurity and violence requires tackling root causes rather than resorting to violence. He highlighted the deep crisis surrounding fentanyl consumption as a primary contributor to these issues. Similarly, he addressed the need for reforms within the Judicial Power, emphasizing the importance of addressing underlying causes such as the formation of lawyers and moralization of public life. Proposals include democratizing the judiciary to allow for citizen participation in selecting judges.

ENVIRONMENT • Fuel Price Monitoring and Future Events: The President provided updates on fuel prices and announced upcoming events, including discussions on fuel pricing and the participation of the Unidad de Inteligencia Financiera in future conferences. He also shared plans for his final public and political appearances, including the Independence Day ceremony and the presidential inauguration. • Sonora Plan: He highlighted the importance of foreign investment in projects such as the construction of electric vehicles in Sonora is emphasized. He mentioned the intention to address pending projects, such as the Cananea Mine, in the region. • Environmental Concerns in Nuevo Leon: President Lopez Obrador addressed concerns over environmental pollution in Nuevo Leon, particularly regarding quarry activities. He acknowledged the attribution of increased pollution to the Cadereyta refinery but emphasized that other factors, includ-

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE ing emissions from various industries, also contribute. The President refrained from further discussion due to the electoral context. Additionally, regarding pollution in the Sonora River, the Secretary of the Interior, Luisa Maria Alcalde, assured ongoing communication with Grupo Mexico to address remediation plans. BILATERAL ISSUES • Modernization of Border Customs: President Lopez Obrador announced plans to modernize all customs offices along the border with the United States before the end of his term, highlighting Otay in Baja California, Nuevo Laredo, Ciudad Juarez, and San Luis Rio Colorado. He acknowledged the complexity of customs modifications with the United States. • US Immigration Reform and Infrastructure Projects: President Lopez Obrador addressed the rejection of US immigration reform by the US Congress and emphasized Mexico’s commitment to non-electoral discussions on immigration issues. He also discussed the construction of a railway connecting Imuris with Nogales, highlighting its benefits and complexities. Moreover, he highlighted the potential of the Sonora Plan for development and announced his forthcoming visit to present a land regularization program for Yaqui communities.

NEWS BY STATE

SONORA After a period of absence, Sonora will once again participate in Expo ANTAD, a crucial event for the promotion and economic development of the state to be held in Guadalajara from March 12 to 14.

BAJA CALIFORNIA Baja California ranked first nationally as Mexico’s export industry leader, with 1,141 companies included in the Manufacturing, Maquiladora, and Export Services Industry Program (IMMEX), informed Governor Marina del Pilar Avila Olmeda. She said that the export industry has achieved a remarkable 13.7 percent increase in 2023, compared to 2022. The increase is reflected in various areas such as the acquisition of inputs and services; “these indicators reflect the confidence of international investors in Baja California. SOURCE: EL UNIVERSAL

The presence of exhibitors from this entity at this event takes on special relevance in the context of the Sonora Sustainable Energy Plan, which seeks to generate employment, promote economic units, and maintain the development of strategic sectors in the region, highlighted Said Saavedra Bracamonte, Undersecretary of Economic Development of the Ministry of Economy. SOURCE: EL SOL DE HERMOSILLO

NEWS BY STATE

TAMAULIPAS The Ministry of Economy in Tamaulipas informed that during the first quarter of 2024, 15 domestic and foreign companies related to the industrial sector will start the construction of several projects that together amount to an investment of 385 million dollars (mdd). The companies are from the automotive manufacturing, electric-electronic, energy, and semiconductor manufacturing sectors, which will be established in the cities of Reynosa, Nuevo Laredo, Victoria, and Altamira. SOURCE: MEXICO INDUSTRY

NUEVO LEON In order to strengthen the electromobility hub, the Government of Nuevo Leon expects to arrange more investments in its next tour of Asia, informed Emmanuel Loo, Undersecretary of Investment of the Nuevo Leon Ministry of Economy. This strategy seeks to have more products manufactured in Nuevo Leon in order to attract more suppliers and investment. SOURCE: MEXICO INDUSTRY

NEWS BY STATE

COAHUILA Governor Manolo Jimenez Salinas accompanied executives of Freightcar America, a company dedicated to the production of railroad cars, at the inauguration of the expansion of its plant in Castaños, where he pointed out that the most powerful tool for Coahuila’s families to prosper is to have a good job. The Governor reiterated his support to the businessmen and women who trust in Coahuila as a destination for their investments, and mentioned that his government is an ally of all those who seek to work, start a business, or invest in the state. SOURCE: EL DIARIO DE COAHUILA

CHIHUAHUA Industrial activity in the state of Chihuahua grew 4.1 percent in the monthly comparative, according to the latest Monthly Industrial Activity Indicator (IMAI) report. In the annual variation by type of economic activity, construction grew 46.6 percent; energy generation and water supply grew 10.8 percent; and mining grew 1.5 percent. On the other hand, manufacturing industries decreased by 1.5 percent. SOURCE: HERALDO DE CHIHUAHUA

NEWS BY STATE

SAN LUIS POTOSI For the second consecutive month, San Luis Potosi ranks first nationally in , according to the annual survey with which the National Institute of Statistics and Geography (INEGI) measures the dynamism of this productive sector in the country.

QUERETARO The automotive industry has been on the rise since its arrival in Queretaro in the 1960s, moving from manufacturing to innovation development. It is estimated that its production reached 5.3 billion dollars a year in 2020 and that in 2023 it was 8.3 billion dollars.

The Annual Survey of the Manufacturing Industry indicates that in October 2023, Potosi had an annual percentage variation of 25.3 percent with respect to the same month of the previous year.

Growth has been boosted in two stages: the first with the signing of NAFTA in the 1990s and the second with the arrival of assembly plants in the Bajio region. According to the Director of the Automotive Cluster, Daniel Hernandez Camacho, a third stage of growth is already underway with the conversion to electromobility.

SOURCE: REFORMA

SOURCE: DIARIO DE QUERETARO

NEWS BY STATE

GUANAJUATO The Extraordinary Assembly of the Mexican Association of Manufacturing, Molds and Dies (AMMMT) was held at the facilities of Grupo Plasma Automation in Leon, Guanajuato. The meeting was also attended by businessmen and investors from this entity. The AMMMT is a business organization that brings together companies that form a fundamental part of Mexico’s manufacturing supply, molds and dies sector, which represents a value of 5,000 million dollars (mdd), of which about 2,000 mdd are for plastic injection molds, covering the national supply of different industrial sectors of highly purchasing companies. SOURCE: MEXICO INDUSTRY

AGUASCALIENTES Aguascalientes has consolidated its position as a leader in industrial productivity in Mexico, ranking fifth nationally and second in the Central region, thanks to its outstanding performance in manufacturing and construction. This privileged position is a reflection of a business-friendly environment, driven by effective public policies and an optimal logistics infrastructure. SOURCE: LIDER EMPRESARIAL

NEWS BY STATE

CDMX Former INE president, Lorenzo Cordova, will be the main speaker at the March for Our Democracy on February 18 in Mexico City, organized by over 210 civil groups across 107 cities. Attendees are urged to avoid partisan symbols, and President Lopez Obrador is urged to allow peaceful elections. Autonomy and independence for electoral authorities are demanded, along with an electoral process free from the influence of organized crime and abuse of social programs. SOURCE: EL ECONOMISTA

STATE OF MEXICO Civil organizations from the Toluca Valley have called for the National Demonstration for Our Democracy, which will take place on Sunday, February 18, in defense of democratic institutions. The march, starting at Glorieta del Aguila in Toluca, will be held simultaneously in over a hundred cities across the country. Participants demand respect for institutions that strengthen democracy and denounce attacks on these institutions, as well as an increase in corruption. They call for autonomy and independence for electoral authorities and protection of the electoral process against influences from organized crime. They also criticize the proposed package of reforms, which includes changes to the INE and the Judiciary, and express concern about the implementation of clientelistic programs. The march, open to all people, will conclude at the Plaza de los Martires with speeches from the organizers. SOURCE: EL SOL DE TOLUCA

INVESTMENT NEWS CENTRAL MEXICO COATS GROUP The footwear and clothing company announced the opening of a new facility with a 20 million dollar investment and creating 330 jobs in Toluca. AUTOPLASTEK The plastics company announced the opening of a 5.5 million dollar investment and creating 110 job opportunities in Silao, Guanajuato. NORTH DROTIUM The software development company has announced its intention to invest 176 million dollars for EV production and creating 2,700 jobs in Durango. VIAKABLE The wires company announces a 5.5 million dollar investment and creating 40 job opportunities in Durango, Durango. SOURCES: CLUSTER INDUSTRIAL, MEXICO INDUSTRY