Weekly Review I March 20, 2024

GENERAL SITUATION IN MEXICO

RELEVANT NEWS

MEXICO CLIMBED TO 9TH POSITION AMONG MAJOR EXPORTERS

Mexico climbed from thirteenth position in 2022 to ninth in 2023 among the world’s largest exporters of products, according to data from the World Trade Organization (WTO), Inegi and the Russian Customs Service.

This is the highest place Mexico has achieved historically, having reached tenth place for the only time in 2019.

“Mexico has been competing for this export supremacy for several decades, and for some administrations now it has been predicted that if Mexico does things correctly to promote the attraction of investment, to continue promoting competitiveness and more, it will become an export power,” said Israel Morales, director of the National Committee for the Mexico-US Relationship and International Agreements of the National Council of the Maquiladora and Export Manufacturing Industry (Index).

Mexico’s exports grew at an inter-annual rate of 2.6% in 2023, to 593,012 million dollars, thus displacing the corresponding exports from Russia, Canada, Hong Kong and Belgium, as these four nations registered inter-annual drops in the indicator.

China led the ranking with 3.4 billion dollars, followed by the United States (2 billion) and Germany (1.7 billion).

In its most recent trajectory, Mexico lost competitiveness: it went from 11th position in 2020 to 12th in 2021 and then to 13th in 2022.

RELEVANT NEWS

“We are already starting to see in 2023 tangibly the effect of relocation or the growth of production lines in some plants that already existed; new investments will perhaps start to arrive in 2024 or 2025,” added Morales, referring in general terms to the strengthening of production in Mexico.

Exports from Russia to the world fell 26.7% in 2023, to US$425.1 billion. According to Reuters, the most significant drop was in shipments to Europe, which fell 68%, to 84.9 billion dollars, affected by economic sanctions related to the Russian invasion of Ukraine.

After a sharp drop in 2023, Belgian exports are expected to recover somewhat in 2024 and more strongly in 2025, in line with the outlook of trading partners.

In turn, the negative export performance from Canada was mainly due to the drop in exports of energy products (-18.9 percent).

Morales highlighted that since the replacement of the North American Free Trade Agreement (NAFTA) by the Treaty between Mexico, the United States and Canada (T-MEC), in July 2020, greater certainty was given to investors.

“At that juncture there was also the disagreement, which today we call it a trade war, between the United States and China and that, together with the pandemic, made the United States recognize its vulnerabilities by depending too much on China for inputs, which even put the issue of public health at risk.

“This decision by the United States to relocate, to bring back essential inputs and strategic supply chains to the North American region, obviously has an impact on Mexico. The famous nearshoring,” concluded Morales.

SOURCE: EL ECONOMISTA

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

March 13-19, 2024

LABOR

• Reduction of workweek reform: President López Obrador pointed out that this is a matter that is being discussed in Congress, there is a consultation process with all those involved, and it is up to the legislators to resolve it. He highlighted his government’s efforts to support workers through minimum wage increases and the positive state of the economy, with Mexico having low unemployment rates. Regarding the outsourcing reform, Minister of the Interior Luisa María Alcalde mentioned an increase in profit sharing and historic highs in formal employment and average worker salaries.

TAXATION AND FINANCIAL MATTERS

• Tax payment by private firms: López Obrador responded to questions about tax evasion by businessmen, stating that taxes must be paid and acknowledging past deception. He highlighted a shift in media attention towards non-payment issues by large companies. The president emphasized that tax payments were historically shouldered more by the population than by businesses. He noted that while some companies had their taxes forgiv-

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

en in the past, under his administration, many major companies, including OXXO, Televisa, Wal-Mart, and Bimbo, have fulfilled their tax obligations.

ENVIRONMENTAL CONCERNS

• Protected Natural Areas: the president addressed a controversy surrounding a golf course in Huatulco, Oaxaca, involving the auctioning of lands granted by FONATUR. These lands were subdivided to fund the creation of Protected Natural Areas. Additionally, there have been initiatives to reclaim beaches for public use and reduce land monopolization by hotel chains. The issue of the golf course relates to the conclusion of a concession held by entrepreneur Salinas Pliego, with proceeds intended for children’s uniforms in Oaxaca. Legal proceedings have ensued due to an extension of the contract by a now-denounced official. Plans are underway to establish a Protected Natural Area and regularize land ownership for the benefit of approximately 300 families receiving land titles.

HEALTHCARE AND MEDICATION

• Healthcare system and medication procurement: President López Obrador reminded that he will have a meeting with governors from states affiliated with IMSS - Bienestar in Oaxaca on March 21st. He stated that his government has evaluated all hospitals within the system to assess medicine supply, hospital conditions, and personnel. He reiterated the commitment to having the best public health system globally. Additionally, he highlighted past corruption in the purchase and sale of medicines, involving 10 distributors who sold drugs to the government under the protection of corrupt politicians.

ENERGY

• Electricity system in Baja California: the President outlined plans to interconnect the national electrical system with Baja California due to previous lack of communication. Additionally, a high-voltage line from a solar plant in Sonora to Baja California is under consideration. Manuel Bartlett, the director of CFE, highlighted the historic integration of Baja California into the national grid. He mentioned the construction of five power plants in Baja California, including one aeroderivative and one internal combustion plant, along with three combined-cycle plants. Investments totaling $2.1 billion USD in Baja California and $1.3 billion USD in Mexicali are being made for energy production infrastructure. The combined-cycle plants are expected to be completed by September.

• Cadereyta Refinery: A video presented during the president’s morning conference addressed three misconceptions about the Cadereyta refinery: 1) It refuted claims that the refinery does not meet environmental standards; 2) It countered the belief that the refinery is the primary source of pollution for Monterrey, highlighting other significant contributors, such as Ternium and Cemex; and 3) It dismissed assertions that Cadereyta set a record for fuel oil production in the last 20 years.

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

INTERNATIONAL AFFAIRS

• U.S.-Mexico relations: President López Obrador reminded that he urged U.S. President Joe Biden to regularize the status of over 5 million Mexicans living and working in the U.S. He emphasized the importance of presidential candidates in the U.S. addressing immigration regularization for Mexicans, which would be well-received by the Mexican and Hispanic community. Additionally, he highlighted efforts to seize around 50,000 firearms originating from the U.S. and noted President Biden’s push for gun sales regulation. The President reiterated Mexico’s stance of not endorsing any U.S. candidate and respecting the electoral process. However, he warned of scrutiny towards candidates disrespecting Mexicans and pledged to call upon fellow nationals in such instances.

NEWS BY STATE

BAJA CALIFORNIA

The president of the Business Coordinating Council (CCE) in Mexicali, Luis Manuel Elizondo Lomelí, highlighted the critical situation in the municipality due to nearshoring, where companies are expanding operations within the region. He noted that most growth comes from existing companies rather than new industries. The business sector is focused on addressing key factors like infrastructure and industrial space to support production. Elizondo emphasized the increasing demand for nearshoring space, necessitating strategic planning and collaboration with authorities to develop infrastructure and urban services. He stressed the importance of a comprehensive nearshoring plan to meet market and community needs effectively.

SOURCE: INDUSTRIAL NEWS BC

SONORA

The energy clusters in the state held the Sonora Energy Summit 2024, with the participation of fifteen representatives of national energy sector groups, in order to work on the Comprehensive Development Plan for the Energy Industry.

In this first edition of the event called “Energy in Evolution: Dialoguing for a sustainable future”, the main authorities and decision-makers of the energy industry in Mexico will work on four main topics: Liquefied Natural Gas, Green Hydrogen, Renewable Energy and Sustainable Mobility.

SOURCE: CANAL SONORA

NEWS BY STATE

NUEVO LEÓN

In November 2023, Nuevo Leon was the state that contributed the most to the growth of industrial activity in Mexico, according to the Monthly Indicator of Industrial Activity by Federal Entity (IMAIEF) of the National Institute of Geography and Statistics (INEGI).

Also, according to the results, Nuevo Leon registered an increase of 2.5% compared to the previous month and 8% compared to November 2022. The state had an increase in industrial activity of 7.6%, while on a national level it registered an increase of 2.9%.

SOURCE: MEXICO INDUSTRY

CHIHUAHUA

The Governor of the State of Chihuahua led the groundbreaking ceremony for the Bafar Norte Industrial Complex in the city of Chihuahua, which is being developed with an investment of more than 250 million pesos.

The project covers an area of 54 hectares, where 180,000 square meters of industrial buildings will be built for the installation of 21 companies in the industry, which once in operation will provide employment opportunities for more than 20,000 people.

SOURCE: ENTRE LINEAS

NEWS BY STATE

JALISCO

The Federal Electricity Commission (CFE) affirms that it has the capacity to develop investment projects in the industrial zones of El Salto, Carretera a Tesistán, Antigua Zona Industrial, Periférico Sur and López Mateos Sur. The state-owned company responds to the industrial sector after it was revealed that the lack of electricity infrastructure in Jalisco is keeping 12 private investment projects on hold.

“The state has an installed capacity of 4,559 megavolt-ampere (MVA) in substations and a total maximum demand of 2,769 MVA. This means that the CFE has an available capacity of 40%, with which it can cover the demand for electricity for the next five years”, answers the Social Communication Department of the Jalisco Division.

SOURCE: INFORMADOR

NEWS BY STATE

AGUASCALIENTES

Governor María Teresa Jiménez seeks to make Aguascalientes a leader in the nearshoring race in Mexico, highlighting the dynamism and innovation capacity of Aguascalientes for Foreign Direct Investment (FDI).

In the framework of the International Congress of Nearshoring, of the Confederation of National Chambers of Commerce, Services and Tourism (Concanaco Servytur), he highlighted that from January to September 2023 Foreign Direct Investment (FDI) increased 300%, with respect to the same period of 2022, underlining the confidence of 37 countries that have decided to invest in the state.

SOURCE: EL ECONOMISTA

QUERÉTARO

The mayor of Queretaro, Luis Bernardo Nava Guerrero, seeks to position the capital as the hub of digital technologies in Latin America. In the framework of the Smart Cities Summit & Expo Digital and Green Transformation, held in Taiwan, the mayor presented the work of innovation and development of technology-based policies.

The mayor commented, “Various strategies are analyzed and shown at a global level to have more inclusive cities, with social and technological development, in short, to close gaps and have better opportunities for development”.

SOURCE: AL DIALOGO

NEWS BY STATE

GUANAJUATO

The National Auto Parts Industry (INA) announced that during 2024, foreign investment of 2.3 billion dollars is expected for Mexico in the auto parts sector. This investment flow, according to INA, will be mainly directed to states such as Guanajuato. This will be the result of the nearshoring process and the expansion of companies in the country.

Guanajuato, together with other states such as Chihuahua, Coahuila, Estado de México, Nuevo León and Jalisco, is emerging as one of the main destinations for these new foreign investments in the auto parts sector.

SOURCE: LIDER EMPRESARIAL

SAN LUIS POTOSI

The international expansion of the automotive industry is gaining new momentum with the upcoming arrival of Taxan, a Japanese company specializing in the manufacture of electronic assemblies, in San Luis Potosí, Mexico. This strategic move, announced during a meeting between Taxan executives and the state government delegation, promises to have a significant impact on the region.

With the planned hiring of 1,500 local workers, Taxan seeks to establish a strong presence in the Mexican automotive industry, offering high quality products backed by Japanese expertise and technology. This decision will not only strengthen San Luis Potosí’s industrial sector, but will also create employment and professional development opportunities for local residents.

SOURCE: CLUSTER INDUSTRIAL

NEWS BY STATE

CDMX

Salomón Chertorivski, the candidate for Mayor of Mexico City from the Movimiento Ciudadano, has proposed seeking foreign investment to spur development in the city. He emphasized the importance of the city government facilitating and creating favorable conditions for companies to invest in Mexico City. On the other hand, Santiago Taboada, the candidate of the “Va X La Ciudad de México” coalition, proposed simplifying procedures and establishing clear rules to encourage investment. He highlighted the need to streamline processes to avoid creating unnecessary obstacles for potential investors. Lastly, Clara Brugada Molina, candidate for Mayor of the city by Morena-PT-PVEM, has emphasized the importance of welfare systems as drivers of nearshoring in the metropolis.

SOURCE: MILENIO, CONTRARÉPLICA, AND LA PRENSA

STATE OF MEXICO

The Swiss company Sulzer has inaugurated a new vertical hydraulic pump factory in Cuautitlán Izcalli, State of Mexico, with an investment of 120 million pesos. The facility, covering 1,400 square meters, will produce equipment primarily for hydroelectric energy generation plants and provide supplies for the extraction, treatment, and transportation of hydrocarbons and their derivatives in Mexico. This expansion complements the existing 40-year-old factory, aiming to enhance production capabilities with both horizontal and vertical pumps.

SOURCE: EL ECONOMISTA

INVESTMENT NEWS

NORTH MAGNA

The Canadian automotive company announced the investment for new expansion in Ramos Arizpe, Coahuila with a 166 million dollar investment. The investment is set to create 700 jobs in the region.

CENTRAL MEXICO

TAXAN

The Japanese automotive company will set up operations in San Lus Potosí with a 40 million dollar investment and creating 1,500 jobs.

KOSTAL

The German automotive company opened a new facility in Querétaro and the creation of 135 jobs. The investment amount details remain unconfirmed.

IKD

The Chinese automotive company announced the investment for a new facility in Irapuato, Guanajuato with a 178 million dollars investment. The investment is set to create 1,000 jobs in the region.

NIEN ADE NORMAN

The curtains and blinds manufacturer from Taiwan announced the investment for new expansion in León, Guanajuato with a 29.9 million dollars investment. The project is set to create 3,000 jobs in the region.

CDMX

SUIZER

The hydraulic pumps manufacturer opened a new facility with a 7.1 million dollar investment in Cuautitlán, Estado de México. The jobs details remain unconfirmed.

SOURCES: MEXICO NOW, CLUSTER INDUSTRIAL, MEXICO INDUSTRY