GENERAL SITUATION IN MEXICO
Weekly Review #111 I June 29, 2022
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MANUFACTURING INDUSTRY HEINEKEN TO INVEST $1.8 BILLION PESOS IN NEW PLANT Heineken Mexico will invest 1.8 billion pesos in the construction of a canning factory at its plant in Meoqui, Chihuahua, whose construction will begin at the end of the year and is expected to start production in 2024. The plant will generate approximately 120 direct jobs and 150 during the construction phase. In addition, the work will be carried out on the same site to reduce Heineken Meoqui’s environmental footprint. The brewery has a capacity of 6 million hectoliters per year to supply the domestic and international markets. It also ranks number one in sustainability among Heineken Mexico’s seven plants. Another aspect that the company took into account in the new construction is water use optimization. Currently, the brewery has the lowest water use capacity, with 1.9 liters for each liter of beer; previously it was 2.5 liters. It should be noted that at the industrial level, water use per liter of beer is 4 liters. Eusebio Reynosa, general manager of Heineken Meoqui, commented “in the new plant, water consumption will be minimal, and we will not require more water than what we have contracted today.” Last Friday in Monterrey, Heineken donated a deep well to help with the water shortage in the state. In an interview, Monica Bichara, responsible for Heineken Mexico’s legal affairs, acted as spokesperson for Heineken’s sustainability actions with Meoqui.
SOURCE: El Economista
In them, she mentions the opening of the Delicias outdoor park, but because of the pandemic, this action was affected. However, the dialogue with the communities has been resumed. He added that they are reviewing the contingency plans for the lack of water. “We have identified which of our breweries are located in water stress zones. We have balanced 4 out of 5 of those breweries that are in water stress areas, which are Guadalajara, Monterrey, Navojoa, and lastly Tecate,” mentioned Bichara. As for Meoqui, it is expected that in 2025 they will achieve a balance in water consumption to avoid further affecting the community. Regarding President Lopez Obrador’s statements during Monday’s conference, when referring to the water problem and its use by companies, he mentioned that they should prioritize domestic use and that those with concessions should reduce their production. Heineken representatives said that they are open to dialogue, not only with the government but also with the community.
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MANUFACTURING INDUSTRY MORE AUTO PARTS EXPORTED THAN BEFORE COVID During the first four months of the year, auto parts exports to the United States already exceeded pre-pandemic levels. From January to April 2019, Mexico exported 20.475 billion dollars to its northern neighbor. For the same period in 2022, it sent 22.638 billion dollars, according to the US Census Bureau. Mexico is the main supplier to the US and in the first four months of the year, supplied 39 percent of its total foreign demand. This growth is due to what was stipulated in the USMCA rules of origin, whereby the North American regional content value increases to 75 percent for vehicles when NAFTA required 62.5 percent. As the percentage is now higher, the demand for auto parts made in Mexico grows, as this avoids the payment of the tariff required to integrate parts manufactured in the North American region, commented Rene Mendoza, national coordinator of the Chain of Industry Suppliers in Mexico (Capim).
SOURCE: Reforma
Another factor that is forcing vehicle corporations to look for more suppliers in the country is the high freight prices to move products from Asia to America. “The increase is disproportionate; it used to cost 2,500 dollars to bring a container (from Asia to America), and now it is around 14,000 dollars,” said Mendoza. He commented that this is why automakers from other countries, mainly from the United States, are looking for new suppliers, and have turned to Guanajuato as an option for their supply, according to the Automotive Cluster of that state. As a result, these increases in domestic demand are already beginning to be reflected in the production made in Mexico, as growth is expected for 2022. In terms of production, it is expected to close the year with a value of 101,948 million dollars, which would exceed the national production achieved in 2019, which was 97,228 million dollars, according to estimates by the National Auto Parts Industry (INA).
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KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference June 21-28, 2022
INTERNATIONAL • Note Senator Bob Menendez: Regarding Senator Bob Menendez’s note, he pointed out that he is responsible, under threats of not voting with his party, for not including the other countries in the Summit of the Americas. He called it advantageous and blackmailing. • Visit to the United States: He highlighted that in Mexico the anti-inflationary plan consists of three actions: 1) The surpluses in the price of crude oil, use them so that gasoline prices do not rise and control inflation; 2) Boosting productive activity in the country, mainly the countryside for self-consumption, especially corn and beans as well as the distribution of fertilizers and maintaining the agreement with self-service stores, distributors, etc. to maintain stable prices in the basic food basket; and 3) Will make a proposal to Joe Biden in their next meeting to carry out a joint plan for Mexico and the U.S. against inflation. • Meeting with President Biden: President Lopez Obrador lamented the death of 46 migrants found in a truck in Texas. He announced that next July 12 he will have a meeting with his U.S. counterpart, Joe Biden, in which migration will be one of the main topics to be discussed, as well as inflation control. He indicated that the agenda is still un-
der discussion and for this, he will have a meeting today with Ambassador Ken Salazar, but he will travel to the United States a day earlier accompanied by his wife and Marcelo Ebrard. POLITICAL AGENDA • Political Reform: The Federal Executive stated that his reform proposal seeks to have savings and make the democratic processes in the country more efficient by concentrating in a single electoral body all the faculties, thus disappearing the local institutes. He said that even though the opposition in the Congress of the Union has expressed a constitutional moratorium, the political-electoral reforms and the one regarding the National Guard will be presented in the following days. • Judiciary: The President said there are judges such as Juan Pablo Gomez Fierro who exceed their functions and unduly protect companies; he pointed out that the Judiciary Council must take greater relevance to order the situation in the Judiciary. He supported the President of the Supreme Court of Justice of the Nation (SCJN), Arturo Zaldivar Lelo de Larrea, in the fight against corruption. • Relationship with the private sector: Regarding the meeting with the Mexican Business Council (CMN), he said that the possibility of having
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KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S a meeting between Mexican and American businesspeople within the framework of the TMEC and the next meeting he will hold with President Joe Biden in July was explored. He highlighted yesterday’s visit of Samsung’s Global Director. • Tour Tabasco: He commented that he will travel to Tabasco given that there will be a test stage for the Dos Bocas refinery. • President approval: The president showed an international survey on the approval of the presidents of 21 countries, where he pointed out that he has an approval of 67% and only 25% against, highlighting that only the president of India “beats” him with 76% approval. ECONOMY • Inflation and Banxico rate increase: In view of the increase in interest rates by the Bank of Mexico, he stressed that he respects its autonomy, but called for them to think of other solutions, they lack imagination. Raising interest rates paralyzes the economy and therefore lowers inflation, but there is no growth either. He showed annual inflation data by country, as of May 2022, where Mexico is below Germany, USA, Spain, Colombia, Chile, and Brazil. WATER • Water crisis in Nuevo Leon: On the complaint made by Samuel Garcia, governor of Nuevo Leon, regarding the lack of federal support in the matter of the state’s lack of water, the president pointed out that there is an investment destined for the Libertad dam to supply water to Monterrey and the conurbation area of Nuevo Leon. He emphasized that he does not have the precise figure, but “a sizable number
of resources” has already been transferred to the state government. German Martinez Santoyo, director of CONAGUA, explained the problem of water shortage in the Metropolitan Zone of Monterrey, Nuevo Leon. He informed that the demand for subway water is 154,400,000 million cubic meters extracted, of which 49,900,000 cubic meters are for industrial use. In total, industrial water use represents 9.8%. It was noted that agreements have been reached with the industry to inject 200 liters per second of additional water into the network. Likewise, the official presented a list of the main industries with the largest subway volumes concessioned, indicating that the total volume is equivalent to 1,600 liters per second. Of the main industrialists, the steel company TERNIUM and Cerveceria Cuauhtemoc Moctezuma stood out.
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KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S
SECURITY
OTHERS
• Insecurity Situation: Regarding the case of the murder of Javier Campos Morales and Joaquin Mora Salazar, Jesuit priests in Chihuahua, the president mentioned that he will go to the last consequences to continue with the search for those responsible and carry out a thorough investigation • Food shortages: AMLO stated that it is true that there are more murders than in the previous sixyear periods, but that this happens because of the situation in which the present Administration received the country. He reiterated that the present administration would continue to address the causes of violence and the neediest young people and that in the previous six-year terms this did not happen because of the classism and racism of conservatives.
• Auctions of archeological pieces: the president informed that there is a campaign of the Historical Memory Group with the Ministry of Foreign Affairs. He explained that he has signed two documents: one explaining how this trafficking of archaeological pieces takes place and the other requesting the ambassadors to act in the countries where pieces that are of Mexican heritage are auctioned.
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NEWS BY STATE
BAJA CALIFORNIA The Health Secretary of Baja California reports 2,015 active cases in the past 14 days and only 396 new active cases in the past 24 hours. This week started the vaccination plan for children under 5-11 years old, and the vaccination plan continues for adult population. This Saturday will be held the CANACINTRA employment fair where more than 40 companies from industry, commerce, and services will participate. This week a meeting was held between the Government and customs of Mexicali to strengthen the strategy of border crossings, strengthen surveillance in federal and municipal jurisdictions.
SONORA Official reports confirm 1,237 new cases in the last week. The Government of Sonora mentioned that a total of 48 thousand doses will be applied in the first stage of the “Vaccination Day” against COVID-19 in girls and boys from 5 to 11 years old.
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NEWS BY STATE
NUEVO LEON The National Water Commission (Conagua) reported that the federal government has established agreements with industrial companies in Nuevo Leon so that they contribute up to 500 liters per second to the water network and thereby deal with the water crisis in the entity.
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NEWS BY STATE
SAN LUIS POTOSI Before the end of the year, San Luis Potosi will have new domestic air routes, said Juan Carlos Valladares Eichelmann, head of the Secretariat of Economic Development (Sedeco). The state official celebrated that negotiations are at an advanced stage to establish new destinations from the Potosi airport, which, he assured, will help increase the state’s competitiveness in terms of mobility. Valladares Eichelmann preferred not to reveal the names of the new destinations. However, he said that before the end of 2022, the airlines will be announcing all the details of these routes. JALISCO The private sector is promoting the arrival of an electric lithium battery exchange network for motorcycles. CITIO, the Mexican company that exchanges lithium batteries free of emissions, inaugurated its operations in Jalisco with the opening of seven stations in Guadalajara and with growth plans for the entire AMG by December of this year. This service is based on an exchange model in which users of an Italika Voltium Gravity model motorcycle can turn in the battery and exchange it for a fully charged one in a process that takes less than two minutes on average. The launch event was attended by the Secretary of Transportation, Diego Monraz; Congresswoman Monica Magaña, President of the Mobility and Transportation Commission
of the State of Jalisco; Patricia Gascon, Director of Liaison of the Coordination of Economic Development; Efren Diaz, General Director of Regulatory Improvement of the Ministry of Economic Development, as well as Servando Canales, General Director of CITIO. AGUASCALIENTES The next government of Aguascalientes, led by Teresa Jimenez Esquivel, will inherit a healthy and robust Financing System (Sifia) so that it can continue with some financing in support of the citizens. This was confirmed by the current head of the Secretariat of Economic Development (Sedec), Manuel Alejandro Gonzalez Martinez, who said that currently the overdue portfolio of this fund is “healthy”, which will allow, although not continuing with direct support for small or medium-sized companies, to manage financing so that citizens can take advantage of these credits and start or give continuity to a project. Gonzalez Martinez pointed out that currently, there is still a demand for Sifia credits, which helps to be able to continue maneuvering with the funds of this system to continue providing financing, since with the collection of the same, although it does not seek to generate profits, it allows to maintain healthy funds to continue issuing credits.
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NEWS BY STATE
GUANAJUATO The State Government promotes various actions to strengthen Guanajuato’s tequila industry and make it sustainable. This was stated by the Governor, Diego Sinhue Rodriguez Vallejo, during the presentation of the Map of Compatibility of agave cultivation in Guanajuato for the sustainability of the tequila sector. He added that agave cultivation is a priority for the state. This activity has grown significantly in recent years here in Guanajuato. Guanajuato produces 13.62% of agave nationwide and contributes 20% of the value of national production. And there are more than 43 thousand hectares in 7 municipalities, and more than 4 thousand producers, he said. This activity is the platform of an industry that impacts other branches, such as tourism and exports.
QUERETARO The president of the Coordinating Council of Women Entrepreneurs of Queretaro, Alicia Torres Cue, presented ten training scholarships to entrepreneurs of the Casa de la Mujer who wish to start a business and thus have the tools that will allow them to start with a solid foundation in the business world. These scholarships were received by the Director of Community Development of the Board of the State DIF System (SEDIF), Fabiola Rojo, who said that this action seeks to bring to formality the business of women who are now entrepreneurs. Rojo also stressed the importance of providing training, credit, social security, strategic alliances, accompaniment and mentoring to women entrepreneurs, as it helps to open the way and the vision.
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NEWS BY STATE
STATE OF MEXICO The Governor of the State of Mexico, Alfredo Del Mazo Maza, held a meeting with Prologis executives, in which projects for at least three new industrial parks for the state were presented. At the Government Palace, Del Mazo Maza met with executives of this group, which stands out for its largest platform and for being the leading supplier of industrial warehouses and distribution centers in Mexico, to follow up on various projects. Three new industrial parks Through his official Twitter account, the Mexican President explained that these three new industrial parks will be located in the municipalities of Cuautitlan, Lerma, and Toluca and will have an investment of 5,480 million pesos. The President emphasized that with these new industrial parks, the state “is moving towards its consolidation as the best logistics destination in the country,” as they will generate around 8,700 jobs, thus expanding the state’s competitive advantages. In this context, Del Mazo Maza recognized the work of Hector Ibarzabal Guerrero, CEO of Prologis in Mexico, and his team of collaborators, for the promotion of projects and investments that send a message of confidence and certainty to the national and international business community, and that have allowed the current state administration to advance in the construction of state-ofthe-art industrial parks.
CDMX The modernization of Line 1 of the Mexico City Metro is accompanied by a replacement of all equipment, including trains, explained director Guillermo Calderon. There are 29 new high-tech trains very modern and professionally designed and manufactured for Mexico City. The new trains will have a 35 percent greater capacity than the current ones, and assembly will take place in Mexico City. Regarding the units, Claudia Sheinbaum, head of government, commented that the new trains are already being manufactured in China by a conglomerate of “top-level” companies. The Metro director added that once the rehabilitation of the entire Line 1 is achieved (which will include two phases to be completed in August 2023), the waiting time between trains will be only 90 seconds, and the route can be traveled in 30 minutes.
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ECONOMIC RECOVERY
ECONOMY AND INVESTMENTS IN MEXICO
NATIONAL
CENTRAL MEXICO
DHL SUPPLY CHAIN DHL Supply Chain invests 630 million pesos in Mexico to strengthen the presence of the automotive industry in the U.S. market through its logistics.
EXFO EXFO invests 150 million pe
NORTHEAST HENKEL Henkel, a German company, invested 33.2 million euros in its new adhesives plant in Guadalupe, Nuevo Leon.
LABOR
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ALVARO GARCIA
TWO YEARS UNDER THE USMCA SCRUTINY This coming Friday, the trade agreement between Mexico, the United States, and Canada, the USMCA, will celebrate its second anniversary. The NAFTA era ended on the last day of June 2020; starting on July 1 a new moment for the trade between the three North American nations began. From that moment on, workplaces in Mexico, especially those in the export sector, operate under the scrutiny of the new agreement. The USMCA added new rules for companies doing business under the umbrella of our region’s trade agreement. From 22 chapters in the previous agreement, we grew to 34 in the new agreement. Among the additions, the chapters on competitiveness, anti-corruption, digital trade, environment, and labor stand out, the latter two being the ones that have been in the spotlight, not only during the negotiation phase but also once the agreement entered into force. In the meantime, on the eve of Canada Day, to be celebrated next July 1, and the upcoming USA Independence Day, let us take the opportunity to celebrate together these first two years of an agreement that, if well implemented, will contribute to create a more prosperous region, to the benefit of the three economies.
HR, Vice President
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