Weekly Report 112

GENERAL SITUATION IN MEXICO

Weekly Review #112 I July 6, 2022

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MANUFACTURING INDUSTRY SAMSUNG TO INVEST 500 MILLION DOLLARS IN MEXICO TO INCREASE HOME APPLIANCE PRODUCTION South Korea’s Samsung will invest 500 million dollars to increase the manufacture of household appliances at its two plants in Mexico, said the Latin American country’s Foreign Minister, Marcelo Ebrard.

The official, who is touring the Asian nation, informed Monday night that the agreement was reached during a meeting with the CEO of Samsung Electronics, Han Jong-Hee. “He confirmed a 500 million dollar investment in Queretaro and Tijuana to increase the production of household appliances in Mexico,” Ebrard posted on his Twitter account.

In May, Mexico and South Korea announced that they would resume negotiations for a free trade agreement, at a time when the Latin American nation, together with its regional partners, is seeking to strengthen supply chains for inputs from Asia.

SOURCE: El Economista

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MANUFACTURING INDUSTRY USMCA REGION MUST UNITE FOR GREATER RESILIENCE The main business organizations of Mexico, the United States, and Canada urged their respective governments to work together to build regional resilience in the face of the multiple global challenges facing their economies.

The Mexican Business Council, the Business Roundtable, and the Business Council of Canada issued a statement on Tuesday ahead of the U.S.-Mexico-Canada Free Trade Commission meeting to be held this week in Vancouver: This week’s meeting of the Free Trade Commission (FTC) of the U.S.-Mexico-Canada Agreement (USMCA) comes at a critical time for the region.

“Businesses, workers, farmers, and families face many challenges and risks, including rising costs due to inflation, supply chain disruptions, and labor shortages,” the three organizations said in a press release.

“To address these challenges, our three governments need to work together and partner with industry to ensure the strength, competitiveness, and resilience of the North American economy,” they added.

SOURCE: El Economista

The USMCA was adopted with historic political support and provides a solid foundation for a thriving and innovative regional economy.

“However, since the last FTC meeting, each country has taken or continues to take, actions that have undermined or risk undermining the benefits negotiated through the enactment of the USMCA. Now is the time for the leaders of the three countries to fully implement the USMCA and work together to promote a North American economic partnership capable of addressing shared regional and global challenges,” they said.

They concluded that business leaders from Mexico, Canada, and the United States urge continued cooperation among government leaders and will continue to partner with their governments to realize the full potential of the USMCA.

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CLIENTS GOOD NEWS TYG MANUFACTURING OF MATTHEWS INTERNATIONAL RECEIVED THE EMORES© DISTINCTIVE, WHICH RECOGNIZES IT AS AN “EMOTIONALLY RESPONSIBLE” COMPANY.

The recognition is awarded for establishing, implementing, maintaining, and promoting a Psychosocial Education Program that fosters the socioemotional well-being of employees and the relationship with its suppliers and clients.

TYG Manufacturing has provided its managers with leadership, teamwork, and emotional management courses; they have given a Diploma to Leaders on management competencies. Also, an “Emotionally Responsible Women” training for female employees and given scholarships for employees with Emotional Managers courses to offer better leadership.

This year, as an act of solidarity and social responsibility, it supported three teachers from the Moises Saenz Garza High School with scholarships to train

SOURCE: Emores

them in the development of socioemotional competencies to positively influence the students who are the future of the state of Nuevo Leon.

Luis Villa, president of IMGlobal gave an honorary recognition to TYG Manufacturing highlighting the commitment that this company has had in the last decade to ensure the welfare of workers as a permanent project in the organization.

TYG Manufacturing becomes the first plant in Nuevo Leon to receive this distinction and joins the companies in Mexico committed to identifying, analyzing, and preventing psychosocial risk factors and workplace violence. They promote a favorable organizational environment in the workplace, thus creating a culture of emotional responsibility.

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KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference June 29–July 5, 2022

HEALTH: • COVID-19: Hugo Lopez-Gatell Ramirez, Undersecretary of Prevention and Health Promotion, reported that the average number of daily cases per week continues to rise. From June 26 to July 5, an average of 11,680 infections were reported; there is a trend of ups and downs in the number of daily deaths, which is why he highlighted the importance of vaccination.

• National Immunization Strategy: There are 90,463,897 persons with at least 1 dose reported of all ages. Persons 18 years and older: 81,177,685; persons 12-17 years: 7,995,309; persons 5-11 years: 1,290,903.

• Alternative medicine: President Andres Manuel Lopez Obrador mentioned that he is seeking to guarantee the right to healthcare for those who do not have social security. In order to strengthen the single health system, alternative disciplines such as acupuncture, herbal medicine, and homeopathy must be taken into account. Jorge Alcocer, Secretary of Health, agreed that the goal of the Ministry of Health is to integrate alternative medicines to maintain health from birth to death. He added that there is still a need to give importance to indigenous populations.

• Vapers: Hugo Lopez-Gatell mentioned that since

the President signed the decree prohibiting the commercialization of vapers and electronic cigarettes, there has been a positive response. The stores that sold these products closed the next day because they understood that they should not engage in something illegal. However, they are sold in many ways, so in some places, they are still being sold. In this sense, COFEPRIS through its Sanitary Operation Commission has operations to inspect, close, and confiscate the product, as well as to sanction those who continue to sell the product. He also said that the international community has given a positive response to Mexico’s example.

• Recruitment of doctors: Andres Manuel Lopez Obrador commented that 500 Cuban doctors will be recruited in this first phase, although later on new recruits of other nationalities will be sought to form a health system with specialists; he emphasized that the priority is to recruit Mexican doctors. He pointed out that the objective is to provide a social security system to all the people who do not have one, and it is expected that by this year 15 or 16 states will be integrated into the new federalized health system.

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KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S POLITICAL AGENDA • Daylight Saving Time: President Andres Manuel Lopez Obrador signed the bill he sent to the legislature to eliminate daylight saving time nationwide and seasonal hours in the municipalities of the country’s northern border. Since 1996, daylight saving time has contributed to an energetic saving of less than 1% per year of national consumption and economic savings have had a downward trend in recent years due to technological improvements, not because of daylight saving time.

• New PROFECO logo: The Federal Consumer Attorney, Ricardo Sheffield, announced the launching of a new logo “yellow seal, take care of your pocket”, which is a new hologram that will be placed on pumps and businesses that have their pumps and scales calibrated and will be updated every six months.

• Meeting with President Biden: President Lopez Obrador will travel to the United States on Monday, July 11, and will return in the afternoon of Wednesday, July 13 for the meeting with President Biden.

On July 12, two or three meetings will be held on economic integration issues regarding Mexico and the United States, immigration, and investment for development, as well as work visas, among other issues.

• Outsourcing and profit-sharing reforms: The President assured that the profit-sharing and outsourcing reforms have benefited workers. He added that from 2020 to 2021 profit-sharing grew by 100 billion pesos, last year it was close to 200 billion pesos and what is projected for this year will be more. He argued that such an amount had never been reached before.

• Presidency of the Supreme Court of Justice: An-

dres Manuel Lopez Obrador mentioned that he would like that whoever replaces the current president of the Supreme Court of Justice of the Nation, be very similar to the current president, Minister Zaldivar. He added that the SCJN has been improving significantly in its autonomy and dependence during the last years. He added that Minister Arturo Zaldivar is a first-class, honest, and honest person.

SECURITY • Investigation against Genaro Garcia Luna: The President commented that the latest investigations show that there was complicity between Felipe Calderon and Genaro Garcia Luna, although it is unknown at what point the former President

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KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S broke off relations with the former official accused of drug trafficking in the United States. He pointed out that it will be important to observe if there is evidence on the part of the U.S. government and if the investigation is limited only to Garcia Luna.

ENVIRONMENTAL • Water crisis in Nuevo Leon: German Martinez Santoyo, General Director of the National Water Commission (CONAGUA), presented the support being given to the Monterrey Metropolitan area in this water crisis. Last week it rained, therefore, more storage was achieved in La Boca Dam, representing a 9% filling. He also said that government support for the supply of water in the area is being maintained, 26 drinking water pipes, which translates into 16.9 million liters distributed, technical support for the operation of the distribution system, the construction of the “Libertad” dam and the installation of floating and fixed pumping equipment in the Cerro Prieto dam. On the other hand, he mentioned that there are 65 industries with the largest volumes of water concessioned.

38 of these companies will provide 298 liters per second.

• Regulation of the carbon market: A Bloomberg reporter talked about an article they published about a carbon credit program of the British oil company BP in 50 communities in the country. In this program, the company pays ejidatarios for their carbon credits well below the price. The President replied that the case must be reviewed, and the market must be regulated to prevent this from happening in the future. He added that Maria Luisa Albores will be asked to report on the situation.

ECONOMIC • 25 years SAT: President Lopez Obrador emphasized that a healthy and strong Public Treasury has allowed them not to resort to debt. The federal president recognized Raquel Buenrostro and all the General Administrators. Moreover, the Head of the Tax Administration Service, Raquel Buenrostro, pointed out that: - Important work has been done to exploit information from industries and corporations to identify evasion schemes.

- They have collected 86% compared to all the 6 years of the previous administration. Audits of returns have been carried out, and there has been a punctual follow-up of audits, lawsuits, and collection.

- They have worked on digital sovereignty since most of SAT’s technological services were provided by third parties.

- Regarding large taxpayers, the collection is sustainable in the long term.

- n the international area, where some corporate structures lend themselves to evasion, weekly meetings are held with the U.S. Government to avoid double taxation of taxpayers, as well as double evasion.

ENERGY • Mexico’s Refining: The President stated that the objective of public policies is to stop importing fuels by next year, since price increases are expected to be more prolonged than expected. He emphasized that the country’s 6 refineries will be completely modernized after an investment of 40-50 billion pesos and will operate at more than 80% of their capacity.

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NEWS BY STATE

BAJA CALIFORNIA The Health Secretary of Baja California reports 2,727 active cases in the past 14 days and only 433 new active cases in the past 24 hours. The vaccination plans for children under 5-11 years old and adult population continue this week. The Ministry of Economy will give a course the next week about the rules and criteria of Foreign Trade 2022, talking about the new obligations for IMMEX companies, tariffs, and non-tariff measures, among other topics. The course will be at the CANACINTRA facilities.

SONORA Official reports confirm 1,468 new cases in the last week. The vaccination plan continues this week with the vaccine application to children from 5 to 11 years old in different municipalities. The Governor of Sonora had a meeting at the Mexican embassy in the United States where they jointly sought growth opportunities for Sonora. The Government of Sonora signed an agreement with “Nacional Financiera” and “Banco de Comercio Exterior” for economic reactivation in the state. The promotion of economic investment in Sonora is sought.

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NEWS BY STATE

NUEVO LEON The National Water Commission established agreements with the industry to inject 200 to 500 liters per second into the network, and agreements with the citrus zone of Nuevo Leon to contribute 1,000 liters per second to the network, plus other Federation’s actions.

COAHUILA Coahuila is positioned in the first places of export, being the second state with the most exports in the country. Nearly 65% ​​of this entity’s exports are concentrated in transportation equipment.

TAMAULIPAS The Tamaulipas Ministry of Health warned that the fifth wave of COVID-19 doubled the number of municipalities with a red epidemiological traffic light and another 11 cities are at risk of turning into that color.

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NEWS BY STATE

SAN LUIS POTOSI With Information until last Saturday, San Luis Potosi reach 188,623 patients who have had COVID-19 and accumulated 7,560 deaths, informed the Technical Committee for Health Safety. Twenty-two people remain hospitalized, 10 of whom are seriously ill, and one is intubated, fighting for survival. The last death recorded was a 74 year old woman who had been fully vaccinated State Health authorities made an urgent call to the population to reinforce prevention measures to contain the transmission of COVID-19 since only in the first two days of July the number of cases has reached 26 percent of the total number registered in June, which was 4,464.

JALISCO The Jalisco Ministry of Health informed that 608,523 people in the state have contracted COVID-19 and 19,568 victims of the pandemic strain remain since the arrival of the disease in the state. The agency reported 1076 new cases of COVID-19 this Sunday, while no more deaths were added in this last cut-off date. This Monday, Salud Jalisco will open the Jalisco platform for appointments to apply the vaccine against COVID-19 for minors from 5 to 11 years old.

AGUASCALIENTES During the past weekend, the Mexican government distributed 1,128,000 doses of Pfizer-BioNTech pediatric vaccines against COVID-19 to 21 Mexican states. Laboratorios de Biologicos y Reactivos de Mexico (Birmex) informed that the reagent is intended for use in children between 5 and 11 years of age. Members of the Mexican Army and Air Force, the Secretariat of the Navy, and the National Guard provided custody of all the shipments, from their departure from the warehouses to their destinations, using for security and transportation a total of 1,092 elements, 108 vehicles, and three aircrafts. The doses were distributed by two land transportation routes: Route 1: Aguascalientes, Guanajuato, and Zacatecas. Route 2: Guerrero. Meanwhile, this Sunday, July 3, from Air Base number 1 in Santa Lucia, State of Mexico, the distribution continued with 906 thousand doses to 17 states in the country, through three air transport routes: Route 1: Nayarit, Durango, Sinaloa, Baja California Sur, Baja California, and Sonora. Route 2: Veracruz, Tabasco, Yucatan, Quintana Roo, Campeche, Chiapas, and Oaxaca. Route 3: Chihuahua, Coahuila, Nuevo Leon, and Tamaulipas.

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NEWS BY STATE

GUANAJUATO The first semester of 2022 proved to be the most contagious with COVID-19, a period in which 84,862 people became ill in Guanajuato, that is, almost a third of the pandemic so far, considering that 290,981 people have been infected, according to figures from the State Health Secretariat.

Concerning the previous semester, July to December 2021, this represents an increase of 20 percent, considering that more than 70,328 people fell ill during this period. In addition, the 3 days of July have already registered more patients than the average of the previous month, totaling 1,540 at the beginning of the semester, that is, more than a third of the accumulated in June, a month with an increase in the number of infections compared to May, from 828 to 5,577.

QUERETARO Organizational spokesman, Erick Ventura, warned that, due to the speed of contagion in the state, today there are greater probabilities of contracting COVID-19, and also of deaths due to complications, especially in unvaccinated people, who suffer from hypertension, diabetes, or some other syndrome that affects their immune system. The entity went from 120 to 201 cases per day, which could lead to over 3,000 active cases of the disease in less than a week, although it was also recognized that the new cases are causing less severe cases among people already vaccinated. Due to the high transmissibility of the virus, he anticipated that it is very likely that a person who presents at least one symptom of respiratory disease is three to four times more likely to have COVID-19. He was confident that the rapid recovery, which most of the patients show, can keep this surge in terms of hospitalization manageable for the state, and reported that this rate is at 3.4 hospitalizations per day.

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NEWS BY STATE

STATE OF MEXICO The national leadership of Movimiento de Regeneracion Nacional (Morena) gave the opportunity to the actors of the State of Mexico to explore the feasibility of reaching a consensus on the designation of their standard-bearer for the election for the governorship of the State of Mexico in 2023, instead of launching a survey, informed the leader of the party, Mario Delgado Carrillo. He said that the discussion would have to be exhausted this week in order not to delay the work of the political force before the elections.

CDMX Short circuits in Mexico City’s Metro Collective Transportation System have become a recurring problem since, so far in 2022, at least six incidents of this type have been reported. Yesterday, the Tasqueña to San Antonio Abad section of Line 2 of the Metro was left without service after a short circuit was reported between Xola and Villa de Cortes, which caused a fire. The CDMX Attorney General’s Office informed that the Public Prosecutor’s Office started an investigation after the incident.

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ECONOMIC RECOVERY

ECONOMY AND INVESTMENTS IN MEXICO

CENTRAL MEXICO

NORTHEAST

-GKN GKN will invest 100 MDD for expansion in Celaya, Guanajuato.

-LINGONG MACHINERY GROUP Chinese company Lingong Machinery Group invests US$140 million in Marin, Nuevo Leon.

NORTHWEST

CDMX

-HEINEKEN HEINEKEN invests 1,800 MDP in a new plant in Meoqui, Chihuahua to manufacture cans.

- PROLOGIS Prologis announced that it will build three new industrial parks, in which it will invest 5.48 billion pesos in Mexico City.

LABOR

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LABOR RIGHTS FOR PEOPLE WITH DISABILITIES An initiative to reform and add various provisions of the Federal Labor Law (LFT) regarding the labor rights of persons with disabilities is currently advancing in the Mexican Congress. The initiative has already been voted and approved by the senators and since February of this year, it has been in the lower house to continue with the legislative process. If approved by the deputies on the same terms as in the Senate, it will bring new obligations for employers.

The draft decree, in addition to requiring workplaces to have adequate facilities for the access and development of activities for people with disabilities, establishes that at least five percent of the total personnel must be people with disabilities.

Establishing quotas represents a great challenge even for companies with the most advanced inclusion programs. The number of companies that could currently claim to have even two percent is very low.

Reaching five percent is a major challenge, not because of a lack of openness or willingness on the part of organizations, but because in many cities in our country, the number of job vacancies is higher than the number of job seekers, with or without disabilities.

On the other hand, the reform initiative, as approved in the Senate, would go into effect the day after its publication. By not establishing a transitional regime, companies would be immediately in non-compliance.

ALVARO GARCIA HR, Vice President

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