Issuu

GENERAL SITUATION IN MEXICO

Weekly Review #115 I July 27, 2022

MANUFACTURING INDUSTRY POSITION ON THE U.S. AND CANADA’S COMPLAINTS ABOUT ENERGY POLICY DOES NOT HELP THE ECONOMY: CEESP The Center for Economic Studies of the Private Sector (CEESP) affirmed that public insecurity and the stance of Andres Manuel Lopez Obrador’s government in the face of the US and Canadian consultations do not help the reactivation of the Mexican economy, which -according to its estimates- will grow less than 2% in the short term. “This could have a high economic cost for Mexico and further weaken its image in the face of a potential investment, which would allow the country to take much more advantage of its privileged position in the current global context,” said the economic advisory body of the Business Coordinating Council (CCE) and leading companies in Mexico. According to the research center, economic activity remains lethargic that does not augur a better performance in the short term. There is a growing coincidence in the growth forecasts for the remainder of the six-year term, which have been adjusted downward to below 2.0%, adds the organization headed by Carlos Hurtado Lopez. Inegi’s timely estimates already reflect this, especially the economic activity (IOAE) indicator, which forecasts that the global indicator of economic activity (IGAE) for May 2022 will not grow with respect to the previous month and that for June, it will have a decrease of 0.4%, explains the report “The Mexican economy has reactivated,” prepared by the CEESP.

SOURCE: Forbes Mexico

MANUFACTURING INDUSTRY

Even though the annual growth of the IOAE figures seems positive (1.5% in May and 2.1% in June), the consecutive monthly comparisons are more representative of the reactivation at the margin.

The public safety situation really depends on how you want to look at it: “Under the same comparison, the total number of victims for some crime exceeded that of 2019 by 6.5%.”

“It is clear that these rates of progress are insufficient to recover what has been lost so far this six-year period and even more so to catch up with previous trends.”

“Interestingly, the urban public safety survey reveals that the deficiency of public investment has been important in the high perception of public insecurity,” said the CEESP.

“If the IOAE forecast is met, in June economic activity would be 0.5% below its pre-pandemic level, lower by 1.2% compared to the close of 2018 and by 1.7% compared to July 2018, the month of the presidential elections,” the CEESP noted.

It also stated that the main problems perceived by the population are related to the lack of investment in public infrastructures, such as potholes in streets and avenues, failures and leaks in the drinking water supply, and insufficient street lighting.

An issue of a different nature but which, due to its dimension, is considered a significant limiting factor for economic growth is public safety, warned the Center.

“It is convenient to insist once again on the need for the official discourse to be congruent with the need to attract and facilitate productive investment,” warned the CEESP.

According to the National Urban Public Safety Survey for the second quarter of the year, 67.4% of the population over 18 years of age considers it unsafe to live in their city: “The highest percentage since 2020 and which has increased in the last three quarters,” said the CEESP. It added that the perception of insecurity contrasts with the vision of the authorities that emphasizes a decrease in the incidence of crime supported by the presidential directive of zero impunity and corruption. “The authority pointed out that the number of victims of intentional homicide in the January-June period was lower than in the same period of 2019 (-10.6%),” said CEESP.

SOURCE: Forbes Mexico

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference July 20 – 26, 2022 POLITICAL AGENDA • Journalists: Lopez Obrador pointed out that there is no negative aspect to the existence of journalists who have a certain affinity with the government. However, he emphasized that no one is asked to subordinate themselves. Likewise, he commented that he distrusts journalists who claim to be independent since in times of transformation in journalism there cannot be a middle ground. He pointed out that they already know that Proceso Magazine, Reforma, and El Universal are against them. • Salary of public officials: Sheffield informed that at the President’s request he shared this information. The investigation was carried out through consultations with public sources. He pointed out officials of COFECE, Banco de Mexico, IFT, and INE who are protected and who receive higher remuneration than the President, especially he shared the salary of the position of Federal Judiciary Counselor located at 286,600 pesos. He commented that, in the private sector, in energy matters, executives have a substantial remuneration. • Migration: President López Obrador reported that the conversation with President Joe Biden was a very interesting conversation to strengthen relations and the integration of North America and all

of America to face the economic crisis, and especially, inflation. Likewise, they talked about the orderly flow of migration to eliminate intermediaries, such as coyotes, and to reach an agreement between governments, as was the case with the “Bracero” plan, so that those who want to go to work in the US can do so in rural areas, as workers, as professionals, because they do not have the labor force. ECONOMY • Private Investment: Foreign Minister Marcelo Ebrard was asked about the list of investments made during his visit to Washington. The Chancellor stated that, in said event, investments totaling 42 billion dollars were agreed upon; and the names of all the companies cannot be published yet, without their consent. He mentioned that most of the investments are in the energy, agribusiness, electromobility, and semiconductor sectors. • Inflation: President Andres Manuel Lopez Obrador announced that on July 25 he met with the Undersecretary of Economy to refine the anti-inflation plan. It was agreed to maintain the strategy of not increasing the price of gasoline, diesel, and electricity, highlighting that Mexico is one of the countries with the lowest electricity prices in the world.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Likewise, a review will be made of the basic food basket, as well as those that are not included, and producers and marketers will be asked to maintain their prices. Finally, he mentioned the importance of eliminating tariffs on foodstuffs and a policy of tariffs for the transportation of goods, which will be maintained or even reduced. • Wages: The President assured that wages increased more than in 30 years and above inflation, which allowed people’s purchasing power not to be lost, in the face of situations such as the current high inflation. He also stated that salaries in Mexico are higher than in the US and China. HEALTH • Health Pulse: The head of the Mexican Social Security Institute (IMSS), Zoe Robledo, commented that the second recruitment day for specialist doctors was presented; which involves 10,454 vacancies offered in the different health institutions. He highlighted that 51% of the vacancies are concentrated in six entities, giving priority to vacancies that are difficult to fill. Regarding the progress made in the different entities, in Nayarit 100% of the hospital units are operating, with 75% coverage of doctors. He highlighted a great advance compared to the first quarter of the year when they did not have the IMSS Bienestar program. In Tlaxcala there is 72% coverage of doctors, making it a priority entity in the allocation of medical vacancies. Colima has 100% coverage of hospitals and 79% coverage of specialist doctors. • COVID: The Undersecretary of Prevention and Health Promotion, Hugo Lopez-Gatell, announced a reduction of cases in the fifth wave; he estimates that this trend will continue. He added that there

is still a slight increase in cases of hospitalizations and deaths, although it is expected to start decreasing soon. Regarding the vaccination campaign, work continues on the immunization of people from 5 to 11 years of age. The undersecretary urged vaccination due to the scientific evidence in the reduction of the severity of the cases. Finally, he thanked Canada for the vaccines it will donate to the country. • Cuban doctors: The President thanked the people of Cuba and pointed out the need for doctors to take care of the health of Mexicans, he commented that it should be investigated so that it is understood that there are no doctors or specialists due to the low investment in public education during the neoliberal period. He informed that in Nayarit there are already almost 100% of doctors, likewise, Mexican health workers have been basified and there is a supply of medicines. This model will be extended to work throughout the country.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S tric plants in that State. He also announced that there is an agreement with Trans Canada to transport gas from Texas to Tuxpan and that the CFE will act as a partner of this company. This project represents approximately 5 billion dollars. INTERNATIONAL

ENERGY • Energy Policy: President López Obrador commented that he congratulated Minister Loretta Ortiz Ahlf for her extraordinary resolution on the electricity issue. Regarding the controversy filed before the SCJN, he pointed out that no article of the LIE was declared unconstitutional. She commented that the so-called “autoabasto” was declared as a fraud to the law, highlighting Iberdrola among the companies. He pointed out that the “clean energy story allowed them to do dirty business”. • Gas pipeline: Concerning foreign investment, the President mentioned the construction of a gas pipeline from Tuxpan to Coatzacoalcos, and from Coatzacoalcos to Dos Bocas. From Dos Bocas to the Yucatan peninsula, he explained that overland gas pipelines will be used to reach the thermoelec-

• Visas: Foreign Minister Marcelo Ebrard explained that the United States decided to increase H2B visas by 55 thousand to citizens of Honduras, Guatemala, El Salvador, and Haiti and there is a proposal from Mexico to increase them in greater proportion. He also informed that he estimates that 356,000 work visas will be issued by 2022. • Consultation under the USMCA: The President commented that it is a political matter, and that is why the U.S. State Department is especially involved in the consultation. The President commented that there is no violation of anything because Mexico is a sovereign country; he especially emphasized Chapter 8 of the Treaty. He pointed out that Mexicans who were part of previous administrations, such as Arturo Sarukhán, are participating on the US side. • Request for T-MEC Consultation by the Canadian and U.S. governments: Regarding the request for T-MEC Consultation by the Canadian and U.S. governments, President López Obrador indicated that there is no violation of the treaty; no commitments are not being breached. From the beginning of this government’s term, it was outlined not to put oil at risk. The previous government had offered a specific chapter on oil and the current administration rejected it. • The President emphasized that this is a procedure established in the treaty that has been used on five

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S occasions. He pointed out that it is a consultation on policies that are presumed to contravene what is established in the T-MEC, there is a term to respond to this consultation of a little more than 70 days and if there is no agreement, it will go to international panels to decide. He emphasized that Mexico will do its part and make it clear that there is no violation of the treaty. He clarified that it is possible to have commercial relations but that the policies are defined in Mexico and have to do with the constitution and the laws, where the country’s position regarding energy goods will not be put into consideration. He recalled that previous governments had already negotiated for oil to be managed by interests from other countries, something that his government rejected. • He pointed out that he has met with 19 companies in the energy sector and with 17 of them, important agreements were reached. Therefore, he intuits that the consultation is a political issue. He said that during his visit to the US he met with companies in the energy sector and this issue was not discussed, but that even American companies indicated their interest in investing in Mexico. • He emphasized that his struggle is against the increase in electricity and fuel prices; to defend Pemex and CFE, despite the interest to disappear these state-owned companies, particularly CFE, under the false promise of clean energy generated in plants established without permits. INFRASTRUCTURE • Mayan Train: When asked by a reporter about the declaration of the project as a national security project and the possibility of contempt of court, the President commented that there is no legal

problem, what is being done is to give continuity to a relevant public project that was subject to public consultation. He commented that they still do not know how much the additional cost is due to the delay in the work and that Grupo Mexico will no longer be participating. • Water Supply Guadalajara: The Governor of Jalisco, Enrique Alfaro, indicated that the bidding process for the first section of the Salto Calderón aqueduct network has been completed and work will begin in August. He assured that there is a work and coordination agenda with the Federal Government to address the issues that society demands. • National Urban Development and Reconstruction Plan: Roman Meyer Falcon, Secretary of Agrarian, Territorial and Urban Development (SEDATU), reported on the scope of the Urban Improvement Plan. This plan has addressed border municipalities, tourist cities, and communities belonging

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S to regions where a priority project of the federal government will be developed. He indicated that this plan, consists of 875 works, 23,000 regularization actions, and 66 urban planning actions. Edna Vega, Undersecretary of Territorial and Agrarian Planning of Sedatu, reported on the issue of housing through subsidies that are given directly to the population without intermediaries, technical assistance is given for the construction of housing, and there is a participatory design process that responds to the needs of the communities. To date, 253,051 grants have been awarded through the National Housing Commission (CONAVI), throughout 928 municipalities in the 32 states. He indicated that 60,772 housing reconstruction actions have been carried out and this year the National Reconstruction Program will be concluded. SECURITY • Security Strategy: Lopez Obrador stated that the security strategy will not be changed because it is working. The data that is being given is from INEGI and which is an autonomous institution. For this reason, it is affirmed that the strategy is working. The root causes of violence are being addressed and, at the same time, corruption is being prevented. • Public Safety Report: The Secretary of Public Safety, Rosa Icela Rodriguez, reported that there is a downward trend in the incidence of crime. She showed that there is a 25.1% reduction in federal crimes. On the other hand, from January to June, 15,400 victims of intentional homicide were registered, which represents a decrease of 9.1% in the semester of 2020. A graph of homicides by the six-year term was presented, showing that, in the

six-year term of President Lopez Obrador, there is a downward trend. Regarding the concentration at the state level, he explained that in 6 states 49% of the intentional homicides are concentrated: Guanajuato, Michoacan, BC, Edo. Mex, Jalisco and Chihuahua. Regarding the incidence of common crimes, he mentioned that there is a decrease of 29.4%; vehicle theft was reduced by 47.3%; femicides presented a reduction of 20.5%; kidnapping presented a decrease by 73%. He informed that work continues on the theft of hydrocarbons, which has been reduced by 6.1 thousand barrels, that is, 91.5% less barrels of “huachicoleo”. The “Caseta Segura” plan prevented the loss of 9,106 million pesos through preventive measures. General Luis Crescencio Sandoval, Secretary of National Defense, reported that there is 2,839 personnel for operations to combat the illicit fuel market, securing 7 sites with clandestine towers. As for the Customs strategy, there is a deployment of personnel in 32 customs offices (11 inland and 21 borders) where 2,495 elements will be deployed. AGRICULTURE • Fertilizers: Andres Manuel Lopez Obrador stated that US$500 million are being earmarked to produce fertilizers to be given free of charge to domestic producers. Likewise, the US was asked to sell fertilizers at fair prices. The idea is to support 2,000 domestic producers.

NEWS BY STATE

BAJA CALIFORNIA The Health Secretary of Baja California reports a decrease in COVID cases with 3,296 active cases in the past 14 days and 585 new active cases in the past 24 hours. The vaccination plan continues this week for children and the adult population in Mexicali and Tijuana. Last week the Farnborough International Airshow was held in the United Kingdom, where a team from Baja California participated, seeking to expand the network in the aerospace industry and bring more business opportunities to the State.

SONORA Official reports confirm 1,529 new cases in the last week. The vaccination plan continues this week for children from 5 to 11 years old and the adult population in different municipalities.

NEWS BY STATE

NUEVO LEON Governor Samuel Garcia Sepulveda announced the creation of a Technical Council to analyze the establishment of a progressive rate, although as of April there was an increase that included the payment of sanitation, a voluntary ecological rate for consumers of more than 10 cubic meters per month, and a staggering rise for consumption. COAHUILA In the interest of expanding business ties and the development of highway and commercial infrastructure, the Coahuila - Texas Bilateral Road Projects Work Meeting was held, where Governor Miguel Angel Riquelme Solis explained that with the expansion of border entrances there will be greater export capacity. TAMAULIPAS With an investment of 2.5 billion dollars, the federal government will build an underwater gas pipeline that will carry the hydrocarbon from Tamaulipas, through Tuxpan and Coatzacoalcos, in Veracruz, as well as through Yucatan and Quintana Roo to supply the southeast. The pipeline will provide gas to two thermoelectric plants of the Federal Electricity Commission (CFE).

NEWS BY STATE

SAN LUIS POTOSI As of the first quarter of 2022, the Federal Ministry of Labor and Social Welfare (STPS) indicates that in San Luis Potosi there are approximately one million 251 thousand 642 employed Potosinos, where do they work and how much do they earn? According to estimates, the Manufacturing Industry leads the list of employed personnel in the state, accounting for 23.1% of the working class, followed by Commerce with 19.2% and primary sector activities with 12.9%: Miscellaneous services: 9.2%. Construction: 8.0%. Social services: 7.8%. Restaurants and accommodation services: 6.3%. Professional, Financial, and Corporate Services: 5.4%. Government and International Agencies: 3.5%. Transportation, Communications, Postal and Warehousing: 3.4% Mining and Quarrying: 3.4% % Extractive Industries and Electricity: 0.8% JALISCO As part of the opening program of Talent Land, the Secretary of Economic Development (SEDECO), Roberto Arechederra, inaugurated Business Land, a space within this talent meeting dedicated to entrepreneurs and business people who seek to innovate and have the latest technological advances that allow their companies to be more competitive. The secretary explained that Business Land is a land of opportunities to do business and that SEDECO works to offer alternatives, connections, linkages, and everything needed to devel-

op the state’s businesses. He also emphasized that the different departments have the support to develop their businesses and highlighted that with the presence of the Secretariat in the Economic Development Workshop, within Business Land, they will be able to promote the growth of many projects. The Economic Development Workshop kicked off its activities with the Business Simulator Workshop, which was given by experts from the Jalisco Business Development Fund (FOJAL), where attendees experienced first-hand what it is like to start a business. QUERETARO The commerce, services, and tourism sectors expect an economic revenue of 1.3 billion pesos for the summer vacation period, representing an increase of up to 40% compared to last year, according to estimates by the National Chamber of Commerce, Services and Tourism (Canaco Servytur). The most benefited economic units are expected to be hotels, restaurants, shopping malls, and convenience stores, among others, explained the president of the chamber in the state, Fabian Camacho Arredondo. Since the grape harvest season is underway, as well as cultural festivals, it is expected that these will have an impact on the attraction of tourists.

NEWS BY STATE

GUANAJUATO Grupo Lintel inaugurated its corporate building in the Guanajuato Puerto Interior Park, where other companies will be able to work, dispatch and hold business meetings without having to have their own space. Lintel inaugurated its corporate offices in the Santa Fe Business Center in Guanajuato Puerto Interior, with first-class infrastructure, with public and private participation in the most dynamic area of industrial development in the country. Lintel offers companies office space that adapts to their needs through a modular system that allows them to save construction time, respecting the natural environment and with minimal maintenance. There are 640 square meters of offices, a lobby, meeting rooms, private cubicles, an open work area, a cafeteria, and an outdoor dining area.

AGUASCALIENTES In the municipality of Aguascalientes, council members from the Standing Commissions of Economic Development, Tourism, and International Affairs, and Culture, reached agreements on the working tour that will take place at the end of August in Chicago, Illinois, and through which they intend to promote the social, economic, cultural, and touristic development of Aguascalientes abroad. In this regard, the president of the Economic Development, Tourism and International Affairs Commission, Carlos Fernando Ortega Tiscareño, anticipated that the tour will be attended by the municipal President, Leonardo Montañez Castro, members of the City Council, and businessmen from Aguascalientes, who, in coordination with the State Secretariat of Economic Development (SEDEC), will seek to promote the commercialization of local products in that U.S. city. Likewise, and as part of the agenda, an agreement called “Corazon de Plata” (Silver Heart) will be signed, to support the people of Aguascalientes to reunite with family members living in that state of the American Union, after decades of not seeing each other, and for the first time a liaison or legal representative will be established with the migrants.

NEWS BY STATE

STATE OF MEXICO Morena obtained 38 percent of electoral preferences in the State of Mexico and adding its allies, it grew to 48 percent, according to the most recent EL FINANCIERO poll conducted in the state in July. On the other hand, PAN and PRI obtained 16 percent support each, and PRD, 7 percent, which added together results in 39 percent, 9 points behind the Morenista alliance. Last month, the support of each alliance was 46 and 38 percent.

CDMX The Secretary of Health of Mexico City, Oliva Lopez Arellano, said that 32 cases of monkeypox had been reported in the capital, of which 10, have been discharged, so they are waiting to see if the Government of Mexico defines vaccination for a specific group, adding that the contagion occurs through direct contact, including sexual, but it is of low transmissibility. She commented, “we are monitoring all the elements, and like all situations that are new in the country and in the world, you can be sure that Mexico City has been working from the very first moment.”

ECONOMIC RECOVERY ECONOMY AND INVESTMENTS IN MEXICO

CENTRAL MEXICO - NESTLE Nestle inaugurates a sustainable plant in Veracruz; invests 340 million dollars.

- MALTEUROP Seeks to maximize malt production to supply the Heineken plant in Meoqui. Will invest US$120 million.

- SAFRAN Safran announces expansion and 800 new jobs in Queretaro.

- ESSILOR The Essilor Corporation will invest 133 million dollars in a new project in the city of Chihuahua, which will generate 1,700 new jobs.

. NORTHWEST

NORTHEAST

- GKN AEROSPACE The GNK Aerospace Group will invest more than 10 million dollars to generate 100 new jobs in Chihuahua.

- DAIKIN Daikin will invest $230 million dollars in an air conditioning plant in San Luis Potosi. NATIONAL

- METAL FINISHING COMPANY Will invest US$2 million in Chihuahua, a supplier of GKN.

- VESTA Wants to develop Mexico’s industrial parks, for which it will invest 1.1 billion dollars in the next few years.

LABOR

THE STRIKE AS THE LAST OPTION A two-day strike at the emblematic Mexican phone company TELMEX brought the attention of employers, workers, and labor authorities. Even when the international labor standards set not clear or direct provisions regarding the right to strike in Mexico it is a constitutional right. With the implementation of the new labor system, following new rules, and facing new scenarios for the good of all businesses and to protect employment the strike should be the last option. Building agreements, and negotiating should always be on top of the priorities.

ALVARO GARCIA HR, Vice President

What can we learn from the TELMEX strike? First, the reasons for not reaching an agreement had to do with pensions and open positions not covered by the employer. Both reasons could have been addressed as an economic topic following the specific provision for such a process set by the labor law. Second, never underestimate the support of the authority. In the TELMEX strike, the mediation from the labor authority came late. Both employers and workers should look for the conciliation process before is too late. The federal authority can be of great support.