Weekly Report 126

GENERAL SITUATION IN MEXICO

MANUFACTURING INDUSTRY

INDUSTRIAL TRANSFORMATION MEXICO, A MINDFACTURING ALLY; ANNOUNCED THE NEXT EDITION IN 2023

Industry, academic, and government representatives gathered at the fourth edition of Industrial Transfor mation Mexico (ITM), which took place from October 5 to 7 in Leon, and brought together more than 30,000 attendees, 265 exhibitors in 16,000 square meters of exhibition space, and more than 70 conferences.

For next year, the organizers announced that ITM will be held from October 4 to 6 at the Poliforum Leon.

This fair projects the state of Guanajuato before the country and the world as a solid ecosystem for innova tion, this was announced by Diego Sinhue Rodriguez, governor of the state, who added that Guanajuato is moving towards the future by materializing the mind facturing and making it possible in every industry, sec tor, academy and above all, in every person.

“We are consolidating what will be the Mindfacturing Valley and the epicenter of Industry 4.0 in Latin Ame rica, it will be through platforms like this one, where the entity is promoted as an attractive point for natio nal and international investments,” he added.

Bernd Rohde, general director of Hannover Fairs Mexi co, mentioned that Mexico continues to position itself among the largest importers of advanced digital ma nufacturing technology, which will lead to the forma tion of Industry 4.0 leaders in the region in the coming decades.

“In this edition, we sought to boost the competitiveness of industries with new technological launches of each of the participating companies, as they showed their greatest contributions to sectors such as auto motive, aerospace, agribusiness, electronics, and che micals, among others,” he explained.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference OCTOBER 5-11, 2022

POLITICAL AGENDA

• Tatiana Clouthier’s resignation: The President an nounced that Tatiana Clouthier sent him a letter of resignation from the Ministry of Economy. The still Secretary of Economy read the letter in which she expressed her gratitude to the President and the opportunity to participate in his government. The President mentioned that Tatiana Clouthier’s resignation was for personal reasons.

• Head of the Secretariat of Economy: The Presi dent appointed Raquel Buenrostro, current Head of the Tax Administration Service (SAT), as Sec retary of Economy to replace Tatiana Clouthier. In announcing the appointment, the President said that she has done a very good job because.

• Armed Forces in Public Security: He thanked the legislators of the Senate of the Republic for the approval of the reform that expands the collabo ration of the Armed Forces in public security tasks. He mentioned that there will be no problem with its approval in the Chamber of Deputies since it was in the Senate where there was more resistance. He reiterated that the support of these corporations is necessary and that thanks to the reform there are now 500 thousand elements of the Army, the

Navy, the Air Force, and the National Guard, which contrasts with the 40 thousand elements of the former Federal Police that were available at the beginning of the six-year term.

• Regulation of arms sales in the United States: When asked by a reporter about a judge’s rejec tion of Mexico’s demand to sanction arms manu facturers in the United States for their collabora tion in the trafficking of arms into the country, the President mentioned that the Ministry of Foreign Affairs has already issued a statement in which it declares that it will go to another instance to con tinue with this demand.

• Food self-sufficiency: The President indicated that we still need to be self-sufficient in yellow corn and take care that no transgenic corn enters the country because some are pressuring to allow the planting of this corn. He said that Mexico will not al low it, because the damage to health is not known. He mentioned that there is a plan for several states for corn production; and that self-sufficiency in beans has already been achieved, through the fix ing of guarantee prices. They are also working on rice production because today 80% is imported.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

res Rosas, stated that 72,000 jobs were generated during September. He also highlighted that these workers receive an average salary of $14619.

• Regarding the exchange rate, he pointed out that the peso is the currency that has strengthened the most, while currencies such as the Euro and the Pound Sterling have depreciated. He emphasized that the peso remains stable and has strengthened by 1.1% compared to previous governments.

• Regarding remittances, he pointed out that ac cording to figures from the Bank of Mexico, during August there was an 8% increase with respect to the same month of the previous year, thus linking 4 consecutive months above 5,000 million dollars.

ECONOMY

• Problems derived from APECIC: When asked about possible sanitary problems due to the intro duction of APECIC, the President pointed out that this will not be a problem since the APECIC bene ficiary companies will act with goodwill, promot ing competition and preventing food prices from skyrocketing. He stressed that the director of SE NASICA is supported by all major producers. He also pointed out that the importation of cheaper products is beneficial for the Mexican population and that the National Agri-Food Health, Safety and Quality Service (SENASICA) and the Feder al Commission for Protection against Health Risks (COFEPRIS) were hindering the importation of some products.

• Economic Report: The general coordinator of De velopment Programs of the Presidency, Carlos Tor

• He announced that in the first half of this year, For eign Direct Investment reported a figure of 27.512 billion dollars, discounting the atypical operations of the merger of Televisa and Univision, as well as the restructuring of Aeromexico, which represents an increase of 12% compared to the same semes ter of the previous year.

• Regarding growth during the second quarter of this year, he reported that Mexico reported a Gross Domestic Product growth of 0.9% compared to the immediately preceding quarter, surpassing countries such as the United States, Germany, and France.

• Inflation Report: The President explained that his administration made the decision not to increase the price of gasoline, diesel, and electricity. He stated that if this decision had not been taken, in flation would have reached 14% and the economy would have been damaged. He informed that sub sidies are already being applied in other countries, and therefore, inflation is already decreasing. He indicated that during 3 months the United States had more inflation than Mexico; likewise, he spec

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

ified that it has been many years since gasoline was cheaper in Mexico than in the United States.

• Jobs: The President presented the growth of for mal jobs since the fourth transformation, which despite the pandemic and the war in Ukraine have increased, and reported that he expects to end his term with a minimum of 250 to 300 thousand new jobs per year. Currently, there are 21,459,331 work ers registered with the IMSS, which represents a historical maximum. In addition, he reported that in October 2021, the level of workers enrolled in the IMSS before the pandemic was surpassed. Likewise, he informed that the government has a record in foreign investment and public invest ment has been boosted, the refineries are current ly generating 40 thousand jobs, but will grow to 200 thousand jobs.

BILATERAL RELATIONS

• Ken Salazar’s meeting with the Governor of Zacatecas: In view of the agreement signed be tween the U.S. Ambassador to Mexico, Ken Sala zar, and the Governor of Zacatecas, David Monre al, he pointed out that foreign policy corresponds to the Federal Executive and that, in Article 117 of the Constitution, it is expressly forbidden for lo cal governments to establish agreements of this nature; therefore, the agreement would have no validity whatsoever. President Lopez Obrador expressed his disagreement, although he point ed out that this is with due diplomatic delicacy. He stressed that the bilateral relationship is good and that next Thursday, October 13, a High-Level meeting will be held in Washington D.C. on securi ty matters.

SECURITY

• Situation of violence in the country: The President pointed out that 48% of homicides, from October 7 to 9, were concentrated in just 4 entities: State of Mexico, Guanajuato, Baja California, and Jalisco. He also commemorated that in 7 states there were no reports of homicides.

• Revelations derived from the hacking of SEDENA: In view of the revelation of contracts of the “Pega sus” system with SEDENA derived from the hacking of the corporation, the President expressed his will ingness to make the contracts transparent. When asked by a journalist about SENENA’s surveillance of human rights groups, the President mentioned that the freedom of these groups is respected and that there is no surveillance of such groups. He re iterated his recognition of the work of General Luis Crescencio Sandoval. When questioned about the cover-up of various military personnel during the investigation of the Ayotzinapa case, the President mentioned that some military personnel have been

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

great powers would have a say in order to reach agreements and treaties aimed at stopping the warlike confrontations.

• FTA with Ecuador: FTA with Ecuador: The head of the Executive indicated that the Free Trade Agree ment with Ecuador has not been formed, since this nation is requesting to remove tariffs on bananas and shrimp, and its position is to defend national producers.

INFRASTRUCTURE

prosecuted for their participation in the disappear ance of the students, which shows that there is no impunity around the SEDENA.

INTERNATIONAL

• Agreement between Mexico and Russia on space matters: President Lopez Obrador pointed out that the agreement was signed in September last year, before the war between Russia and Ukraine, and that it was signed with many countries worldwide. He conceived that the war situation is exacerbat ed by the mid-term elections in the United States since it is used as political propaganda. Likewise, he asked that Mexico not be involved in these prob lems, due to the non-intervention policy that char acterizes the country. Likewise, he reproached the United Nations (UN) for its lack of action in the con text of war. He reiterated that Mexico presented a peace agreement to the UN, which was presented to the Russian Foreign Minister.

• Mediation committee: The President pointed out that it would be a good idea to create a mediation committee between Russia and Ukraine, where the

• Budget for the sanitation of “potholes”: President Lopez Obrador pointed out that the works related to the sanitation of “potholes” in the streets fall un der the responsibility of municipal and state gov ernments. He also stressed that he will meet with the Secretary of Security and Citizen Protection, Rosa Icela Rodriguez, and the Undersecretary of Expenditures, Juan Pablo de Botton, so that the budget will be sufficient to address the problem, emphasizing that these are additional resources since they do not fall under the jurisdiction of the Federation.

EDUCATION

• SEP Study Plan: After a federal judge suspended the SEP’s educational pilot plan implemented in 960 schools, the President pointed out that he will find out who is promoting these amparos and will defend the need to reform the content of school books. He emphasized that the goal is for educa tion to be scientific but basically humanistic. Final ly, he commented that his government is respect ful of the Judicial Power; however, he will not give up and will follow up on the issue daily.

BY STATE

BAJA CALIFORNIA

Last week, the meeting of the business sector was held with the Association of Southeast Asian Nations and the Busi ness Coordinating Council of Tijuana where Francisco Rubio Rangel, head of the CCE, pointed out that the countries of Southeast Asia seek to invest in Baja California and establish relations in the transfer of goods. He also mentioned that he hopes this will be the first of many meetings to strengthen the relationship between Baja California and Asian coun tries, in order to remain an investment attraction in the country.

SONORA

Jesus Gamez Garcia, president of the National Council of the Maquiladora and Export Manufacturing Industry (Index) in Sonora, mentioned that the supply of industrial buildings in Hermosillo is scarce. They have made a series of recommen dations to construction companies to work hand in hand with the sector and build “reserve industrial buildings”, that is, to build this type of buildings so that they are ready to be used at the time the investments are made.

NUEVO LEÓN

Nuevo León stands out in infrastructure for electric cars, according to the Na tional Automotive Industry (INA). Based on data from the National Registry of Electrolineras, to date the state has at least 101 charging stations, which favors those who are betting on the purchase of an electric car.

COAHUILA

The newly arrived industries in the Cen tral Region of Coahuila and the expan sion of other existing ones, boosted the regional economy and highlighted the need for more local labor for the new productive areas.

QUERETARO

The German company Bosch announced that it will make the strongest investment in the last five years with the installation of a plant of its subsidiary Bosch Rexroth in Queretaro, where it will produce com ponents for mobile applications and ma chinery for manufacturing automation, said Thomas Klein, general director of the company in Mexico.

In the first stage, around US$140 million will be invested, including land, building, and machinery, and 900 people will be hired by 2023.

GUANAJUATO

With an investment of US$800 million, Lay er 9 Data Centers began the construction of its new data center campus in Guana juato, Mexico, which will become the first hyper-scale project in the region and the company’s first in the country.

This would be the largest data center in Mexico: it will start with 64 MW and even tually reach 80 MW. Layer 9, a data center solutions provider, will invest in this project in two stages. The first phase is expected to be ready by the end of 2023.

SAN LUIS POTOSI

With an investment of 146.5 million pesos, the state government began the rescue and transformation of the industrial zone so that workers, businessmen, transport ers, and families can travel safely and with out problems.

According to the project, the work will be gin with the integral rehabilitation of In dustrias Avenue, a stretch that runs from Circuito Potosi to Eje 124, and will direct ly benefit some 200,000 users who work daily in the 600 companies located in the industrial zone.

CDMX

Due to the implementation of a public policy focused on financial responsibility, new infrastructure projects have been im plemented in Mexico City and economic development has materialized, said the head of government, Claudia Sheinbaum Pardo, during her Fourth Activity Report. She explained that one of the bases of her administration was to heal public fi nances, from the reduction of public debt - 2021 being 5.1% lower than 2018-, as well as the generation of savings and the fight against corruption, which in four years has freed up nearly 80,000 million, and transparency in spending. The enti ty went from 17th place in 2018 to 12th place in 2021 in the implementation of the Results-Based Budget and the Per formance Evaluation System in the fed eral entities, published by the Ministry of Finance and Public Credit (SHCP).

ECONOMIC RECOVERY

ECONOMY AND INVESTMENTS IN MEXICO

NORTHEAST

MARKDOM

Markdom expands its operations in Nuevo Leon. Thanks to its quality, on-time delivery, and innova tion, it expanded its plant and now has 128,000 squa re feet for production. It was mentioned that the new area will manufacture plastic injection components for General Motors Ramos Arizpe. The necessary ma chinery for this project is already installed and pro duction will start next year.

SOURCE: MEXICO INDUSTRY

ARCELORMITTAL

ArcelorMittal Mexico will invest US$15 million for its plant in Escobedo, Nuevo Leon. This plant produces pipes for the automotive industry, according to Jaime Lujan Valladolid, director of Industry and Flat Steel Sales.

“The investment will be used for the installation of a fifth pipe mill at the plant and production will be de dicated to serving Tier 1 and Tier 2 suppliers, which in turn supply companies such as Volkswagen, General Motors and Ford for vehicles such as the Suburban, Tahoe and Fusion,” said Lujan Valladolid.

Lujan Valladolid pointed out that the relocation of production chains in the region, known as “nearsho ring”, has allowed the arrival of new companies and more investments in the country and has benefited ArcelorMittal at a global level.

SOURCE: MEXICO NOW

APTIV

Aptiv inaugurated a second plant in the municipali ty of Linares, Nuevo Leon, where it will manufacture harnesses for electric vehicles, considered part of the nervous system and brain of next-generation auto mobiles.

Aptiv invested US$14.9 million to improve the indus trialization of the plant, which will generate 942 jobs

SOURCE: MEXICO NOW

LABOR

MENTAL HEALTH: A WORKPLACE PRIORITY

Mental health (MH) at the workplace will become an increasing chal lenge both for the individual well being and well as for the compa ny productivity. The International Organization of Employers (IOE) indicates that mental health and work are closely interconnected.

Even when MH is a tough challenge that cannot be seen just form the labor perspective, as it requires deepest interventions lead by governments and supported by public health policies, companies still have plenty of actions to implement to improve MH.

To learn more about why mental health in the workplace matters and the elements needed to address the issue the IOE has pub lished a brief for employees: https://www.ioe-emp.org/news/de tails/mental-well-being-is-a-workplace-priority

It is time to take action.

ALVARO GARCIA HR, Vice President