Weekly Report 128

SITUATION IN MEXICO

MANUFACTURING INDUSTRY

ELON MUSK ANALYZES THE POSSIBILITY OF INVESTMENT IN NUEVO LEÓN

Tesla Inc. chief executive Elon Musk is considering in vesting in Nuevo Leon, which borders Texas, two peo ple with knowledge of the matter said Monday.

Musk recently met with Nuevo Leon Governor Samuel Garcia in the state along with other local officials and Ken Salazar, the U.S. ambassador to Mexico, one of the sources said.

Musk is looking in particular at Santa Catarina, a muni cipality on the outskirts of the state capital, Monterrey, one of Mexico’s largest and highest-income cities, the person added.

The sources did not detail what the billionaire’s poten tial investment might entail.

A spokesman for the Nuevo Leon government decli ned to comment. Neither Tesla nor the U.S. embassy immediately responded to requests for comment.

Musk’s visit to Nuevo Leon was originally reported by Mexican media. Several of them published photos of Musk apparently from the visit, including one in which he appears with Garcia’s wife, Mariana Rodriguez.

Garcia posted several of the media reports on his Insta gram account, in one case tagging Rodriguez’s account and writing, “Look, look,” without further comment.

Austin, Texas-based Tesla has its own lane at the U.S.-Mexico border crossing in Nuevo Leon to facilita te trade for local suppliers, the state government said in August.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

Morning Press Conference

October 19-25, 2022

HEALTH

• Tobacco: Dr. Alejandro Svarch, Head of COFE PRIS, reported that the tobacco industry’s goal is to sell cigarettes, regardless of the costs to con sumers, their families, society, and the planet. However, today we face a greater challenge: va pers. These were created with the false expecta tion that they would replace cigarette addiction but have now caused greater addiction in adoles cents and young people. In this line, in May 2022 COFEPRIS, in conjunction with SEGOB, issued a maximum health alert, and the President issued a decree to ban these products. In this regard, since then the health agency has seized 72,00 vape de vices throughout the country.

INFRASTRUCTURE

• Mayan Train: When asked about the social pro grams provided to the communities surrounding the Mayan Train, President López Obrador stated that social programs are being provided through out the southeast and especially to those commu nities through which the train passes. All the eji dos have the Sembrando Vida program and all the health, welfare, and education programs are also being applied and that is why there is no oppo

sition to the construction of the train. Those who filed amparos were not the landowners, but repre sentatives of personal stake groups or associations financed by foreign governments, pseudo-envi ronmentalists, or those who are always looking to “take advantage of the situation”.

o An archaeological corridor is being built in Playa del Carmen, with subway caves. An archaeological zone will be opened to the public in Ichkabal in the municipality of Bacalar. Quintana Roo will be the state with the largest archeological zones in the Promeza program.

ECONOMY

• Economy: López Obrador stated that the SHCP in formed him that Larry Fink, from BlackRock, told him that Mexico was one of the countries that had better managed the crisis caused by the pandem ic because it did not go into debt. There is a ten dency to admire what is done abroad and think that in Mexico everything is badly done, but this is not the case, countries such as Spain did get into debt. Regarding inflation, he noted there is no energy problem, but the food issue must be addressed. This is already being resolved and an agreement has been reached with Walmart, Che draui, Soriana, and other distributors and produc

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

of taxes. He affirmed that he maintained confi dence in the process and the will of the compa ny. He stressed, however, the importance of not increasing taxes and not allowing the remission of taxes. Subsequently, he will share the proof of payment documents. Regarding tax remission, he was questioned about the considerations made by the Governor of Guerrero and the Governor of Nuevo Leon to different companies, such as KIA. The President stated that he will consult with the Governor on the matter this weekend since he will be meeting with her for reasons of his tour in Guer rero.

ers to maintain the price of the basic food basket. Today he will receive Walmart’s manager for Latin America and one of the issues to be addressed will be this. When asked about the statements made by the President of ANTAD that maintaining the prices of the basic food basket is not an obligation for the chains, the President said that nothing is obligatory, but hopefully, they can join in.

• Income Law: The President thanked the Chamber of Deputies for approving the Federal Income Law for Fiscal Year 2023 and took the opportunity to stress the importance of not including new taxes, as he considered that these are not necessary for tax collection if there are no tax privileges -such as remission- or evasion.

• Investment: Appreciated the compliance of Sali nas Pliego’s companies with the resolution of the Supreme Court of Justice regarding the payment

• Investment in Tamaulipas: The President informed that important investments have been made in the state of Tamaulipas, as approximately 8 bil lion pesos (MXN 8 billion) have been invested and will continue to be invested. In the port of Altami ra, gas will continue to be processed through the construction of a liquefaction plant to be able to transport it to Europe. A contract has already been signed with a U.S. company for its construction. As part of the state’s economic growth project, Américo Villarreal commented that together with the federal government, work will be done to im prove customs management, international bridg es, the development of a high-altitude bridge in Matamoros, the development of transportation, and the strengthening of food production.

BILATERAL RELATION

• Bilateral Relation: Before the call held with Presi dent Biden, President López Obrador, and the Sec retary of Foreign Affairs, Marcelo Ebrard, it was reported that they discussed the commercial re lationship between both countries. Likewise, they discussed the immigration issue, where the US

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

President agreed to implement a program to in stall 24 thousand humanitarian visas and 65 thou sand work visas, of which 25 thousand will be for Central Americans and the rest for Mexicans.

• Regarding the upcoming elections in the United States, he stated that there are many political inter ests surrounding the same, for which reason Mex ico will maintain, at all times, a profile of neutral ity, in accordance with the principles of freedom and sovereignty. In the same way, the President affirmed that this has been the country’s position in the face of the Russian-Ukrainian armed con flict. Regarding the imminent global and US reces sion, the President was asked about the potential collaboration between governments to prevent its negative effects. In this regard, he affirmed that there will be no such recession, as investments will increase in the region. He also affirmed that North America is the strongest territory in the face of global problems.

• Migration: Regarding Venezuelan migrants con centrated in border municipalities, the President assures that there is communication with local authorities. In addition, support has been grant ed, such as the installation of shelters and social programs -such as Sembrando Vida, to encourage Mexicans to stay in the territory-. The U.S. gov ernment, on the other hand, has granted visa pro cessing facilities, which will contribute to improv ing migratory conditions.

POLITICAL AGENDA

• Labor: The president pointed out that maquilado ra workers were previously paid very little, with 12hour workdays and four consecutive days of work. This led the government to push for a wage in

crease and seek to regulate this situation. He com mented that many people from Veracruz came to work in the maquiladoras in Tamaulipas, increas ing the labor force in the sector.

• Electoral Reform When asked by a reporter about the opinion of the Venice Commission regarding the political-electoral reform proposals, Presi dent López Obrador pointed out that all opinions are good and valid. He informed that this reform would be entering into debate in the Legislative today, so it is good that the representatives take into account all the comments, including those of former President Felipe Calderón. He recalled the following points of his proposal:

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

1. To guarantee clean and free elections, there should be impartial electoral authorities (a new body). These authorities, instead of being appointed by the economic power elite, will be elected by the people (Councilors and magistrates of the TEPJF).

2. This body would organize all the elections in the country, which would also generate savings since the INE and the TEPJF spend a lot of money.

3. The candidates for the leading bodies in the elec toral body will be proposed by the Executive, the Legislative, and the Judiciary, being the people the ones to decide.

4. The number of legislators should be reduced and all of them should be elected by the vote of the people, and there should be no more plurinominal deputies. We seek to banish electoral fraud, which is characteristic of politics in Mexico.

ENERGY:

• Energy: Given the approval of the reform to the Electricity Law and the controversy presented be fore the Supreme Court of Justice, foreign com panies were privileged to use renewable energies and do business with them. The court resolved that the planning of the Energy Secretariat is needed to control the creation of electric energy without taking attributions away from the Federal Elec tricity Commission (CFE). Likewise, he highlighted that the CFE’s transmission lines are currently in sufficient in the state of Tamaulipas, for which rea son this network will be expanded to bring elec tricity to the entire state.

• The President was questioned about the plan for the management of renewable energies in Sonora, informing that Secretary John Kerry will be visit ing the state on Friday. He denied the construction

of a micro nuclear power plant since the backup plant would be gas and they are looking to build more solar plants as this pilot. Regarding lithium, the President informed that the issue of some per mits previously given to a foreign company must be resolved, since with the reform to the Mining Law, lithium belongs to the nation, and this is the only pending issue. There is a comprehensive plan that considers the Port of Guaymas, the railroad beltway in Nogales, and the exploitation of lithium reserves, for electric car batteries.

SECURITY:

• Security: The President mentioned that the result of the INEGI survey on the perception of insecuri ty in Mexico has him happy, he commented that it is important since this quarter is the lowest. He as sured that people are feeling that they are trying to guarantee peace.

• The President projected a survey by Enkoll on the perception of the activities of the Armed Forces, stating that most of the population supports him in the areas that they continue with the adminis tration of customs, airports, and border crossings, that they continue in the streets supporting public security tasks until 2028 and finally that they carry out infrastructure projects such as the Felipe An geles Airport and the Mayan Train.

NUEVO LEON

In order to digitalize and streamline the most recurrent procedures to open a company at the state level, the gov ernment of Nuevo León will work hand in hand with the Organization for Eco nomic Cooperation and Development (OECD) to map and identify 30 proce dures at the state level and later unify at the municipal level.

TAMAULIPAS

The president of the National Chamber of the Transformation Industry (Canacin tra), Juan Manuel Guerra Noriega, re called that according to the Health Law in Tamaulipas, the use of face masks is no longer mandatory. He stated that most people continue to enter compa nies with their masks, this as a preven tive measure that although it is not man datory, the community continues to act responsibly.

QUERETARO

In a compilation of opinions of Japanese business executives, they announced that the Bajío region, especially Querétaro, is a key entity for new investments and busi ness development by Japanese compa nies and their supply systems since the entire corridor that runs from Querétaro to Aguascalientes has a high presence of Japanese corporations that need to bring their supply chains closer. For more than 60 years, Japan and Mexico have had a close commercial and labor relationship, and more than 1,200 Japanese companies invest more than 2 billion dollars a year in our country. The Japanese Chamber of Commerce and Industry of Mexico is also located in Mexico City and Nuevo Leon. They can be found in Mexico City and Nue vo Leon, but also in the Bajio area (Gua najuato, Aguascalientes, Queretaro, and Jalisco).

JALISCO

To continue promoting Jalisco’s interna tionalization agenda, the State Govern ment, led by the Ministry of Economic Development (SEDECO), the Ministry of Innovation, Science and Technology (SI CyT), private initiative organizations, and academia will conduct a working tour of the Arab Emirates, in order to strength en trade relations to boost the high-tech, innovation and entrepreneurship ecosys tem. The tour will take place from October 24 to November 2 and includes meetings with authorities from Israel and Abu Dha bi with the aim of positioning Jalisco as a reliable state to increase investment in the technology and energy sectors and the exchange of knowledge for innovation and talent development. This triple helix tour will also identify the characteristics of the Middle East ecosystem and offer the com petitive advantages of Jalisco so that Israe li companies can find in the state the good business climate they require. During the tour, meetings will be held with expert or ganizations in higher education, research, innovation, and technology transfer, and opportunities for the development of joint projects will be identified.

GUANAJUATO

With a production value of 565,664 mil lion pesos in the Manufacturing Sector, Guanajuato ranked fourth in the country from January to July 2022. Guanajuato has been increasing its economic develop ment and competitiveness during the ad ministration of the Governor of the State, Diego Sinhue Rodríguez Vallejo, placing it in the first place in the country. The head of the Ministry of Sustainable Economic Development (SDES), Ramón Alfaro Gó mez, said that the state is now positioned as the 6th largest economy in Mexico. The manufacturing of transportation equip ment in Guanajuato represented 45.7% of the Manufacturing Production Value One of the sectors that grew the most was the food sector, which reached 62 thousand 617 million pesos, representing a growth rate of 15.2% compared to the same peri od in 2021.

AGUASCALIENTES

It will be during the first week of Novem ber when the 2023 Economic Package for Aguascalientes will be ready, with an amount of more than 28 billion pesos. The project will be presented to the State Con gress on November 15, for its respective analysis. Alfredo Martin Cervantes Garcia, Secretary of Finance of the State Govern ment, mentioned that although no new taxes are contemplated, there will be ad justments in the cost of driver’s licenses and other procedures, due to the current inflation of more than 8%. The state offi cial pointed out that next year’s Revenue Law will be close to 30 billion pesos, which represents an increase of two billion pesos with respect to 2022.

SAN LUIS POTOSI

In his appearance in the State Congress, on the occasion of the gloss of the report, the Secretary of Economic Development, Juan Carlos Valladares Eichelmann, reported a growth of 3.8 percent in the first quarter of 2022, compared to the fourth quarter of 2021. This progress, he said, places the entity in third place nationally in growth, but he requested the support of the legis lators to generate the legal conditions that make possible the generation of labor, tak ing advantage of the logistic conditions, inter-port, transfers, railroads, highways, and other conditions.

CDMX

Attracted by nearshoring, some 50 com panies from the United States, Sweden, the United Kingdom, Spain, China, and Switzerland are interested in investing in the construction of a factory, new opera tions, and a production line in Mexico City (CDMX).

“Investors have come from Tucson, Phoe nix, Seattle, and we have just received companies from Sweden, who are inte rested in investing in Mexico,” says Fadla la Akabani Hneide, Secretary of Economic Development of the City. Currently, the country’s capital is becoming a market for nearshoring because it is the natural bridge between Central and South Ame rica and the world’s largest market with the United States and Canada, the official told Forbes Mexico.

STATE OF MEXICO

The governor of the State of Mexico, Al fredo Del Mazo Maza, informed about new investment projects in the textile in dustry in the state, totaling 13 million 500 thousand dollars, for the installation of a new manufacturing plant by the Coats de Mexico group. This new plant in Tolu ca will generate close to 350 new sourc es of employment and will focus on the production of high-tech performance threads for personal protection, gener ating economic benefits and develop ment opportunities for many families in the state of Mexico. This investment proj ect will be developed over the next two years, thus strengthening its presence in the state, since this company, originally from the United Kingdom, has its main distribution center in the municipality of Tultitlán; in these facilities, Coats handles 119 tons of inventory monthly, destined to serve the domestic market.

ECONOMIC RECOVERY

ECONOMY AND INVESTMENTS IN MEXICO

NORTHEAST

- SANHUA CAMPUS

On Thursday, October 20, the company inaugurated a plant in Ramos Arizpe, Coahuila. investment of 35 MDD and will generate 600 new jobs. Company de dicated to the production of household appliances and automotive components.

- DANFOSS MEXICO

On Thursday, October 20, they inaugurated a plant in Apodaca, Nuevo León. The amount of investment amount was not disclosed. They will ge nerate 100 jobs.

CENTRAL MEXICO

- ATOTECH

On Tuesday, October 18, they inaugurated their fa cilities in Querétaro with an investment of 170 MDP, offering 100 new jobs. German company in the che mical industry.

- STANDARD PROFIL

On Thursday, October 20, they inaugurated their se cond plant in Parque Amistad in Apaseo el Grande, Guanajuato, creating 300 new jobs, with an invest ment of more than 10 million euros. Leader in the production of automotive sealing systems.

CDMX

- COATS MEXICO

On Monday, October 17, the company announced that it will increase its plant in Toluca, State of Mexico. The investment is 13.5 MMD, with the creation of 350 new jobs. UK company in the textile industry for the au tomotive industry, telecommunications, and power generation.

- T-SYSTEMS

On Monday, October 17, inaugurated new offices in Puebla, considering the hiring of 300 Mexican cy bersecurity experts over the next 5 years. Company in Mexico with a presence in CDMX, Monterrey, and Aguascalientes. The amount of investment was not disclosed.

NATIONAL - MEGACABLE

During the First Megatec 2022 Tour in CDMX, MEGA CABLE shared with its partners the main advances of the company, announcing the investment of 2 MMDP in the near future. in the near future. They had 22 thousand employees, they should end the year with 27 thousand and next year with more than 30 thou sand. and next year with more than 30 thousand. Main operator and distributor of telecommunications services in Mexico and Latin America. telecommuni cations services in Mexico and Latin America.

LABOR

SUMMER DAYLIGHTSAVING-TIME ENDS

Most of the Mexican territory will adjust the clock next Sunday Oct 30 to end, for the final time as the government has announced, the daylight saving time.

Be aware that until the USA Daylight-saving-time ends, a week af ter Mexico, there will be a one-hour difference between Mexican central time and USA central time (same difference will apply for the rest of the time zones).

Cities in Mexico bordering the USA (i.e. Tijuana, Ciudad Juarez, Reynosa, etc). will end the Daylight-saving-time until the USA ter ritory does therefore there will be time differences during a week between central Mexico and the cities in the Mexico-USA border region.

HR must communicate the time difference to avoid misunderstand ings will scheduled meetings between executives in both sides of the border.

ALVARO

GARCIA

HR, Vice President