Weekly Review I February 1, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I February 1, 2023

RELEVANT NEWS

MEXICO, U.S., AND CANADA TO LAUNCH CHIP DEVELOPMENT FORUMS

Mexico can attract up to 15 billion dollars of Asian investment in the coming months for the development of suppliers and talent in the automotive industry, mainly in auto parts, semiconductors, and raw materials demanded for electromobility, said Francisco Gonzalez, president of the National Auto Parts Industry (INA).

With the factors of nearshoring, the increase in regional content in the USMCA, the need for new technologies, and the recent agreement of North American leaders, starting next week (February), the automotive industry of Mexico, the United States, and Canada will begin work in trilateral forums with their respective governments to define the opportunities and strengths in the development of chips.

“We will be doing an initial review of strengths and opportunities for the companies. In the United States we will be meeting with the associations of Canada, the US, and Mexico to see the proposal that will be followed, specifically in the semiconductor section of the automotive sector, here what is important is the programming of semiconductors in Mexico,” he said in an interview after participating in the event to urge companies in the sector to legitimize their collective bargaining agreements.

This point is part of the agreements reached by North American leaders (Andres Manuel Lopez of Mexico; Joe Biden of the US and Justin Trudeau of Canada), to organize the first trilateral semiconductor forum with the industry and adapt government policies, as well as increase investment in the region’s chip supply chains.

The first step will be to map the supply chain, said the president of INA, which will go from Jalisco, Guanajuato,

“We already have experience from companies that are in Silicon Valley, such as Intel, which has a large center for semiconductor programming in Guadalajara and Mexico has become very good at semiconductor solutions. Not so in production because it will be in Arizona with a state-of-the-art plant of different sizes, in addition to Texas, in the US,” said Francisco Gonzalez.

For Mexico, he assured, many investments are coming, since it is a key location for strategic capital, such as the one recently announced by Foxconn, the Taiwanese company leader in semiconductor production, which will bring its technology suppliers.

SOURCE: EL ECONOMISTA

Queretaro, Tijuana, Mexicali, Chihuahua, Coahuila, and Nuevo Leon to Silicon Valley.

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

January 24-31, 2023

ECONOMY

• CARGO: Regarding the cancellation of cargo planes to AICM, President Andres Manuel Lopez Obrador commented that he received a letter from DHL stating that they will begin moving their cargo to AIFA at the end of February. He commented that he will attend the landing of the first DHL plane that is already “moving” to AIFA. He considered that it is the “conservatives” who do not want to migrate cargo transportation to AIFA and mentioned that he does not have much respect for “those associations” since they are the ones that were used to justify, with customized studies, the rejection of the cancellation of the “Texcoco airport”. Regarding the changes, he mentioned that this will allow more spaces for the transportation of people at the Mexico City International Airport, they will have fiscal precincts, larger spaces and they will no longer be able to bring in drugs or money. Ninety days will be granted to make the changes.

• Altos Hornos: Lopez Obrador mentioned that the Government is willing to help Altos Hornos de Mexico, which has debts with Pemex, CFE, and SCHP. Consideration is being given to them so that people are not left without work and it does not impact the Coahuila region. But he urged Mr. Ancira

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

$300 million pesos are about to be transferred to repave the highway from Hermosillo to Puerto Libertad by the Government of Sonora.

• International Affairs: The President commented that he is in favor of all Latin American and Caribbean governments. He said that he is against military, legal, and media “coups d’etat”. He commented that he recorded a message he sent to the Summit of the Community of Latin American and Caribbean States (CELAC) 2023 that is taking place in Argentina and that will be screened today, and explained that he did not attend since he has several events and pending matters that he must attend to in Mexico.

to make a decision and present a serious investment proposal with responsible businessmen, then agreements can be sought regarding the debts. But he pointed out that public resources will not be invested to rescue a private company.

INTERNATIONAL

• NEARSHORING: The president commented that 10 industrial parks in the Isthmus of Tehuantepec are about to be put out to tender as soon as possible.

• Bilateral relation: Between Sonora and Arizona, there is talk about the construction of a desalination plant to promote water in the region with the support of technology from Israel, the President mentioned that the project will be reviewed, and if there is no opposition in the consultation for any environmental impact, then he would see no problem in authorizing the project. He informed that

• Oil and Gas: The President stated that the new refinery that is still under construction in the southeast of Mexico and with which it is expected to achieve energy sovereignty before the end of his term, will begin processing oil in July 2023 with processing of 170 thousand barrels per day and by 2024 will reach production of 340 thousand barrels per day. He informed that in addition to the refinery in Tabasco, Pemex acquired from its partner, the Anglo-Dutch Shell, its 50% of a plant in Deer Park, Texas, and launched a rehabilitation program for its six refineries in Mexico. He announced that on March 18 he will commemorate the anniversary of the oil expropriation, a popular event will be held in Mexico City’s Zocalo.

• Electrical infrastructure: CFE’s CEO, Manuel Bartlett, mentioned that the generation of electricity capacity will be expanded by building two Combined Cycle Power Plants, located in the cities of Merida and Valladolid. Together they will have a production capacity of 1,519 Megawatts and will add to the current generation capacity which will reach 4,521 Megawatts.

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

POLITICAL AGENDA

• INE: Accused that the President of INE, Lorenzo Cordova Vianello, and Councilor Ciro Murayama do not have a democratic vocation and have conservative thinking. He said that there is no understanding of the transformation project in the country, a situation that is a product of democracy, since there is no single thought, there is a contrast of ideas and that benefits the debate. He stated that democracy means that elections are clean and free and that is what they should be focused on. He recalled that the INE counselors rejected a constitutional reform to the electoral body whose objective was to reduce the governmental section.

• He indicated that the change in the Law is not of substance, it is only a reduction in their salaries and that this would not put democracy in Mexico at risk. He emphasized that those who have put the elections at risk are the electoral authorities since they allow the purchase of votes, ballot box stuffing, etc. He pointed out that what is behind the campaign “INE is not to be touched” is that Garcia Luna is not to be touched, since it is an issue that generates a lot of concern for them.

• Corruption: He announced that before the end of his term, he will send another Initiative to reform article 127 of the Constitution so that no public official earns more than the President and to avoid appeals, such as those of the Judicial Power, the INE, INAI, and other autonomous organisms. He mentioned that he is analyzing a possible reform to provide benefits to criminals who contribute to the investigation of a crime, the objective is to reach the intellectual actor and main beneficiary of the crime. He reminded that the Institute to Re-

turn to the People what was Stolen was created, the resources are destined to social programs.

• Court of Justice: He indicated that the Federal Government will continue to work together with the Supreme Court of Justice as it has done in the past. He has no plans to meet with the presiding justice soon, as they have no urgent matters to discuss.

• Genaro Garcia Luna Case: The President presented a video on the progress of the trial of Genaro Garcia Luna in New York, United States. When asked by a journalist about this issue, the link between Facundo Rosas and Cardenas Palomino and Garcia Luna, and the possibility of Mexico having access to the statements and the interrogation, the President stated that this matter is being handled by the Attorney General’s Office, which is currently handling the allegations of Garcia Luna’s case. On the other hand, the President mentioned that the Ministry of Finance, the Financial Intelligence Unit, and a law firm are in charge of the distribution of assets obtained with money obtained from the treasury by Garcia Luna.

NEWS BY STATE

BAJA CALIFORNIA

The president of DEITAC, Cristina Hermosillo presented her work plan, through which she will seek to improve promotion in sectors with greater industrial activity, such as the medical devices, electronics, automotive and aerospace sectors. She said that they need to take advantage of the complementary capabilities that the Tijuana-San Diego region has, since together they can become a Center of Excellence for the Bioindustry and Manufacturing of Medical Devices. On the other hand, she affirmed that the pandemic brought nearshoring to the region, and Tijuana is one of the entities in which Asian companies seek to establish themselves.

SONORA

The Secretary of Economy Margarita Velez de la Rocha held a meeting with business organizations to strengthen joint work to achieve the economic development of Sonora, through actions that help promote the state to attract new investments, as well as the exchange of opinions and concerns about development projects. On the other hand, the Mexican presidential spokesman, Jesus Ramirez, commented that Tesla is studying installing an assembly plant in an industrial park near the Felipe Angeles International Airport (AIFA), which would serve as an air export center.

CDMX

The Secretary of Urban Development and Housing of Mexico City announced that there will be criminal complaints against whoever is responsible for the advertising placed on the side of a building located in the Cuauhtemoc district.

Through its social networks, Seduvi CDMX informed that the placement of the advertising media violates the Outdoor Advertising Law.

STATE OF MEXICO

An EL FINANCIERO poll on electoral preferences in the State of Mexico, conducted in January, indicates that Delfina Gomez, as candidate of Morena-PVEM-PT, obtains 45 percent of the effective intention to vote, eight points above Alejandra del Moral, as candidate of PAN-PRI-PRD-Panal, who obtains 37 percent.

In a distant third place is Juan Zepeda, of Movimiento Ciudadano.

SOURCE: EL UNIVERSAL, EL FINANCIERO

INVESTMENT NEWS

AMERICAN WOODMARK, A LEADING CABINET MANUFACTURER COMPANY, ESTABLISHES IN NUEVO LEON.

On Thursday, January 26, 2023, American Woodmark Corporation (NASDAQ: AWMD) held the groundbreaking ceremony for its new manufacturing plant in Cienega de Flores, Nuevo Leon. This new project involves a $45 million dollar investment. The new building will have 275,904 square feet, and will initially employ 300 new employees. Construction has begun and the building is expected to be completed in November 2023.

American Woodmark has a team of more than 10,000 employees and more than 12 brands. The company is one of the largest cabinet manufacturers in the United States and one of the most important cabinetry suppliers to the construction and remodeling industry.

American Woodmark was supported by Prodensa, a leading company in consulting services for national and foreign manufacturing companies, who, in coordination with the municipal and state governments and CPA developers, promoted the strengths of Nuevo Leon for the strategic decision of its new location in Mexico.

Scott Culbreth, President, and CEO of American Woodmark said “We conducted an exhaustive analysis to determine the location of our new manufacturing plant, and we are convinced and very excited to have selected this particular location, in the municipality of Cienega de Flores in the state of Nuevo Leon. Reaching this day would not have been possible without the hard work, advice, and dedication of

our partners PRODENSA and CPA, as well as our strategic team at American Woodmark”, and added, “We are working as a team to build this year a 275,000 square foot building to increase our capacity in the kitchen and bath lines”.

The groundbreaking ceremony was attended by the State Governor of Nuevo Leon, Samuel Garcia; the City Mayor of Cienega de Flores, Miguel Angel Quiroga; the State Secretary of Economy, Ivan Rivas; and the Undersecretary of the Ministry of Economy, Emmanuel Loo; Congressman Andres Pintos and Congresswoman Irais Reyes, as well as local dignitaries, industry leaders and developers, service providers, and community members, to celebrate the beginning of the construction of a new building with the highest quality standards to increase American Woodmark’s manufacturing capacity in North America.

Welcome to Nuevo Leon American Woodmark; we are proud to be your partners.

INVESTMENT NEWS

BALLUFF, A WORLD LEADER IN THE ELECTRONICS INDUSTRY, WILL INVEST 50 MILLION EUROS IN ITS NEW FACILITY IN AGUASCALIENTES.

The German company, Balluff, a world leader in the electronics industry, celebrated its Groundbreaking Ceremony of its new facility in Aguascalientes on January 31.

Balluff will invest 50 million euros in the establishment located in the municipality of Jesus Maria, and will offer 700 jobs, announced the company’s CEO, Frank Nonnenmann.

Balluff is a leader in the production of sensors, accessories, network systems and RFID solutions. Its facility in Aguascalientes, located in the Santa Fe Tecnopark industrial park, will have an area of 15,000 square meters and will focus on the creation of sensors for Industry 4.0, profiled for the automotive industry, renewable energies, among other sectors.

Prodensa in coordination with the municipal and state government, and developers, supported Balluff in its decision to choose Aguascalientes as the best option for its new facility.

“We took our decision [where to open the new plant] very seriously, it took us a year to thoroughly look at which country and which region [to establish]; we believe we have found Aguascalientes to be the perfect place for our company, for our DNA, to continue to be successful,” stated the executive.

Thank you for trusting us to be your strategic partners for your new location.