Weekly Review I February 8, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I February 8, 2023

RELEVANT NEWS

AUTO PARTS INDUSTRY LEADS IN INVESTMENTS DUE TO NEARSHORING: INA

The auto parts industry in Mexico is the main recipient of nearshoring investments, with 37% of the total amount raised in capital or plant relocation during 2022; while, by country of origin, 40% of this relocation came from China, said Alberto Bustamante, director of the National Auto Parts Industry (INA).

The second recipient of investments is the furniture industry with 18%, followed by machinery and tools with 15%, as well as electronics and household appliances with 15%, 8% with high technology; 5% of pharmaceuticals, and others, according to the INA.

Thus, “the auto parts industry is the main recipient of nearshoring,” which could add up to 15,000 million dollars in the coming months, he projected.

Upon presenting the monthly report of the automotive industry during January 2023, the INA executive specified that the arrival of companies that manufacture batteries for electric cars; chassis; transmissions;

automotive interiors, aluminum rims, molds and tooling, electric components, plastics, and engine parts are expected.

Until now, the largest amounts of capital that have landed in Mexico have come from China, as part of the relocation of companies that had operations in Asia and are moving to Mexico.

This is followed by capital from the United States with 20%; from Japan with 11%, Germany with 9%, and 8% from South Korea, since with the USMCA requirements to increase the value of regional content, automakers have resorted to bringing their suppliers from other parts of the world to comply.

Meanwhile, the nearshoring phenomenon continues to grow due to the opportunities offered by Mexico, both in terms of the network of free trade agreements and the talent in its workforce.

SOURCE: EL ECONOMISTA

RELEVANT NEWS

Although he insisted that “the transformation towards clean energies in the mobility sector could generate an investment of up to 15 billion dollars for the automotive and auto parts industry for the manufacturing of batteries for electric cars, chassis, transmissions and other components, which opens great opportunities for the country”.

The investments being made are primarily aimed at the manufacture of lithium batteries, for which there is currently a Mexican-owned company located in Sonora, which will produce for the automotive sector by the end of this year.

“The important thing is that Mexico joins these production lines for the manufacture of semiconductors, some designs, programming, assembly, and substrates, and inputs, in which Mexico will participate in the supply chain for the two plants that are expected to start manufacturing by the end of the year, within the Sonora plan,” he said.

In addition, there is the start-up of four wind farms that would detonate at the same time, the exploitation of lithium, and the necessary inputs for the technological change.

The director of INA highlighted Mexico’s participation in North America, as a partner of the United States and Canada after the signing of the USMCA, which reached 107,329 million dollars in manufacturing, a historic figure.

Alberto Bustamante boasted that more than 21% of the value of a car manufactured in the United States comes from domestic manufacturing.

SOURCE: EL ECONOMISTA

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

February 1-7, 2023

POLITICAL AGENDA

• Decent housing: The President highlighted that FOVISSSTE and INFONAVIT are making an effort to offer affordable housing and that they are cleaning up INFONAVIT, which had been affected by corruption. In addition, they are working on an agreement with Banorte to develop apartments in abandoned land in Cuernavaca, and on abandoned land, in Cancun, they plan to build protected areas.

• Veracruz: The president spoke about his position on projects started and not finished and assured that he will only support those that can be completed. He also spoke about investments in Veracruz, including industrial parks, road works, social programs, health, and support for companies such as Cervecera and Nestle. In addition, he mentioned the decision to bring maritime gas from Tuxpan to Coatzacoalcos with the participation of TransCanada. The President also showed his confidence in the Governor of Veracruz and Senator Rocio Nahle, despite her current leave of absence.

• Cargo Decree: The President responded to a journalist who questioned the implementation of the cargo decree at the International Border Airport (AIFA) due to a lack of infrastructure. The president stated that the IATA representative proba-

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

the country and has a storage center with a storage capacity of 500 tons. The cargo terminal has 345,000 square meters and an installed capacity of 443,000 tons per year. There are 20,000 tons available at the strategic bonded warehouse and 12 authorized bonded warehouses with a cargo handling capacity of 423,000 tons by 2023. As of February 13, AIFA will operate with six weekly international cargo frequencies by VivaAerobus and CargoJet and as of March 26, Ethiopian will operate two weekly frequencies from Spain. DHL will also handle all its cargo through AIFA. There are 19 points from EDOMEX and CDMX to reach the airport.

bly does not know about AIFA and that there was an agreement with cargo airlines. The minister of Communications and Transportation added that there was already an agreement with the cargo airlines, and they had even sent a document offering their support. The president asked to speak with the director general of AIFA, who responded that he had given tours to the interim president and that they were ready to receive cargo transportation.

INFRASTRUCTURE

• Felipe Angeles Airport Capacity: The Minister of National Defense has presented a video about the Felipe Angeles International Airport (AIFA). The passenger terminal can carry up to one billion passengers and has 28 contact positions to handle up to 45 aircraft simultaneously. The military air base is the largest and most important in

• Tren Maya: Section 4 of the Tren Maya runs from Izamal, Yucatan to Cancun, Quintana Roo, and will have 3 train stations, 2 stops, 1 maintenance base, and 1 garage workshop. A total of 192 works are being carried out for the feasibility of the project, including road distributors, junctions, pedestrian and vehicular crossings, and drainage works. In Cancun, the works are complemented with a vehicular bridge, an airport distributor, an avenue, and a boulevard. More than 62 thousand jobs have been generated. The construction includes the modernization of 194 kilometers of highway and the construction of 3 stations and 3 stops, generating 13,350 direct jobs. The inauguration of the Mayan Train is scheduled for December 2023.

• Aviation: President Lopez Obrador mentioned that proceedings are underway to recover the category 1 status of the Felipe Angeles International Airport (AIFA) and that there is progress on the issue. He stressed the importance of the airports being managed by the Ministry of Defense and the Navy and that services are improving. Regarding Aeromexico’s flight to Houston, he mentioned that

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

it was a decision of the airline due to its partnership with Delta. It was also mentioned that flights have been increased at AIFA and it was decided that all cargo transportation will go through this airport. He met with DHL, who had already offered to move their cargo to AIFA, and they will soon have a meeting with their executives as recognition to the country and the government.

ECONOMY

• Digital Nomads: Regarding the gentrification that is being experienced in several cities in the country, the president said that in the case of the CDMX the Head of Government is already addressing it. The Federal Government cannot close the door to people who want to come to work, he considers that it is also a recognition of the safety and comfort to live and work in one of the best cities in the world. He pointed out that there are many foreigners seeking Mexican nationality, and he considers that the Ministry of Foreign Affairs will do something about it, since it is noticeable that the prices of the places where these people arrive are increasing, mainly in rents and restaurants.

• Report on the national economy: The President informed that in January 2023, the employment figure increased by 871,059 jobs compared to February 2020, before the pandemic. The peso has appreciated by 7.5% since he took office. Inflation in Mexico is 7.8%, while in the United States it is 6.5%. Food prices have been maintained with the help of industrialists and commercial chains, and action is being taken to combat the shortage with measures such as the free delivery of fertilizers and increased corn production. Fuel prices have decreased compared to previous six-year periods

and the price of export oil has helped to maintain subsidies and control inflation. In addition, public debt is lower compared to 2004, 2010 and 2022.

• Remittances: The president reported that in December 2022, Mexico received $58.497 billion dollars in remittances, which placed it in second place worldwide in remittance receipts after India and ahead of China. Obrador stated that remittances, together with social programs, allow there to be no consumption crisis and that 25 million of the 50 million families in the country have some type of support. This also boosts the overall economy by generating consumption.

INDUSTRY

• Electric cars: The president recognized the governor of San Luis Potosi, as he promoted the arrival of BMW with a factory to build electric cars, the first in the Americas, which represented a large investment.

• Unions: When asked by a journalist about the expiration of union contracts. The President pointed

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

EDUCATION

out that it is a process of democratization, under the new labor reform the workers have to vote for the ownership of the contracts and celebrated the progress that has been made in this matter.

SECURITY

• Security: Admiral Jose Rafael Ojeda, Minister of the Navy, presented the security report. He pointed out that there are 1,500 Navy elements deployed at the Mexico City airport. In relation to the Transisthmian Train, he mentioned that security has been provided in the three sections that are being rehabilitated with 4,900 Navy elements deployed.

ENERGY

• Lithium MX: The President pointed out that lithium belongs to the nation and cannot be privatized; extraction contracts can be made. The regulations are already being worked on and the purpose is that the benefits of the extraction are for the people. That a battery plant is created in Sonora.

• Strike at Colegio de Bachilleres: The president has mentioned that the issue of public education is a priority and that the Ministry of Education and the Ministry of Labor are working on the case of the striking students. In addition, he has mentioned that the scholarships granted by the government have helped to reduce the dropout rate. However, the latest mobilizations and protests of the students have been about the amounts and management of the scholarships. He pledges that in July the situation will be regularized and in the future pensions can only be collected through the Banco del Bienestar, as it is the only one that does not charge commission.

• Possible irregularities in the Ministry of Public Education: the President confirmed knowing a report of the Superior Audit of the Federation about a budget of the Ministry of Education during the time of Delfina Gomez that shows a significant amount of undeclared money, mainly for universities. The Secretariat has already responded indicating that these are transfers managed by decentralized agencies. The president assures that there is no irregularity and explains that budget monitoring by the ASF is usual and does not mean corruption. He reaffirms his confidence in Delfina Gomez and recognizes that, as she is MORENA’s candidate for the elections in the State of Mexico, she will be attacked by the opposition.

NEWS BY STATE

BAJA CALIFORNIA

In order to strengthen efforts to promote the municipality as a location for foreign investment, boost job creation, and provide a space for professional talents, the XXIV City Hall and the Ensenada Economic Promotion Commission (COPREEN) signed a collaboration agreement.

Mario Nicolas Ruanova Morineau, president of COPREEN, mentioned that this agreement will allow the continuity of joint actions for Ensenada’s economic development plan, as well as to improve the communication channels to receive the visit of different business delegations.

SONORA

The government of Sonora announced a public and private investment package for industrial parks in Ciudad Obregon. The investment is made up of 220 million pesos to be deployed during this year, 110 million pesos by the state and the other half contributed by the companies located in the city.

The investment is intended to expand the capacity of the Ciudad de Obregon Industrial Park, where there are currently close to 150 companies that generate 15,000 jobs.

NUEVO LEON

The governor of Nuevo Leon, Samuel Garcia Sepulveda, informed that this year the Foreign Direct Investment (FDI) captured in 2022, which amounted to 4 billion pesos, could double, even reaching 10 billion dollars, maintaining the national leadership in the arrival of foreign investment.

“Nuevo Leon broke records again, we went up from 8% to 8.3% in the national Gross Domestic Product (GDP), also in exports, employment, FDI reached 4 billion dollars, obtaining the first place in the country in 2022,” said Samuel Garcia.

“This year our projections are that being private capital is not in our hands, but we can predict a very good year, we will grow more than double in foreign investment, thanks to the efforts of the Ministry of Economy, the business cluster of Nuevo Leon and the talent of professionals.”

TAMAULIPAS

The lack of rain has affected 93.5% of Tamaulipas, which is why the authorities hastened the implementation of the Water traffic light.

According to information from the Tamaulipas State Water Commission (CEAT), 93.5% of the Tamaulipas territory is currently affected by the lack of rain.

CDMX

The first stage of the photovoltaic plant on the roofs of the Central de Abasto, in Iztapalapa, will result in savings of 3.5 million pesos, informed the capital’s government. The Minister of Economic Development, Fadlala Akabani, explained that the savings correspond to expenses in common areas and other services of the Ceda. “These are savings that correspond to the common areas and other services of the Central de Abasto itself, this corresponds to the first stage. It should also be noted that given the conditions for the installation, the Central de Abasto itself saved 100 million pesos corresponding to waterproofing,” she said. This morning, the head of government, Claudia Sheinbaum, and authorities toured the first stage of the photovoltaic power plant, where she highlighted the importance of the project as part of the clean energy generation plan.

STATE OF MEXICO

Delfina Gomez Alvarez, Morena’s sole pre-candidate for governor of the State of Mexico, leads by 25 points in the most recent poll published on voting intentions conducted by the Center for Strategic Planning and Political Prospective (Ceplan). In the survey, according to Ceplan, Delfina Gomez has 47.1 percent of voting intention of the people of the State of Mexico, while the candidate of the opposition, PRI, PAN, and PRD, Alejandra del Moral Vela, reached 22.4 percent.

INVESTMENT NEWS

CENTRAL MEXICO CLARIOS

The company dedicated to battery manufacturing has made it official that it will begin an expansion and the construction of a new Distribution Center in Celaya, Guanajuato.

BOSCH

On February 3, Bosch Mexico inaugurated an automotive manufacturing plant in the state of Queretaro, which represented an investment of 146 million dollars and is expected to generate around 400 jobs.

BALLUFF

The German company dedicated to the manufacture of sensors and electronics for the automotive sector has confirmed that it will invest 53 million dollars in a new plant in Aguascalientes, which will create 700 new jobs.

PASCUAL COOPERATIVE

The group dedicated to the food sector started the construction of a new plant in Queretaro with an investment of 10 million dollars, this investment will bring 100 direct jobs and 500 indirect jobs.

NORTHWEST GKN AEROSPACE

The British multinational company dedicated to the aerospace industry, with an investment of 10.5 million dollars, celebrated its groundbreaking ceremony in its new operation in Chihuahua.

NATIONAL

KANSAS CITY SOUTHERN

The railroad company informed that this year it expects to make investments of more than 200 million dollars to expand its operations in Mexico, this investment will seek to cover all areas of the company.