Weekly Review I March 29, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I March 29, 2023

RELEVANT NEWS

TESLA INVESTMENT WILL DRIVE 50-YEAR GROWTH IN NORTHERN MEXICO

The investment that Tesla will make in Santa Catarina, in the north of Mexico, will represent five times more than the one that arrived in that municipality in the last decade and a 50-year leap in one single year, affirmed Mayor Jesus Nava.

In an interview with EFE, the municipal president spoke of what the installation of the electric car assembly plant in his territory, which is adjacent to Monterrey, the capital of the northern state of Nuevo Leon, represents.

“In the last 10 years, we have had a statistical growth of around 2 billion dollars in investment; Tesla in a single year will bring five times what it has brought to Santa Catarina in the last 10 years,” he said.

Nava mentioned that Tesla will force the municipality to “run” close to 50 years in one.

“Then there has to be a very balanced growth with access to housing, to services, with access to commerce, with access to health, public spaces, to security, to public transportation,” he indicated.

On March 1, Tesla CEO Elon Musk confirmed the installation of a mega-factory of the electric car assembly plant in Nuevo Leon, during the celebration of the “Investor Day 2023”, held in Austin (USA).

The municipal president specified that 95% of Santa Catarina’s territory is a protected natural area, so the growth that Tesla will detonate will have to be very balanced.

RELEVANT NEWS

For that, he said, that there is already an Urban Development Plan that considers this electric car project.

“So we have 5% of the city’s territory, developable, of which 60% is already developed, 40% is missing, which is where Tesla is going to be installed,” explained Nava.

He commented that around Tesla, in this 40% that remains to be developed, there has to be a very disciplined growth.

“How it (orderly development) is going to be achieved is through the Urban Development Plan. With the Urban Development Plan we are going to define very well the zones of housing, service, commercial, industrial growth and also with a mobility and accessibility plan,” he detailed.

Nava assured that the comprehensive plan is already prepared, so everything around the arrival of Tesla’s electric car factory in northern Mexico is planned. TESLA WILL ACCELERATE THE MARKET.

The mayor also commented that an investment of this size represents many challenges.

“Any city in the world feels fortunate to have an investment like Tesla; however, there are many challenges to address with an investment like this,” he said.

Elon Musk’s company is expected to make an initial investment of US$5 billion and generate between 35,000 and 40,000 formal jobs, according to what Nuevo Leon Governor Samuel Garcia has stated.

“We are sometimes victims of our own success and sometimes we are also victims of world politics. This policy promoted by the United States: the “nearshoring” (relocation of chains) that pushes these global companies to come and set up in Mexico or install part of their manufacturing chain in Mexico,” Nava said.

The mayor added that Tesla is coming to accelerate the markets and estimated that the installation of supply companies will increase throughout Nuevo Leon.

In the last few months alone, Vertiv, a storage technology manufacturer, Noah Itech, which produces automation equipment, and Automotive Components International (IAC), an automotive plastics maquiladora, have arrived in Santa Catarina.

SOURCE: FORBES MEXICO

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

March 22 – 28, 2023

POLITICAL AGENDA

• Plan B Electoral: In view of the decision of a minister of the Supreme Court of Justice to suspend Plan B Electoral and the announcement of the Legal Counsel of the Federal Government to challenge such suspension, President Andres Manuel Lopez Obrador commented that the minister overstepped his authority by becoming in fact a legislative power. He considered that the important thing is to know why they are acting in this way, since this is not a legal issue, but a political and also a commercial one, because what they do not want is that the salaries of INE’s high officials be reduced. He recalled that the Constitution establishes that no one can earn more than the President and the ministers exceed him. He expressed that there is a Plan C, which would consist of not voting for the conservative block so that the transformation of the country continues, which was already implemented in 2018. He emphasized that the transformation has been taking place with respect for the Rule of Law.

• Banning of Tik Tok: Regarding the determinations of some foreign governments to totally and partially ban this social network, the President mentioned that in Mexico it will not be banned, the freedom of manifestation of ideas will be guaranteed.

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

of Justice of the Nation is a lie, since the owner of the newspaper is upset by the cancellation of a loan granted to him during the time of the former Secretary of the Interior, Miguel Angel Osorio Chong, for 100 million dollars.

ECONOMY

• Tour with Larry Fink: The President informed that Larry Fink, CEO of BlackRock, accepted the invitation to tour the Southeast of Mexico, with the date to be confirmed.

• Osorio Chong: He stated that the change in the coordination of the PRI’s parliamentary group in the Senate of the Republic is a Party matter, where his government has no interference.

• Judicial Power of the Federation: The President of Mexico reiterated the need for a reform in the Judicial Power of the Federation due to corruption and the tendency to protect power groups in its structure. He stated that the reform is not easy and that forums must be held within the Judicial Power to carry it out. In addition, he denounced that the survey published by the newspaper El Financiero on the acceptance of the Supreme Court

• Commercial banking commissions: The President pledged that during his administration the legislation will not be changed, he recalled that at the beginning of his term he made a commitment not to change the rules for the banking system and in a second moment, nothing can be approved in the legislature due to a blockade by opposition legislators. However, with the current legal framework and through the National Banking and Securities Commission (CNBV), they will fight against abuses in commercial banking, such as the excessive charging of interest.

HEALTH

• Health: Undersecretary of Health Hugo Lopez-Gatell recognized Argentina for its ban on the marketing of tobacco products, vapes and electronic cigarettes. He also reported that COVID-19 cases continue to decline and hospital capacity remains stable. The continuation of vaccination for children from 5 to 12 years of age was also mentioned. IMSS Director Zoe Robledo highlighted the progress of the IMSS-Bienestar program in several Mexican states, including coverage, improved infrastructure, supply of medicines and new hires of Cuban specialists and doctors.

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

• Campaign against drugs: The Secretary of Education, Leticia Ramirez Amaya, presented the campaign “If you do drugs, you harm yourself” which is being promoted against addictions, focused on secondary and high school students. She presented a triptych and a video capsule with information about fentanyl, with the objective of educating teachers and students about the risks of this drug. The President reiterated the importance of disseminating the harm caused by synthetic drugs, especially fentanyl. He regretted the situation in the United States due to its high levels of mortality caused by this substance. He assured that in Mexico, drug consumption has not increased alarmingly and is focused in certain areas of some states.

INTERNATIONAL

• Peru Situation: President Lopez Obrador mentioned that he had a good meeting with Pedro Castillo’s lawyer, highlighting that they acted outside the law and there are no grounds for their imprisonment. The lawyer has evidence that the Peruvian Congress exceeded its powers. The president pointed out that since Pedro Castillo became president there has been harassment due to economic and social interests.

SECURITY

• Report on security in the country: During the conference, the President highlighted the reduction of crime during his mandate due to the fight against corruption and the attention to the causes of violence. The Secretary of the Navy reported on the collection and participation in activities to guarantee the security of the Isthmus of Tehuantepec

Train and the transfer of vaccines. The Secretary of Security and Citizen Protection reported on the increase in crimes with firearms and the reduction in the theft of motor vehicles and hydrocarbons. He also highlighted the success of the Regularization of Vehicles of Foreign Origin program.

• Military Intelligence: The President pointed out that the Mexican Government does not use the PEGASUS software, he committed to deliver the information on the work done by the National Intelligence Center. He explained that the intelligence work performed by SEDENA is done legally and with judicial authorization. He explained that Pegasus is a brand name and there are equivalent systems everywhere, which carry out the same functions of the listening system. He accused that the information coming from “Guacamaya Leaks” is information obtained illegally and financed by Claudio X. Gonzalez’s group and international agencies to generate instability in the country.

BILATERAL RELATIONS

• Relations with the United States: Several issues related to security and the fight against crime in Mexico were discussed during the conference. The President highlighted the reduction in crime during

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

his term in office and noted that this is due to the fight against corruption and attention to the causes of violence. The Secretaries of the Navy and National Defense reported on the activities they are carrying out to guarantee security in the Isthmus of Tehuantepec Train, the transfer of vaccines and the fight against fuel theft. The Secretary of Security and Citizen Protection highlighted the increase in crimes involving firearms and the reduction in the theft of motor vehicles and hydrocarbons. She also highlighted the success of the program for the Regularization of Vehicles of Foreign Origin.

• Meeting with John Kerry: The Mexican President reported on his meeting with U.S. Climate Envoy John Kerry, and mentioned that they discussed Plan Sonora and the expansion of solar plants from Peñasco to other sites in Sonora. Also discussed was the comprehensive renewable energy plan which includes water-fired power plants, hydroelectric plants and the goal of producing 35% of all energy with renewable energy processes by 2024. The main objective of these actions is to avoid an increase in the price of electricity. In addition, the importance of the automotive industry and the natural resources that Sonora offers, such as lithium and copper, were mentioned.

ENVIRONMENT

• Water Crisis: In response to a specific question about the water pressure in the Cutzamala system, the President stated that the Secretary of National Defense has carried out exploration and drilling of water wells around the Felipe Angeles Airport. Work is currently underway with CONAGUA to connect the wells to the rest of Mexico City. Sec-

retary Sandoval added that SEDENA will begin an operation to “bomb clouds” and facilitate rainfall in the Valley of Mexico area. Mexico City’s Chief of Government, Claudia Sheinbaum, is working to address the problem.

• Constellation Brands plant: When asked about the extension of the withdrawal time of the Constellation Brands plant and its scope, Maria Luisa Albores Gonzalez, head of Semarnat, responded that they requested an extension of 12 months and it was only granted for 6 months. The purpose is that during this time all its infrastructure can be taken to the port of Veracruz where they will be installed. For his part, the president mentioned that the company accepted the result of the consultation, they acquired a piece of land near the port, expressing that they behaved very well. He pointed out that to a certain extent they were deceived by the previous administrations by granting permission when there was no water available and the people of Mexicali protested. Because of this they spoke with the owners, who accepted the move where there is water and they also have the possibility of exporting the beer.

• Pig farms in Merida: Regarding the studies and the effects on the water that occurred in Mérida due to the pig farms, María Luisa Albores González explained that an environmental study diagnosis was carried out and they are working with the local government in a technical round table to achieve a homogenization of a real diagnosis. She expressed that they have already identified municipalities where there are red hot spots where they cannot have more pigs and where it is necessary to reduce the number of pigs in the farms.

NEWS BY STATE

BAJA CALIFORNIA

Exports of the Maquiladora Industry in Mexicali increased 46% at an annual rate during January 2023 compared to the same period in 2022, according to figures from the National Institute of Statistics and Geography (INEGI). Exports from the city’s maquiladora sector reached an amount of 5 thousand 237.6 million pesos, the highest volume for the month of January since INEGI has registered. Mexicali participates with 20% of the total income from abroad for the Baja California Maquiladora Industry.

SONORA

The two industrial parks that are planned to be built in Cajeme this year; Skybridge and Santa Rita, which will be located to the south of the municipality, will have at least 74 new companies, mentioned the Secretary of Economic Development of Cajeme. He stated that Santa Rita will have at least 32 warehouses of 5,000 square meters on a 75-hectare property. In Sky Bridge, 22 warehouses of 10,000 square meters will be built, of which the construction of two has already begun, which they estimate will be in operation in no more than six months, he indicated. He added that it seeks to build at least five industrial parks, in various sectors of the municipality, in order to detonate the region’s economy and attract high-tech industries with good-level jobs.

SOURCE: MONITOREO ECONOMICO, EL IMPARCIAL

NUEVO LEON

The governor of Nuevo Leon, Samuel Garcia Sepulveda indicated that after Tesla’s investment announcement and the federal government’s subscription, more than 30 to 40 first and second-level suppliers (Tier 1 and Tier 2) are arriving.

COAHUILA

So far in the current state Administration, 204 investment projects have been concentrated in Coahuila -whose value amounts to more than 10 thousand 850 million dollars-, and 103 correspond to the automotive industry.

SOURCE: EL ECONOMISTA, VANGUARDIA

QUERETARO

Automotive companies in the state have joined the Circular Economy System (SEC), which is being developed by the private sector in conjunction with the state government, in order to make their processes more sustainable. The state system involves 154 companies from various sectors, including companies from the automotive sector, one of the pillars of the state’s manufacturing activity The President of the Queretaro Automotive Cluster, Renato Villaseñor Mendoza, highlighted that with the implementation of circularity projects, companies have strengthened their organizations, a phenomenon that can be seen both in the automotive companies and in the rest of the participants.

GUANAJUATO

Of the 17 investment projects that Guanajuato is negotiating during this six-year term, one of them could come from the Netherlands. Companies based in this region of Europe are considering investing in the Bajio. “We have detected interest from the household appliance and automotive companies that have been prospecting Guanajuato and the Bajio area”. This was stated by the Secretariat of Economic and Sustainable Development of Guanajuato (SDES) in an informative card delivered to this media. At least 20 companies from the Netherlands have stopped considering China and Asia as a manufacturing center and are considering investing in the Bajio, said Forbes in an interview with Steven Büter, general manager of the Business Office of the Embassy of the Netherlands in Mexico.

SAN LUIS POTOSI

San Luis Potosi promotes and joins the common block to generate synergy with the states of Mexico in favor of growth, dynamism, and development, according to Juan Carlos Valladares, head of the state’s Secretariat of Economic Development (SEDECO). In this sense, during the meeting of the members of the Mexican Association of Secretaries of Economic Development (AMSDE), he specified that the nearshoring effect is a very interesting example of how the country -if the right conditions are created- can attract capital, companies, and detonate the generation of employment, thus boosting development.

CDMX

The Congress of Mexico City approved reforms to the Law on the Right to Access, Disposal, and Sanitation of Water, through which the Digital Agency for Public Innovation (ADIP) and the Water System of the capital will develop a platform for the online processing of water feasibility reports according to the established polygons. According to the initiative presented by the head of government, Claudia Sheinbaum Pardo, and approved this Wednesday in general, the objective is to digitalize and simplify existing procedures before the Water System of the capital.

STATE OF MEXICO:

Despite having more than 16 million inhabitants and thus being the most populated entity in the country, the State of Mexico only had 13 water treatment plants in operation as of 2020, far below Sinaloa, Mexico City, and Tabasco, which had 140, 45 and 39 plants, respectively. This is based on information published by the National Institute of Statistics and Geography (INEGI) in the Drinking Water and Sanitation Module of the National Census of Municipal Governments and Territorial Districts of Mexico City (CNGMD) 2021, on the occasion of World Water Day, which will be commemorated on March 22.

SOURCE: EL ECONOMISTA, EL SOL DE TOLUCA

INVESTMENT NEWS

NORTHWEST MACQUARIE

A Mexican infrastructure company has announced a 175-million-dollar expansion project in Chihuahua where over 10 industrial plants will be built, creating over 10,000 new job opportunities during this process.

SKY BRIDGE DEVELOPMENTS

American company dedicated to the development of industrial factories has just started the construction of one of its new projects in Ciudad Obregon, Sonora. This project comes with an investment of 12 million dollars.

NORTHEAST

NOVA STEEL

Nova Steel, a Mexican-based steel company has invested 37 million dollars to expand its steel operations in Ramos Arizpe, Coahuila, creating 80 new job opportunities.

NYX

NYX, the American company dedicated to the plastic business,, has invested 10 million dollars to open a manufacturing facility in Arteaga, Coahuila, creating 600 new job opportunities in the region

XIGNUX

Xignux, a local company dedicated to providing wiring for the automotive industry founded in Nuevo Leon has announced its plans to keep investing in Nuevo Leon due to the Tesla presence.

CENTRAL MEXICO BOSCH

Bosch, a German engineering and technology company, has announced a 240-million-dollar expansion project in Mexico, creating 400 new job opportunities in Aguascalientes.

LAYER 9

Layer 9, a U.S. technology company dedicated to data storage has announced an 800-million-dollar expansion project in Guanajuato, creating 2500 new job opportunities and promoting Mexico’s potential in the data industry.

SOURCE: CLUSTER INDUSTRIAL, MEXICO INDUSTRY, EL FINANCIERO, STATE GOVERNMENT GUANAJUATO, LA POLITICA ONLINE, EL DIARIO MX