Weekly Review I May 10, 2023

GENERAL SITUATION IN MEXICO

Weekly Review I May 10, 2023

RELEVANT NEWS

NEARSHORING ALSO BOOSTS BUSINESS TOURISM

The arrival of companies attracted by nearshoring has triggered not only the demand for industrial space but also the arrival of a greater number of visits from directors, managers and consultants as part of business tourism in cities such as Monterrey, Tijuana, Saltillo, Ciudad Juarez and Mexico City, as well as in the Bajio region.

“Business tourism in Mexico will register strong growth driven by relocation, as companies look to bring manufacturing logistics and the supply chain closer together, which will be a long-term trend,” revealed Erick Brunet, Newmark’s director of transactions.

Tesla’s arrival in Nuevo Leon and nearshoring are a gateway for the development of business and luxury

tourism, said the executive during the panel “Supply and demand in business hotels. In-depth analysis.

Alonso Burgos, vice president of CALA Development at Marriott Hotels; Gustavo de la Serna, director of Business Development LATAM at Wyndham Hotels, as well as Patricio del Portillo, vice president of Development LATAM at Aimbridge, discussed the business opportunities created by the arrival of companies through nearshoring.

This phenomenon, they said, has created new business models that combine corporate, family and leisure spaces, so that office spaces are changing their vocation to residential, hotel, coliving and long stay.

RELEVANT NEWS

Tourism industry experts stated that hotel occupancy will recover and return to pre-pandemic numbers.

Facilities aimed at business tourism are being developed, with a greater incorporation of business centers in hotels and other amenities to offer executives the possibility of traveling with their families and having a space to work, the executives added.

They explained that this type of stay in Mexico lasts two or three weeks, with executives extending their visit for up to months.

“This model is an investment opportunity for those dedicated to corporate real estate and housing, since new apartment buildings are being sought for more residential tourism and to offer long-stay guests, who are looking for a more familiar environment, specific locations where they can have office, lodging, gastronomic and cultural functions”.

To this end, restaurant and food and beverage service spaces are excluded, especially in neighborhoods where there is a gastronomic offer.

“It will undoubtedly be a new form of tourism, so we are looking for an investment profile in a building that can be converted to this type of corporate-tourist offer,” finally agreed the experts in the lodging industry.

“There are several challenges, among which stand out: the development of infrastructure around industrial buildings, the energy issue that continues to be a concern, as the supply is not sufficient, and labor, where Mexico is fortunate because of the demogra-

phic bonus, being one of the few nations that continues to register population increase,” Erick Brunet stressed.

The main real estate sector in Mexico that has seen an increase after the pandemic has been the industrial sector, due to foreign direct investment and nearshoring, he noted.

SOURCE: FORBES MEXICO

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

May 3-9, 2023

POLITICAL AGENDA

• Plan B: Regarding the SCJN’s resolution on Plan B in electoral matters, the federal president pointed out that the Judicial Power “is rotten, it has no remedy”, he referred that the ministers of the Court decided that an Initiative is not valid due to the violation of internal rules that the legislative power, he indicated that there were no such violations, however, in an act of authoritarianism the Court. He mentioned that it is necessary to achieve a qualified majority in the Congress in order to reform the Constitution, he pointed out that this is Plan C. He asked for an “even vote” for the presidential and legislative elections. He announced that, in September, he will send to the Congress of the Union at least three constitutional reforms, one of them so that the people may elect the ministers of the Supreme Court of Justice of the Nation, another one to raise to constitutional rank the support for people with disabilities, among other issues.

• Science and Humanities Law: In the case of the Science and Humanities Law, it was indicated that it is false that CONACYT will be eliminated, since Maria Elena Alvarez Bulla, director of the Council, already clarified that the organization is only being transformed to strengthen its capacities. In ad-

dition, Maria Elena Alvarez Bulla commented that private companies would receive up to 2,667 million pesos to subsidize and magnify their profits under the pretext of innovation. Through CONACYT there were not only deviations for economic purposes, but also political ones. Among them stand out Mario Amparo Casar, Sergio Lopez Ayllon, Mexico Evalua, Mexicanos Unidos Contra la Corrupcion, INAI, INE, and even the SCJN.

• Mining Law: In a press conference, Ana Elizabeth Garcia Vilchis clarified that it is false that the legislative process developed in the closing of the ordinary period of sessions of the Congress of the Union was illegal. Regarding the new Mining Law, it was considered that it does not put the sector at risk, since the reform seeks to guarantee the sustainable exercise of the activity in Mexico, prioritizing indigenous communities and water for human supply.

BILATERAL RELATIONSHIP

• USAID: In the section Who’s Who in Lies, an analysis was presented on the intervention of the U.S. administration through USAID. In this regard, they commented that on May 1st, the newspaper Milenio published that such agency sent to the U.S. Con-

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

gress a fund to manage governance issues, considering that the administration of Andres Manuel Lopez Obrador has affected Non-Governmental Organizations. He pointed out that USAID’s funding of opposition groups is an act of interventionism. For this reason, President Lopez Obrador expressed his regret due to the friendly relations with President Joe Biden, and sent a letter to address this issue, recognizing the work done by Elizabeth Sherwood-Randall, advisor to the U.S. presidency, but denouncing the operation of the U.S. agency.

• United States: The President called on U.S. Republican Party governors and legislators to make a proposal “so that guns are no longer sold in supermarkets”. He said that this would be a good initiative so that there would no longer be shootings. He questioned the anti-immigration measures adopted by the governor of Florida, who is seeking to become a Republican candidate for the U.S. presidency.

• Migration: The Mexican government has been able to establish legal mechanisms so that migrants can arrive in the United States in an orderly, safe and humane manner, preventing them from being victims of insecurity and abuse. Between 2022 and this year, approximately 885,000 work and family reunification visas and permits will be issued to migrants from Central and South American and Caribbean countries. President Lopez Obrador has included these countries in his immigration policy and has promoted working groups with the United States. The Mexican government is investing around $150 million dollars in Central America and the Caribbean, through Sembrando Vida and Jovenes Construyendo el Futuro, to create conditions of stability and solve migration in a structural manner. The president criticizes the fact that so many resources continue to be given to NGOs, as he considers that these associations do not provide support to the people, and promotes programs and direct support with immediate results. In Mexico, migrants are received and cared for, but legal migration procedures must be carried out in their own country.

• Fentanyl: President Lopez Obrador had a meeting with U.S. legislators from both parties, in which they asked Mexico to intervene with the Government of China to stop the shipment of fentanyl. In response, the Chinese Government argued that they do not export this substance, but in case Mexico identified it, they would appreciate the information. Recently, a contaminated container of fentanyl and methamphetamines was detected, and President Lopez Obrador is going to send this information to the Chinese government, reiterating the request. In addition, the President criticized

KEYPOINTS OF PRESIDENT

ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

the manipulation of the U.S. media and some legislators who claim that migrants are the ones trafficking drugs into the U.S., which will be refuted with facts and official information.

• Relationship with the United States: President Andres Manuel Lopez Obrador indicated that the relationship with the government of President Joe Biden is good because it is very respectful of Mexican sovereignty. However, there are certain policies that are very interfering, which is why he appreciates the agreements that have been reached, for example, on immigration matters, as fundamental. In this regard, the U.S. president recognized that the challenge could not be dealt with solely through the use of force; likewise, the U.S. president recognized Hispanics for their contribution to the development of the United States. This has translated into few problems of interventionism during the current administration.

ECONOMY

• Economy: The President noted that Mexico served as the leading economic trading partner of the United States in the first quarter of 2023. He noted that Mexico’s economy is growing at more than 3%. The President added that Mexico is currently one of the countries with the lowest unemployment, and that the Mexican peso is the currency that has strengthened the most against the dollar.

• Remittances: Ricardo Sheffield, Federal Consumer Attorney, indicated that in March 2023, 5,193.8 million dollars in remittances were received, which means 10.68% more than in March 2022 and 24.93% more than in the same period of 2021.

INFRAESTRUCTURE

• Tren Maya: Section 4 of the Tren Maya, which connects Izamal with Cancun, has 90% construction progress, with 120 km of track completed. A total of 62,000 jobs have been created and significant progress has been made in the construction of crosswalks and road distributors. The first convoy will arrive in Mexico on July 8 and the operation of the train will be monitored through the HealthHub system. In terms of archaeological salvage, more than 4,200 pieces of real estate and 570 pieces of movable property have been recovered. The Tren Maya Hotel will be completed in November 2023 and 270 jobs have been generated. The Youth Building the Future Program has invested 4,448 million pesos to benefit 44,699 young people in the area of the Mayan Train. The President emphasized that the project will generate development in the southeast of the country thanks to the tourism that will come to the area and that technical schools are developing careers related to the railroad to offer employment to young people. In addition, it is expected that the Mayan Train will be profitable in 6 years and that it will benefit the inhabitants of the area with special rates. The train infrastructure will also be used to transport cargo and supply fuel to the Yucatan peninsula.

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

• Puebla: The Governor of Puebla thanked President Lopez Obrador for the support received in hospital infrastructure, health, and metropolitan mobility, including the construction of Line 4 BRT, the southern truck station and the new Ejercito de Oriente Road Distributor. Regarding the Agua de Puebla company, which has been abusing the people of Puebla for 10 years, the governor explained that it is a concession granted by the previous administration and that financially it is complicated to take action, but an agreement was reached to avoid increases of more than 4% in the service charge and to commit an investment for the benefit of the metropolitan area.

ENERGY

• Energy: The President mentioned that the energy self-sufficiency policy has allowed Pemex to increase the production of gasoline and gas associated with oil, thus reducing the need for imports. He also highlighted that the costs of purchasing gas from the US have been reduced and surpluses are being sold. Investments have been made to avoid flaring gas into the atmosphere, which has reduced the amount being flared and improved air quality.

HEALTH

• End of the Pandemic: The Undersecretary of Prevention and Health Promotion, Hugo Lopez-Gatell Ramirez, pointed out that last Thursday, May 4, the World Health Organization (WHO) declared the end of the COVID19 pandemic, however, the existence of the disease will remain. In terms of immunity, he said that 95% of the population has a high

level of immunity through vaccines or infection. He emphasized that, given that these characteristics are met, the President has signed a decree declaring the end of the pandemic for COVID-19, which results in the end of several periods of validity established during the emergency. He mentioned that there is a long term management plan with several recommendations among them.

• Strategy against drug use: The Secretary of Education, Leticia Ramirez Amaya, announced the progress of the Strategy in the Classroom for the prevention of drug use in schools, she emphasized that it is a nationwide campaign, she said that the participation of parents is essential. The President, Andres Manuel Lopez Obrador, said that during his call today with the President of the United States, Joe Biden, he will address the issue of the liberalization of the consumption of some drugs, such as marijuana.

• Patria Vaccine: The director of CONACYT announced that the Patria vaccine is ready, which already has all the protocols established by the WHO. This was thanks to the conjunction of public capacities in alliance with private entities such as AVIMEX. This alliance not only makes possible technological sovereignty in vaccines, but also the return of value for Mexico.

NEWS BY STATE

BAJA CALIFORNIA

The leader of the Metropolitan Center for Economic and Business Information, announced that Mexico currently has 50 customs offices authorized for the entry and exit of goods, of which 12 are internal, 17 are maritime and 21 are border. According to the customs located in the border States, a total of 14 million 148 thousand 704 operations were carried out in the year 2022, where Tamaulipas registered the highest percentage of operations with 49.05%, followed by Baja California with 18.83% and a an increase of 2.53% compared to the previous year, in the third position is Chihuahua with 12.66%.

SONORA

President Lopez Obrador announced the construction of a natural gas liquefaction plant that will be established in Puerto Libertad and that will connect with a new gas pipeline that will be built from the United States to that community,” said the Governor of Sonora. The plan consists of an investment that will be around between 12 thousand and 18 billion dollars.

NUEVO LEON

Last week, the Governor Samuel Garcia Sepulveda visited Los Angeles, California to participate in the Milken Institute event, which brings together the most important investment funds. During his visit to California, he also held meeting with executives from companies such as Mattel and Tesla.

The Governor pointed out that, during the January-April period of this year, 22 companies have confirmed investment projects whose value amounts to six billion 240 million dollars and of which 15 are new investments and seven are expansions.

These are projects in sectors such as automotive, manufacturing in general, IT and software, services, home appliances, among others, and the predominant countries are: South Korea, Germany, France, China, the United States and others.

CHIHUAHUA

The average daily wage (SDP) amounted to 540.02 pesos in the state of Chihuahua at the end of April 2023, registering a growth of 13% in one year, which placed the state in seventh place in the country, according to the Center for Economic and Social Information (CIES).

By regions, Ciudad Juarez is the municipality with the highest average daily salary, reaching 593.59 pesos; followed by Chihuahua with 515.76 pesos per day, and Cuauhtemoc with 453.03 pesos. In fourth place is Parral with a salary of 439.87 pesos; then Nuevo Casas Grandes with 400.74 pesos; and Delicias with 384.03 pesos.

SOURCE: MILENIO, HERALDO DE CHIHUAHUA

COAHUILA

The head of the Secretariat of Economy of Coahuila, Claudio Bres Garza, said that the government headed by Miguel Angel Riquelme Solis is confident that by the end of this month of May, after the first five months of 2023, a total of 36 investments will have been made in the state, including both new companies and the expansion of others already in operation.

Claudio Bres Garza indicated that fortunately there is a great diversity of industrial parks to satisfy the demand of space that these companies will bring with them and indicated that in the three municipalities of the Southeast Region, there are around 14 warehouses under construction at the moment.

TAMAULIPAS

Among the main objectives of Council of Business Institutions of Southern Tamaulipas (CIEST) for this year, is to encourage the arrival of new investments and promote growth among the more than 12,500 businesses that they represent in the region.

In addition, there is a work plan that addresses various businessmen’s problems, such as the guarantee of a correct water supply, health issues, infrastructure improvement and the consolidation of a permanent tourist attraction program.

Among the projects that are expected to be implemented in the short term are the management and approach to public and private organisms to reinforce the strategies of access to water, the development of a regional brand, tourist spots and the promotion of a new highway to speed up the routes between the cities of Tampico and Monterrey.

SOURCE: HERALDO DE SALTILLO, MEXICO INDUSTRY

GUANAJUATO

According to the Quarterly Indicator of State Economic Activity (ITAEE) published by INEGI, Mexico, “¿Como vamos?” Guanajuato had an economic growth of 5.1%. This places it in eighth place nationally among the states that exceeded the annual target in the last quarter of 2022.

In the fourth quarter of 2022, 10 states exceeded the annual economic growth target of 4.5%. Figures are considered with annual rates for the same period of 2021.

The governor of San Luis Potosi, Ricardo Gallardo Cardona, with the aim of expanding its global reach and boosting the development of San Luis, announced that through the Secretariat of Economic Development (Sedeco), is working on a new trade mission, now to the Asian continent.

The president said that part of his objective is to strengthen the promotion of the state and promote new economic models of sustainable industrial development in balance with the environment, which detonate growth and dynamism in favor of the families of San Luis Potosi.

He said that the goal is to visit and learn about the industrial processes of Japanese companies; however, the details continue to be perfected in order to optimize times and reach the greatest number of companies.

The secretary mentioned that San Luis Potosi, today more than ever, is showing signs of being an important destination for investment, but it is equally important to maintain the best relationship and follow up with the entrepreneurs whose industry and businesses already operate in San Luis Potosi.

SAN LUIS POTOSI

AGUASCALIENTES

Aguascalientes will host the North America Automotive B2B Meeting, a business meeting that will bring together the most important buyers and suppliers of the automotive industry in Mexico, Canada and the United States.

The president of the Mexican Industry Supply Chain (Capim), Rene Mendoza, pointed out that the event will be held on November 29 and 30 of this year

with the participation of 1,200 supplier companies and around 120 large buyers of all levels.

He added that there will also be delegations from Japan and South Korea, which will showcase the main technological advances in the sector.

SOURCE: El Economista

CDMX

As part of the strategy for the private sector to implement mitigation measures in Mexico City, the head of Government, Claudia Sheinbaum Pardo, announced the arrival of 17 new electric trolleybuses. In a press conference, she explained that due to the latest modifications made to Mexico City’s Urban Development Law, the latest real estate projects have already implemented mitigation measures to improve services for citizens. In this sense, he indicated that these new units are part of the consideration that the company Grupo MIRA granted to the capital’s government for the mitigation works of the “Neuchatel” development, located in Rio San Joaquin, in the municipality of Miguel Hidalgo. According to Sheinbaum Pardo, this sum seeks to meet the goal of having 500 trolleybuses operating in Mexico City.

STATE OF MEXICO

Delfina Gomez, candidate for the governorship of the State of Mexico for Morena, PT and PVEM, participated in a “Citizen Dialogue Meeting” organized by the Confederacion Patronal de la Republica Mexicana (Coparmex). During the event, she received proposals from businessmen and civil society on issues such as corruption, security, gender violence, mobility, economic development and attention to vulnerable groups. Gomez proposed the implementation of attention and follow-up tables to solve the inefficiency of public ministries and to expand the Gender Police in the 125 municipalities to address the problem of gender violence and femicides. He also proposed the digitalization of the government and the creation of a Citizen Transparency Committee to fight corruption and attract investment to the entity. Regarding the inclusion of people with disabilities, she proposed to make them visible and take into account their situation in areas such as health, education, employment, mobility and sports. Gomez presented herself as a demanding woman and spoke about what she likes most and least about the State of Mexico. She was accompanied by leaders of Morena, PT and PVEM, as well as representatives of Coparmex and UVM.

SOURCE: EL ECONOMISTA, MILENIO

INVESTMENT NEWS

NORTHWEST PACIFIC LIMIT

The US company Pacific limit plans to invest approximately $14 billion in a construction of a gas pipeline and liquefaction plant in Sonora, as announced by the Mexican President Andres Manuel Lopez Obrador

NORTHEAST

GRUPO GP

Grupo GP inaugurated its new industrial park ‘Pocket Park Norte’ in García, Nuevo León with a $250 million investment. The park is expected to create up to 5,000 direct jobs and 10,000 indirect jobs.

PARK OHIO

Park Ohio’s Plant 4 in Ciudad Acuña, Coahuila, was inaugurated with a $12 million investment, producing 81 tons of mixed rubber per year and generating over a thousand direct jobs.

SOFTYS

Mexican company SOFTYS is expanding in Northeast Mexico with the acquisition of Onex, a company specializing in health and hygiene like them, for $304 million. The acquisition is expected to create over 1,000 jobs.

BORGWARNER

BorgWarner has celebrated the expansion of its plant in Saltillo, Coahuila with a $47 million investment to boost the manufacturing of electrified components for the automotive industry. The expansion is expected to create over 450 jobs.

CENTRAL MEXICO

EPIROC

Swedish company Epiroc is expanding its operations in Caleras, Zacatecas with a $5 million investment, creating 100 new jobs. The company specializes in the manufacturing of equipment and machinery for mining and construction.

SCHUNK

German company SCHUNK is investing over 8 million dollars in a new plant in San Cristobal, Queretáro The company specializes in manufacturing tool holders and stationary clamping systems, gripping technology, automation technology, and depaneling machines.

SOURCES: CLUSTER INDUSTRIAL, MEXICO INDUSTRY