Weekly Review I June 19, 2024

GENERAL SITUATION IN MEXICO

Weekly Review I June 19, 2024

RELEVANT NEWS INDUSTRIES

AUTOMOTIVE

Key developments in the automotive sector:

• Biden’s Auto-Emissions Rules: The Biden administration’s revised auto-emissions regulations, aiming for a slower transition to electric vehicles (EVs) with a focus on gas-electric hybrids, have raised concerns about future pollution levels.

• EU Tariffs on Chinese EVs: The EU plans to impose tariffs up to 38.1% on Chinese electric vehicle imports, citing unfair subsidies benefiting Chinese manufacturers and their impact on the European automotive industry.

• Mexico’s Automotive Modernization: President-elect Claudia Sheinbaum aims to modernize Mexico’s automotive sector, focusing on infrastructure upgrades, attracting foreign investment, and promoting sustainability and innovation.

• Expansion of EV Production in Mexico: GM, BMW, and Nissan are expanding their electric vehicle production capacities in Mexico to meet increasing market demands and adapt to shifts towards electromobility.

• Ford’s Production Milestone: Ford’s Hermosillo plant achieved a milestone with the production of its 7 millionth vehicle, a blue Ford Bronco Sport, highlighting its significant manufacturing capabilities and ongoing contributions to the automotive industry.

SOURCE: MEXICO BUSINESS NEWS

RELEVANT NEWS

BUSINESS CHAMBERS

AMCHAM

AmCham Mexico, after consulting with 45 economic and sustainable experts, aims to enhance Mexico’s investment climate and regional value chains, particularly in semiconductors through nearshoring. The organization emphasizes sustainability, economic development, investment trends, and optimal business environments. They advocate for leveraging Mexico’s strategic advantages like location and talent, citing the need to manage increased electricity demand sustainably. AmCham underscores the importance of innovation and comprehensive security strategies to mitigate risks and foster robust regional growth over the next decade.

SOURCE: EL ECONOMISTA

Index Nuevo Leon, through its Information Technology Committee, is organizing the Technology Summits in Manufacturing event on June 20 at Club Industrial in San Pedro Garza Garcia, Nuevo Leon. The event aims to inform attendees about current manufacturing sector trends, emphasizing opportunities in nearshoring. Topics include artificial intelligence and cybersecurity. Speakers from IDC Latin America and Jeff Winter from Hitachi Solutions America will present on infrastructure needs and strategic insights. Sponsors like Dell, Zebra Technologies, and Juniper Networks will showcase technological advancements enhancing manufacturing processes.

SOURCE: MEXICO INDUSTRY

INDEX NUEVO LEON

NEWS BY STATE

SONORA

Ford has launched a Pilot Plan to ship vehicles manufactured in Hermosillo through the Port of Guaymas, replacing land transport with maritime transport to Lazaro Cardenas, Michoacan. This shift follows the port’s recent expansion and renovation, allowing it to accommodate large cargo ships. The decision aims to lower operational costs and mitigate risks associated with road transport. Governor Durazo Montaño highlighted that this move enhances Sonora’s economic development, underscoring the benefits of port infrastructure investments. The modernization of Guaymas port is seen as pivotal for fostering eco-friendly international trade logistics between North America and Southeast Asia.

SOURCE: MEXICO BUSINESS NEWS

BAJA CALIFORNIA

Baja California captured over a billion dollars in FDI during the 1st quarter. In the first quarter of 2024, Mexico attracted $20.31 billion in foreign direct investment (FDI). Mexico City led with 59.29% of the total, followed by Nuevo Leon at 6.65%. Baja California secured 5.33%, marking a significant increase from the previous quarter. In the northern border region, investments totaled $3.29 billion, with Nuevo Leon, Baja California, and Chihuahua taking the top spots. Baja California specifically received $1.08 billion in FDI, a 277.29% rise from the previous quarter, mainly in manufacturing (79.76%), notably transport equipment. Japan was the largest investor in the state at 60.14%, followed by the United States at 23.01%, while the Netherlands and the United Kingdom saw disinvestment.

SOURCE: INDUSTRIAL NEWS BC

NEWS BY STATE

NUEVO LEON

The Ministry of Economy announced Mexico’s involvement in the H2 Twin Cities program, part of the Clean Energy Ministerial and supported by the U.S. DOE through the State Agency of Renewable Energies led by Eduardo Sanchez. This initiative connects cities at different stages of hydrogen adoption to foster global infrastructure and technology transfer. Houston mentors Nuevo Leon in this edition, aiming to advance a green hydrogen industry. The collaboration underscores Nuevo Leon’s commitment to sustainability and innovation in clean energy, with a focus on feasibility studies, investment attraction, and skills development.

SOURCE: CLUSTER INDUSTRIAL

NEWS BY STATE

CHIHUAHUA

Several corporations, predominantly in electronics, electrical, automotive, and service sectors, are set to establish themselves in Chihuahua this year, with a significant focus on Ciudad Juarez. According to Sergio Colin Chavez of Index Juarez, this influx is expected to spur substantial job growth in the manufacturing sector, particularly in Ciudad Juarez. The majority of these incoming companies originate from Asia, indicating a positive economic impact with potentially thousands of new jobs created in the state.

SOURCE: EL HERALDO DE JUAREZ

TAMAULIPAS

Tamaulipas showcased its competitive advantages to French entrepreneurs from the Franco-Mexican Chamber of Commerce and Industry (CCI) during a meeting with the State Ministry of Economy. They discussed the state’s robust maritime, land, and air infrastructure supporting global trade, professional development opportunities for competitive work environments, basic service availability, and plans for operational enhancements across industries. The French delegation, led by key figures including the Consul General of France in Monterrey, explored investment opportunities and toured ports in Tampico and Altamira. Collaboration was agreed upon to pursue future investments in Tamaulipas, reinforcing its appeal as a fertile ground for business expansion and new operations.

SOURCE: MEXICO INDUSTRY

NEWS BY STATE

SAN LUIS POTOSI

Governor Ricardo Gallardo Cardona of San Luis Potosi will undertake a commercial tour of West Asia to promote the state’s competitive advantages and attract foreign investment. The tour includes visits to Qatar, Armenia, and Abu Dhabi, focusing on fostering bilateral cooperation and exploring opportunities for economic, educational, and cultural exchange. San Luis Potosi’s strategic location is highlighted as conducive to new business ventures, and the tour aims to enhance ties and promote the state as an attractive investment destination.

SOURCE: MEXICO INDUSTRY

JALISCO

Gettel, a leading Chinese company in advanced plastics production, will invest $80 million to start operations in Jalisco, Mexico. Initially creating 130 jobs, the company plans to begin operations in March 2025 at the Jalisco Logistics Center, with potential to expand to 400 jobs in subsequent phases. Gettel specializes in biaxially oriented polypropylene (BOPP) films and currently operates globally, supplying products to numerous countries across Asia, Europe, and America, serving sectors including food, consumer goods, solar panels, and chemicals. The investment highlights Jalisco’s attractiveness for foreign investment and its support for economic development.

SOURCE: MEXICO INDUSTRY

NEWS BY STATE

GUANAJUATO

Monex, a leading Mexican company in the foreign exchange and international payments market with over 38 years of experience in the financial sector, inaugurates its new branch in Guanajuato Puerto Interior (GPI). The offices offer high-quality financial products and reliable services to clients in Mexico and abroad.

The opening in the heart of the Bajio region aims to support businesses in capitalizing on the continuous Foreign Direct Investment (FDI) flowing into Guanajuato. Mexico is one of the countries benefiting most from Nearshoring, and this phenomenon is expected to continue over the next five years due to favorable conditions such as strong economic and political stability, rule of law, and security, among others.

SOURCE: CLUSTER INDUSTRIAL

NEWS BY STATE

CDMX

Mexico City is a top economic player aiming to capitalize on the nearshoring trend by collaborating with the State of Mexico and Hidalgo due to its own land limitations for industrial facilities. Fadlala Akabani, head of Mexico City’s Secretariat of Economic Development, highlights that while the city leads in Foreign Direct Investment (FDI), capturing 59% of the national total in the first quarter, it needs targeted policies to attract diverse investments beyond its strong financial and service sectors. Efforts include revitalizing Vallejo’s industrial area with a MXN 1.2 billion investment, reducing its unemployment rate to 1.2%, and forming clusters with neighboring states to attract companies like the Chinese firm BYD. This regional cooperation offers competitive advantages over other parts of Mexico.

SOURCE: EXPANSION

STATE OF MEXICO

During the first eight months of Delfina Gomez’s administration in the State of Mexico, 68,465 formal jobs were created in the private sector, the highest number recorded in 27 years. In a previous meeting with business leaders, Delfina Gomez assured that her administration is committed to facilitating the development of companies that strengthen job creation in the state. According to the Secretariat of Economic Development, the State of Mexico has the highest number of new formal jobs in the country, contributing 19.4% of the national total. The jobs created are mainly in the sectors of services, transportation and communications, commerce, social and community services, among others.

SOURCE: EXCELSIOR

INVESTMENT NEWS

PRODENSA CONGRATULATES DOOSAN BOBCAT ON THEIR GROUNDBREAKING CEREMONY FOR ITS NEW PLANT IN NUEVO LEON

Salinas Victoria, Mexico - June 13, 2024

Prodensa, a leading global consulting firm specializing in business expansion and workforce solutions, is pleased to congratulate our esteemed client, Doosan Bobcat, on the exciting milestone of laying the foundational stone today for what will be their new plant in the municipality of Salinas Victoria, Nuevo Leon.

Strategically located in the Interpuerto Monterrey Industrial Park, this project will represent a significant investment of 300 million dollars. It is expected that the plant will be fully completed in two years and will begin operations in early 2026. The facility will be dedicated to the production of compact loaders from the Bobcat M series and is projected to generate over 500 new jobs, thus strengthening the local business fabric and economy.

Scott Park, CEO and Vice President of Doosan Bobcat, emphasized the strategic importance of these new investments for the company: “We have witnessed significant growth across all our business segments, and this new plant is a crucial step in our long-term plans to increase production and meet the growing demand of our customers.”

The groundbreaking event was attended by distinguished state and local authorities, as well as prominent business leaders, including Samuel Garcia, Governor of the State of Nuevo Leon; Emilio Cadena, CEO of Prodensa; Scott Park, CEO and Vice President of Doosan Bobcat; Jeongwon Park, CEO and Chairman of Doosan

Group; Mike Ballweber, President of Doosan Bobcat North America; Ivan Rivas Rodriguez, State Secretary of Economy; Emmanuel Loo, Undersecretary of Investment; Mauricio Garza Kalifa, CEO of Interpuerto Monterrey; Luisa Ortega, Secretary of the Municipality of Salinas Victoria; and Jose Ma. Garza, President of Grupo GP.

This collaboration underscores Prodensa’s commitment to fostering investment, job creation, and economic growth in Mexico’s industrial landscape. For press inquiries or further information, please contact Andrea Nuñez (aanunez@prodensa.com).

SOURCE: PRODENSA

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S

MORNING

PRESS CONFERENCE

JUNE 12 - 18, 2024

JUDICIAL POWER

• AMLO’s Judicial Reform: Ana Elizabeth Garcia Vilchis, Director of Social Media for the Presidential Spokesperson’s Office, detailed the proposed judicial reform, which includes the popular election of Supreme Court justices, reducing the number of justices from 11 to 9, and eliminating chambers to avoid redundancy and bureaucracy. The reform also seeks to prevent judges from suspending laws with general effects, set deadlines of 6 months for tax matters and 1 year for criminal matters, and call for an extraordinary election in 2025 to renew all judicial positions. President Lopez Obrador emphasized that the reform will proceed and urged legislators to act as true representatives of the people and ensure accountability. He also mentioned that he aims to cleanse the Judiciary of corruption by having judges, magistrates, and justices elected by the people, preventing them from owing their positions to powerful interest groups. The president clarified that, contrary to what has been reported, those who occupy the positions must be academically qualified.

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

LEGISLATIVE

• Package of Presidential Reforms: President Lopez Obrador stated that the entire package of proposed reforms, including reducing working hours and indigenous consultation, will not progress in September. However, other legislative projects with similar goals are more advanced. He identified five key projects: preventing re-election, social programs for women aged 60 to 64, scholarships for young people, and reforms of the ISSSTE and the Judiciary. Regarding the ISSSTE reform, he mentioned a 2020 reform that increased the pension fund for state workers by reducing commission fees, saving over MXN 40 billion so far, with expected savings of MXN 160 billion by 2030. Starting July 1, the pension fund will compensate the percentage that ISSSTE workers had not been receiving.

ECONOMY

• Financial Market Worries After Elections: The president responded to a reporter’s inquiry about Carlos Slim’s view on market anxiety, stating that Slim understands the country’s stability and attributes negative publicity to misinformation and conflicting interests. He noted Slim’s satisfaction with Claudia, describing him as cautious and institutional. The president also acknowledged past disagreements, including protests following the 2006 fraud incident.

POLITICAL

• AMLO and Sheinbaum Tour: President Lopez Obrador reported on a joint tour with elected president Claudia Sheinbaum, which focused on visiting various regions and projects. He highlighted the rescue operations at the Pasta de Conchos mine. They also visited Nuevo Laredo, where they decided to establish the National Customs Office, the country’s primary land customs office. Additionally, they conducted evaluations of all land customs offices, now overseen by SEDENA for land and SEMAR for maritime operations. This restructuring has led to positive outcomes, with customs revenues contributing approximately 13% of the national budget. The weekend activities included evaluating the ISSSTE in Torreon and overseeing the “Healthy Water for the Laguna” project, which involved deciding to build an aqueduct to address aquifer overexploitation. Looking ahead, the tour will proceed to Veracruz and Oaxaca, focusing on transition planning.

LEGISLATIVE CHANGES AND INITIATIVES

ENVIRONMENT

• Mexico City: Report for the Issuance of the Environmental Law of Mexico City

Presented by: Commission for Environmental Preservation, Climate Change, and Ecological Protection; Commission for Planning and Development

Purpose: The new Environmental Law of Mexico City aims to replace the 2000 law, set principles for environmental policy, and establish procedures for conservation, sustainable use, impact mitigation, and restoration. It mandates environmental impact assessments for projects, allows self-regulation for compliant companies, and promotes efficient, low-emission technologies for vehicles. It requires environmental audits for various establishments, enforces sustainable production, and bans unauthorized pollutant emissions and waste disposal in protected areas. It prohibits water privatization, encourages the use of reused or treated water, and makes water availability a prerequisite for permits. It also requires a Single Environmental Manifestation for local emission sources and restricts excessive emissions and the use of harmful agrochemicals in conservation areas.

Status: Approved on 2024-06-13, passed to the State Executive Power.

• Mexico City: Report on the Amendment to Article 65 of the Solid Waste Law of the Federal District; Repeal of Articles 221, 222, 223, and 224 of Chapter VI of Title VII of the Environmental Protection Law in Mexico City; and Issuance of the Environmental Responsibility Law of Mexico City

Presented by: Commission for Environmental Preservation, Climate Change, and Ecological Protection

Purpose: Hold any individual or entity responsible for direct or indirect adverse and measurable impacts on habitats, ecosystems, natural elements, and resources, including their chemical, physical, or biological conditions, interactions, and provided environmental services, accountable for comprehensive reparations.

Status: Approved on 2024-06-13, passed to the State Executive Power.

LEGISLATIVE CHANGES AND INITIATIVES

WATER

• NUEVO LEON: CITIZEN INITIATIVE TO REFORM VARIOUS PROVISIONS OF THE POTABLE WATER AND SANITATION LAW FOR THE STATE

Presented by: Congress of the State of Nuevo Leon

Purpose: Require that concessions involving investments exceeding one thousand quotas receive prior authorization from the State Congress and the First Water Advisory Council. Status: 2024-06-12 - Initiative referred to the Commission for report.

PRODENSA INSIGHTS

Explore Prodensa Insights for expert analysis and industry trends. Visit our website www.prodensa.com/insights for full information

THE NEARSHORING SERIES BY EMILIO CADENA: CURRENT TRENDS IN BUSINESS RELOCATION AND THEIR IMPACT ON THE SUPPLY CHINA

Key takeaways:

• The pandemic exposed vulnerabilities in global supply chains, forcing companies to adapt and become more resilient.

• Companies are reassessing their reliance on distant markets and diversifying production geographically.

• Mexico is a prime destination for nearshoring due to its proximity to the US, lower costs, skilled workforce, and growing tech sector.

• Strategic inventory location and logistics are crucial for success in the digital age, especially in large countries like Mexico.

• The Valley of Mexico presents a compelling opportunity for e-commerce fulfillment due to its infrastructure and population concentration.

• Companies that can anticipate change, adapt quickly, and make smart logistics decisions will thrive in the new global market.

Read the full blog post to learn more about:

• How COVID-19 impacted global supply chains and drove the need for change.

• The factors behind the shift towards nearshoring and tech-shoring in Mexico.

• Why the Valley of Mexico is a strategic location for e-commerce fulfillment.

• How to optimize your business strategy by aligning logistics with market trends.