GENERAL SITUATION IN MEXICO
Weekly Review I July 17, 2024
RELEVANT NEWS INDUSTRIES
AUTOMOTIVE
Mexico’s automotive market posted its strongest month since 2018 in June, with sales up 8.3%. Meanwhile, Fictiv opened a new custom manufacturing facility in Nuevo Leon. Additionally, cybersecurity remains a top concern for automakers, while electromobility and environmental strategies gain focus.
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Mexico’s Automotive Market Posts Strongest Month Since 2018
Mexico’s automotive market saw a robust recovery in June, achieving its strongest performance since 2018, according to data from the National Institute of Statistics and Geography (INEGI). In June, domestic sales of light vehicles reached 122,929 units, marking an 8.3% increase compared to the same period last year.
Innovation, Trade, and Talent Fortify
The Auto Parts Sector
Mexico finds itself in a strategic position where it must balance its trade relationships with both the United States and China. Both powers are important trade partners for Mexico, particularly in the auto parts sector, where there are significant dependencies on imports for components not produced in North America, such as steel, aluminum, batteries, and semiconductors.
Fictiv Opens New Custom Manufacturing Facility in Nuevo Leon
Fictiv, a global leader in custom manufacturing, has opened a new manufacturing facility in Santa Catarina, Nuevo Leon. This move builds upon Fictiv’s strategic expansion announced last year, which integrated Mexico into its global network of manufacturing partners.
RELEVANT NEWS
INDUSTRIES
Automakers Worry Over Cybersecurity Amid Smart Tech Investment
Cybersecurity has surged to become a top external concern for automotive manufacturers as they invest more in smart manufacturing technologies, according to a report from Rockwell Automation.
Electromobility Requires Comprehensive Policy, Clear Dialog
The USMCA has the highest and most restrictive rules of origin in the world. It requires 75% regional content for vehicles, 40% labor content, and specific requirements for steel and aluminum purchases. No other agreement in the world imposes such stringent requirements. It is crucial to assess whether these requirements genuinely enhance the collective competitiveness of the region or hinder it.
SEDEMA, Holcim Implement Tire Waste Management Strategy
Mexico City’s Ministry of the Environment (SEDEMA) launched the Strategy for Tire Waste Management initiated in collaboration with Geocycle Mexico, a subsidiary of Holcim Mexico, to tackle tire waste from clandestine dumps and public areas
VEMO, BYD Unveil EV Charging Station in Mexico City
VEMO and BYD have introduced a new EV charging station in Mexico City, equipped with 23 chargers. Located at Plaza Miyana, this hub features four units capable of charging a vehicle within 45 to 60 minutes. “This hub marks the first phase of our collaboration with BYD, a partnership that leverages our strengths in electric vehicles and charging infrastructure development,” stated Roberto Rocha, co-founder and CEO, VEMO.
Mexico Motorcycle Sales Reach Record 1.4 Million Units
The motorcycle industry in Mexico has achieved a record-breaking sales figure of 1.4 million units this year, with exceptional performance for brands such as Honda, Bajaj, BRP, and BMW Motorrad, according to data from the Mexican Association of Motorcycle Manufacturers and Importers (AMFIM).
BYD Plans US$1 Billion Turkey Factory to Skirt Tariffs
BYD has announced plans to build a US$1 billion factory in Turkey, aiming to avoid escalating tariffs on Chinese exports to key markets like Europe and the United States. The facility, scheduled to begin operations in late 2026, will have the capacity to produce 150,000 electric vehicles (EVs) and plug-in hybrids annually.
Pirelli Workers to File USMCA Labor Complaint for Better Wages
Workers at Pirelli’s Silao, Guanajuato plant are gearing up to file a labor complaint under the United States-Mexico-Canada Agreement (USMCA), demanding better wages and the enforcement of the Rubber Industry Contract Law. The complaint, to be filed through the Rapid Response Labor Mechanism (RRLM) of the USMCA, addresses issues of low wages and poor working conditions.
SOURCE: MEXICO BUSINESS NEWS
RELEVANT NEWS INDUSTRIES
AEROSPACE
Queretaro’s International Airport (AIQ) is undergoing a transformation into Mexico’s inaugural aerospace port, as announced by Marco Antonio Del Prete Tercero, Minister of Sustainable Development. The initiative aims to equip AIQ with capabilities for both aircraft takeoffs and landings, a rare feature among traditional spaceports. Currently undergoing preliminary certification analysis, AIQ’s potential as a full-cycle aerospace port is highlighted by Del Prete Tercero, who anticipates a six-month to one-year process for FAA accreditation, facilitated by a US consultancy.
Key factors contributing to AIQ’s suitability include its expansive 4 km runway, advantageous environmental conditions of low humidity and minimal adverse weather, and strategic location with sparse population density, mitigating risks like hurricanes or earthquakes. Del Prete Tercero underscores the strategic significance of AIQ’s transformation, envisioning it as a magnet for aerospace industry investments, particularly from US firms. Drawing parallels with Houston’s Ellington Airport, which attracted substantial investments post-certification despite no launches yet, he emphasizes the transformative economic potential of AIQ’s aerospace ambitions.
SOURCE: MEXICO BUSINESS NEWS
NEWS BY STATE
BAJA CALIFORNIA
Pro Baja, the State Government and Prodensa are preparing for the Farnborough International Airshow. They will be giving the seminar How to do Business in Mexico: looking for opportunities for the aerospace industry, highlighting Baja California as an Aerospace hub. They will talk about Baja California’s industry overview, strategic infrastructure projects, business opportunities, business opportunities for aerospace companies and state government support programs.
SOURCE: PRODENSA
SONORA
Taiwan will support the training of talent in the chip industry. Taiwanese companies are looking to invest in the auto parts industry to boost electromobility in Mexico and consolidate a productive chain of electronics and smart mobility manufacturers. They currently have partnerships to work on the Sonora Plan, which seeks a renewable and clean energy transition.
SOURCE: EL ECONOMISTA
NEWS BY STATE
NUEVO LEON
Nuevo Leon will participate next week in the Farnborough International Airshow and will be giving the seminar “Mexico’s Industrial Hub, Air Transport Leader and Nearshoring Capital” together with Prodensa, American Industries and Banco Base, highlighting Nuevo Leon for aerospace industry investment. The topics will be Why Monterrey leads in foreign direct investment, how to start operations in Mexico and labor, site selection and cost model, banking and financial in Mexico.
SOURCE: PRODENSA
NEWS BY STATE
SAN LUIS POTOSI
During the first half of 2024, Mexico’s private sector announced 143 public investment projects with an expected total investment of $45.464 billion USD. San Luis Potosí ranks tenth nationally in terms of investment expectations and job creation, according to the Ministry of Economy’s Subsecretary of Foreign Trade. The state of San Luis Potosí anticipates investments totaling $1.374 billion USD, contributing 3% to the national total. These investments are projected to create 7,076 direct jobs in the region. Noteworthy companies among the investment announcements in San Luis Potosí include Taxan México and Sinbon Electronics.
SOURCE: MEXICO INDUSTRY
NEWS BY STATE
GUANAJUATO
APIMEX organized the DIVEX event, its sixth edition, showcasing substantial achievements. The event attracted 258 supplier requirements from various sectors and hosted 27 buying companies. It facilitated 333 B2B meetings and drew approximately 500 attendees. Key participants included major companies like Pirelli, Mabe, and Frankische. President Fernando Padilla emphasized the industry’s flexibility to enter new markets and compete globally, stressing the need for alliances and collaboration with foreign investments to enhance value chains. The event, featuring networking sessions, conferences, and expert panels, also introduced a new APIMEX platform for organizing B2B meetings, involving 27 buying companies with strong participation on-site.
SOURCE: MEXICO INDUSTRY
QUERETARO
The recent seminar organized by index Querétaro focused on the evolution and challenges of Mexico’s export manufacturing industry under the USMCA. Enrique Quezada, president of index Querétaro, emphasized the industry’s pivotal role in Mexico’s export growth and urged dialogue between industry stakeholders and new political actors to align economic opportunities with social priorities. Israel Morales highlighted the industry’s resilience post-pandemic, driving Foreign Direct Investment recovery and reflecting in sector revenues exceeding pre-pandemic levels by 2023. The seminar, supported by Deloitte, KPMG, and PwC, addressed updates to IMMEX programs and streamlined compliance management in foreign trade, fiscal matters, and logistics. Overall, the event aimed to update industry stakeholders on critical compliance issues and foster strategic discussions to enhance the industry’s integration and economic impact in Mexico.
SOURCE: MEXICO INDUSTRY
NEWS BY STATE
CDMX
During the eighth delivery of Credits from the Social Development Fund (Fondeso) 2024, totaling MXN 31.3 million distributed among 3,020 creditors, Head of Government of Mexico City Martí Batres announced that this administration has granted 269,000 credits, amounting to MXN 2,700 million. The program targets self-employed individuals and micro and small enterprises, which generate 80% of local jobs. Secretary of Economic Development Fadlala Akabani noted that 65% of the support has gone to women entrepreneurs, reducing gender gaps and strengthening the city’s business sector. This initiative has preserved 400,000 jobs and trained 770,000 people. Batres highlighted Fondeso’s reduction of interest rates on loans to as low as 6% and 0% in many cases, benefiting lower-income groups.
SOURCE: EL ECONOMISTA
STATE OF MEXICO
The State of Mexico achieved a 7.9% industrial growth and a record creation of 71,000 formal jobs over the past year, according to the State Economic Development Secretariat (Sedeco). Key sectors contributing to this growth are construction and manufacturing. The growth is attributed to the support from the state governor, Delfina Gómez. The data, from Inegi’s Monthly Indicator of Industrial Activity by State, show manufacturing grew by 6.1%, construction by 10.4%, energy generation by 14.7%, and mining by 0.2%. Sedeco emphasized the joint efforts of entrepreneurs, workers, and the state government in strengthening the economy. The Mexican Social Security Institute (IMSS) reported that from September 2023 to June 2024, 71,242 new jobs were created, marking a record and placing the State of Mexico first nationwide in private sector job creation, accounting for 22% of the national total.
SOURCE: MEXIQUENSE
INVESTMENT NEWS
NORTH
BECTON DICKINSON
The groundbreaking ceremony for Becton Dickinson’s new medical products plant took place, with an investment of 80 million dollars in Ciudad Juárez, Chihuahua. The project expects to create 400 jobs.
GRUPO CANO
Grupo Cano inaugurates a new plant with an investment of 12 million dollars in Ciudad Juárez, Chihuahua. This project will create 300 jobs and produce construction material for the manufacturing industry.
MEXICO PACIFIC LIMITED
It was announced that the construction of a natural gas pipeline will begin in August in Guaymas, Sonora. The project is led by American Mexican Integrated Gas Operations through its representation in Mexico as Mexico Pacific Limited. The investment amounts to 6.8 billion.
SOURCES: CLUSTER INDUSTRIAL, MEXICO INDUSTRY
KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S
MORNING PRESS CONFERENCE
July 11- 16, 2024
ECONOMY
• E-commerce Regulation: A reporter highlighted that the Ministries of Finance and Economy are reportedly working on new regulations for international e-commerce, including higher tariffs and limits on monthly purchases, which could impact consumer purchasing power and affect parcel companies. The president clarified that there is no current initiative on this matter and mentioned that international trade issues are being discussed at the G20 level, but no agreements have been reached yet. He assured that the government would not take actions that would harm Mexican consumers.
TRADE
• Steel and aluminum tariffs: In response to U.S. tariffs, President López Obrador stressed the importance of maintaining strong relations with the U.S. and Canada. He explained that the U.S. aims to limit steel imports to only Mexico, but Mexico set two conditions: that no specific country be targeted by the restrictions and that Mexico be allowed to import steel and aluminum from Brazil, establishing a privileged relationship with Brazil. He also highlighted the need for long-term strategies to boost investment in Mexico and proposed future integration of the Americas to make the continent a leading global economic and commercial force.
LEGISLATIVE CHANGES AND INITIATIVES
LABOR
• Nuevo León: Initiative to Reform Article 33 BIS IV of the Law for the Promotion of Investment and Employment; and Article 57 of the State Education Law
Presented by: State Representative Eduardo Gaona Domínguez (NL - MC)
Purpose:Establish that, to access the First Employment incentive, companies must ensure that applicants are state residents with at least one year of verifiable residence.
Promote strategies for graduates to benefit from the First Employment program.
Status: 2024-07-15 - Initiative referred to the Commission of Education, Culture and Sports; and of Economy, Entrepreneurship and Tourism for a resolution.
• Sonora: Initiative to Reform Article 1 of the Political Constitution of the State of Sonora
Presented by: State Representative José Armando Gutiérrez Jiménez (Son - PAN)
Purpose:Work is a fundamental means for the fulfillment of human beings and the satisfaction of their needs, where it must be performed without any discrimination. Therefore, it is strictly prohibited to require a certificate of no criminal record to perform any job, except in special cases provided for in the applicable regulations.
Status: 2024-07-15 - Initiative referred to the Commission of Governance and Constitutional Points for a resolution.
• Initiative with Draft Decree to Add Section XXXIV to Article 132 of the Federal Labor Law
Presented by: Representative Mario Alberto Rodríguez Carrillo (Plur - MC)
Purpose:To add as an obligation for employers to provide, at no cost to employees, eyeglasses with the required prescription according to their condition and/or needs when their use is specifically related to fulfilling their job duties involving data display screens, and when their use is required by a medical prescription issued by a public health institution.
The eyeglasses must be of good quality, with the price agreed upon between the employer and the employee. The eyeglasses can be provided directly by the employer or through reimbursement of expenses incurred by the employee.
Status: 2024-07-10 - Published in the Parliamentary Gazette.
LEGISLATIVE CHANGES AND INITIATIVES
ENVIRONMENT
• Nuevo León: Initiative to Reform Articles 131 and 133 of the State Environmental Law
Presented by: State Representative Alhinna Berenice Vargas Garcia (NL - PRI)
Purpose:Emissions of pollutants into the atmosphere, whether from artificial or natural sources, fixed or mobile, must be progressively reduced to ensure the right to health and a quality environment in order to fulfill international commitments on environmental matters and climate change.
The State and Municipalities must implement programs to progressively reduce air pollution.
Status: 2024-07-15 - Initiative referred to the Commission of Environment and Sustainable Development for a resolution.
• Tamaulipas: Initiative to Reform Article 18 of the Political Constitution of the State
Presented by: State Representative Armando Javier Zertuche Zuani (Tamps - MORENA)
Purpose:Citizens must participate in the protection and conservation of the environment, collaborating with authorities in the reporting and prevention of polluting activities. Industrial, commercial, and service activities that use natural resources or generate waste must implement sustainable environmental management programs and adopt social responsibility policies that include clear commitments to environmental protection.
Status: 2024-07-11 - Initiative referred to the Commissions on Constitutional Points; and on Urban Development and Ports for a resolution.
PRODENSA INSIGHTS
Explore our latest blogs and stay updated with valuable insights! Visit our website today: www.prodensa.com
The blog “The Export Boom: Revolutionizing Manufacturing in Mexico” on Prodensa’s website explores how manufacturing exports have driven Mexico’s economic transformation. Highlighting the shift from a raw materials-based economy to an industrial powerhouse, it covers the impact of trade agreements like NAFTA/ USMCA and key sectors such as automotive, electronics, and aerospace. The post discusses the geographic distribution of manufacturing, diversification of export markets, and future growth prospects, emphasizing the resilience and adaptability of Mexico’s manufacturing sector.
For more details, visit Prodensa’s blog (https://www. prodensa.com/insights/blog/the-export-boom-revolutionizing-manufacturing-in-mexico
THE EXPORT BOOM: REVOLUTIONIZING MANUFACTURING IN MEXICO