Weekly Report 95

GENERAL SITUATION IN MEXICO

Weekly Review #95 I March 9, 2022

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MANUFACTURING INDUSTRY MEXICO HAS THE CAPACITY TO BE THE WESTERN INDUSTRIAL GIANT: CONCAMIN Jose Antonio Abugaber Andonie, President of the Confederation of Industrial Chambers of the United Mexican States (Concamin), stated that the Mexican economy has the industrial capacity to become a western giant.

“Our country has the capacity to become the Western giant, and that is why I am here today representing a single voice of Mexico’s industrialists, seeking for solutions that help us to promote, innovate and take advantage of resources, conserving the environment and opting for solutions that generate wellbeing for our society,” said the Mexican businessman.

He added that Mexican industry is known worldwide by large transnational companies, who export manufactured goods and services every day.

The leader of the industrialists pointed out that among the trends industries, the manufacturing industry stands out, with 7 thousand 481.9 million dollars, which is equivalent to 40.59 percent of the total foreign direct investment.

Mexico is the 15th largest economy in the world, as it generates a gross domestic product of 1.292 trillion dollars registered in 2021, he commented during his participation in the Mexico Pavilion at Expo Dubai 2020, with the presentation Mexico Industry Trends.

Another is the mining industry, with 2 thousand 496.6 million dollars and 13.54 percent of the total capital entering the Mexican economy, and financial services, with 2 thousand 131.1 million dollars, equivalent to 11.56 percent of total FDI.

“Our country is getting closer every day to the 11th place among the largest exporters in the world, with a value of shipments abroad of 418 billion dollars, surpassing the United Kingdom.”

The president of Concamin emphasized that one of the strong trends in Mexico is the look towards technology, innovation, and digitalization, with processes that can be simplified remotely by joining the new clouds to store information, work with online platforms, and artificial intelligence to improve research.

The Mexican businessman was accompanied by Alejandro Preinfalk, CEO of Siemens Mexico, and Luis de Alba, Mexico’s ambassador to the United Arab Emirates.

The Concamin contributes 40 percent of the national GDP, 90 percent of exports that generate direct and permanent employment for 9.4 million workers, representing 42 percent of formal employment and generating 48 out of every 100 jobs.

SOURCE: Forbes Mexico

“Today, new technologies are the engine for business transformation,” he added.

Abugaber Andonie pointed out that another point to highlight is the need to reduce carbon emissions and rethink sustainability as an essential need, as well as the substitution of clean fuels and energies.

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MANUFACTURING INDUSTRY MANUFACTURING SECTOR EXPECTS GAS ‘BILL’ TO BE 15% MORE EXPENSIVE DUE TO WAR IN UKRAINE The National Council of the Maquiladora and Manufacturing Export Industry warned that the U.S. is diverting part of its production to Germany.

The manufacturing sector is expecting a tremendous “blow” to its production costs, especially due to high gas prices.

The war between Russia and Ukraine will make gas supplies to Mexican manufacturers more difficult and increase the available supply, warned the National Council of the Maquiladora and Export Manufacturing Industry (Index).

“The United States will be supplying part of the gas that Germany consumes, which it used to buy from Russia [...] We expect a 15 percent impact; I am referring to a 15 percent increase in the cost of gas as a result of this change alone,” explained Luis Manuel Hernandez, president of Index Nacional, in an interview for El Financiero T.V.

High gas costs will further squeeze the country’s factories, which are already suffering the pressures of inflation. Index estimates that, for the manufacturing sector, production costs have risen 10.35 percent.

The weight of inflation must be added to the misalignments in global supply chains, which leave companies with shortages of basic components and raw materials.

“This leaves us not so competitive with the U.S.,” said Hernandez.

INVESTMENT MOVES TO THE BORDER Despite the rugged territory, Index anticipates that manufacturing investment will continue to increase in 2022.

It projects a 7 percent increase in investment flows at the national level. The northern region estimates a 10 percent increase and a 5 percent raise for both the central and southern regions.

We are also seeing a reconfiguration of investors’ preferences, who are now looking for the border or states with rail infrastructure to move their goods quickly.

“They are questioning which are the best states to invest in [...] They are defining themselves more by proximity to the border than by insecurity per se,” he commented.

SOURCE: El Financiero

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GOOD NEWS MEXICO TURNS GREEN; ONLY ONE STATE WILL REMAIN ON YELLOW TRAFFIC LIGHTS. As of Monday, March 7, Mexico is painted green in the COVID-19 Epidemiological Traffic Light. 31 of the 32 states, including Mexico City, have moved to the phase of lower epidemiological risk, and only Queretaro will remain in yellow.

means that 9% of the population aged 18 years and over have received at least one application.

Last Monday, Mexico celebrated two years since the first confirmed coronavirus case. The Ministry of Health informed this Friday that as of Monday, March 7, and until Sunday, March 20, none of the 32 states of the country will be in red traffic light (maximum risk of contagion), nor in orange (high risk).

This week, Mexico received 18 million doses of the British vaccine AstraZeneca, 14 million as part of the Covax mechanism of the World Health Organization (WHO), the largest shipment of vaccines it has received in the health crisis, in addition to two other shipments of 2.03 and 1.98 million doses from the same pharmaceutical company.

Last Friday, Mexico reported 308 new deaths and 9,748 contagions by COVID-19, totaling 5 million 554,392 cases and 319,604 deaths in total.

On February 10, the country reported 927 deaths, the highest number during the current fourth wave, driven by the Omicron variant since December.

The average occupancy of general beds in Mexican hospitals stands at 14% and intensive care beds at 11%, with a downward trend.

Last Tuesday, the Mexican Government considered that the fourth wave of COVID-19 infections “is on its way out” after five weeks of declining cases and with half of the 32 states with several days without deaths, according to Hugo Lopez-Gatell, in charge of the pandemic in the country.

The authorities also indicated that more than 183.04 million doses have been administered within the vaccination program, totaling 271,490 during the last day.

Of the 126 million inhabitants, almost 85.31 million have received at least one dose of the vaccine, which

SOURCE: Forbes Mexico

Meanwhile, 79.05 million people have completed their vaccination schedule.

Since the end of December 2020, 220.51 million doses of Pfizer, Johnson & Johnson, and Moderna vaccines from the United States, the British AstraZeneca, the Russian Sputnik V, and the Chinese CanSino and Sinovac have arrived in Mexico.

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KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference March 2- 8, 2022

TAXES

Public debt

AMLO stated that the list of tax debtors will be open

Public debt has increased around 5% since its last

for the public domain. He mentioned that not only

report closing in 2021. The President also mentioned

big contributors will be listed, but also journalists,

there had been no additional debt taken to counter

artists, media, and civil unions.

the effects of the COVID-19 crisis.

New Jobs

Russian sanctions:

Carlos Torres Rosas, the coordinator for the National

In terms of fertilizer, a hot topic due to the Russian

Welfare Program, reminded the media that two years

presence in Ukraine, AMLO accused neoliberal gov-

into the COVID-19 pandemic, there is a favorable out-

ernments before his administration of having had de-

look in terms of the economy. He stated the 21 million

stroyed FERTIMEX, thus increasing foreign reliance

new jobs as proof of his optimism. Furthermore, he

for the essential agricultural good. He stated that

mentioned the rise in the minimum wage and the av-

Mexico will continue to purchase Russian and Chi-

erage salary increase to be at a monthly 14,000 MXN.

nese fertilizer.

Remittances

AMLO lastly ensured that the supply of gas and oil,

Remittances have increased and continue to do so,

among other energetic resources, were guaranteed

even in January. The individual average in January

and safekept. The former despite the complicated in-

last year was 343 USD, and this year the individual av-

ternational situation on this topic. He concluded by

erage closed at 371 in January. The income showed a

stating that the Federal Government is taking mea-

19.6% increase compared to the previous year’s same

sures and plans to counteract the effects and reper-

period.

cussions that are already being felt due to the armed conflict in Ukraine.

SOURCE: https://www.youtube.com/channel/UCxEgOKuI-n-WOJaNcisHvSg

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MEASURES TAKEN

BY STATES IN MEXICO

BAJA CALIFORNIA The State of Baja California is considered a low-risk or green light with 303 active cases in the past 14 days. For the first time, Baja California is at the lowest level within the traffic light of epidemic risk, with a clear decrease in the trends of contagion, hospitalization, and mortality. The vaccination plan continues this week with the application of the complete vaccination schedule and booster application for the adult population. The Health Secretary asks the population to continue with the sanitary protocols and preventive measures such as using face masks, healthy distance, ventilation of spaces, and hand washing. A meeting was held at the Index facilities with the Foreign Trade and Customs Committee, where they discussed upcoming steps on issues of speeding up customs crossings.

SONORA The State of Sonora is considered lowrisk or green light with only one municipality at medium-risk or yellow light.

Official reports confirm 123 new cases in the last 24 hours. This week, the vaccination plan continues in different municipalities with the booster application and the complete vaccination schedule for the adult population. The governor of Sonora announced that more than 12,500 new jobs registered with social security were generated in February, ranking first place nationally.

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MEASURES TAKEN

BY STATES IN MEXICO

COAHUILA Given the drop in the number of infections and hospitalizations due to coronavirus, the Covid-19 Southeast Regional Technical Subcommittee determined to promote economic reactivation with the approval of musical concerts, sports competitions, exhibitions, to name a few, which will take place in the coming weeks.

TAMAULIPAS In the new coronavirus report in Tamaulipas, the Ministry of Health announced that as of this week the entity is green at the state epidemiological traffic light.

Although there was progress at the state level, there are municipalities such as Altamira, Tampico and Madero that have regressed and are now in red.

NUEVO LEON Nuevo León has ended the fourth wave of coronavirus and has resumed 100% of economic activities and in public spaces as of this week.

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MEASURES TAKEN

BY STATES IN MEXICO

AGUASCALIENTES Aguascalientes will go green From March 7 to 20, 31 states will appear in the green color of the COVID-19 Epidemic Risk Traffic Light, which is updated every two weeks by the federal Ministry of Health. Aguascalientes, Baja California, Baja California Sur, Campeche, Chiapas, Chihuahua, Mexico City, Coahuila, Colima, Durango, State of Mexico, Guanajuato and Guerrero will be considered low risk. Also Hidalgo, Jalisco, Michoacan, Morelos, Nayarit, Nuevo Leon, Oaxaca, Puebla, Quintana Roo, San Luis Potosi, Sinaloa, Sonora, Tabasco, Tamaulipas, Tlaxcala, Veracruz, Yucatan and Zacatecas. Only one state appears in yellow traffic light of medium risk, and that is Queretaro. No state was placed in orange for high risk or red for maximum risk.

QUERETARO Except for Queretaro, 31 states will remain green for the next two weeks in the epidemiological traffic light presented yesterday by the Ministry of Health (SSA). From Monday, March 7 through Sunday, March 20, the green-lighted states will be able to lift all types of restrictions to return to normal activities, including school activities. Compared to the traffic light presented two weeks ago, no state is in orange and red colors, representing high and maximum risks, respectively.

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MEASURES TAKEN

BY STATES IN MEXICO

GUANAJUATO The Ministry of Health of Guanajuato reported that hospitalizations due to Covid in the state continue to decrease.

There are currently 49 people hospitalized, of which five are children under five years of age. With data until March 7, the state added 30 new infections and three deaths due to coronavirus, bringing the total number of positive cases to 277,596 and 15,24 deaths. Of the new infections, Celaya registered two, Jaral del Progreso one, Leon 12, Salvatierra one, and San Miguel de Allende 14; the rest of the municipalities had no new infections. The state added three deaths in the last hours, of which Acambaro accumulated one, Celaya one, and Leon one.

The Ministry of Health of Guanajuato announced that the state has 1,325 active cases of coronavirus, 580,955 cases studied, 303,359 negative cases, 434 cases under investigation, 261,232 cases recovered, and 277,440 cases due to community transmission.

JALISCO IRAG Network Information System registers a green light in the occupation of general beds and beds with ventilators in all the hospitals in this area. According to a press release from the Government of Jalisco, almost 1,300,000 people over 30 years of age (1,295,000) have gone for the COVID-19 vaccine booster at the different modules set up in Jalisco. This progress is only 3 weeks after the extra dose was extended to this age range.

SAN LUIS POTOSI With data up to March 6, the Health Services of the Government of San Luis Potosi reported nine deaths and 271 new cases of COVID-19. In total, since the beginning of the pandemic, 175,808 positive cases and 7,484 deaths from this respiratory disease have been reported in the state of San Luis Potosi. Up to this moment, there are only 46 patients hospitalized for COVID-19 in the state, of which 13 are reported to be stable, 28 in serious condition, and 5 in critical condition since they were connected to a mechanical ventilator. Hospital occupancy in the state remains stable, since out of 446 beds available for people infected

by COVID-19, only 41 are occupied, that is, only a new percentage; with respect to beds with ventilator, there are only 5 out of 158 beds available, reaching only three percent.

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MEASURES TAKEN

BY STATES IN MEXICO

NATIONWIDE: Lopez Obrador declared this morning that the peso (MXN) has remained unmoved by the global changes experienced due to the conflict.

STATE OF MEXICO Alfredo del Mazo announced that heavy restrictions are being lifted as the State of Mexico enters the “Green Light” status. Del Mazo declared that even though economic activities will be held without restrictions, capacity restrictions and facemasks will be observed.

CDMX Mexico City has officially been cleared as “Green Light” in the epidemiological traffic light system. This entails that all non-essential activities such as bars, nightclubs, and massive-scale events are now fully permitted with some capacity restrictions and obligatory face mask requirements. This economic boost to the capital comes at an essential time, as uncertainty about the Ukraine conflict’s impact on the Mexican economy is still unclear.

In terms of exports, a 14.5% annual increase was reported on trade towards Mexico’s biggest partner, the United States. Even when this shows improvement and is a positive signal at an early start, China showed 15%, crowning itself as a top commercial partner to the United States.

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ECONOMIC RECOVERY THE HOME DEPOT RAISES ITS BET ON MEXICO: WILL INVEST $3.63 BILLION PESOS BY 2022 After 20 years of having arrived in the country, The Home Depot wants to continue building its business in Mexico and, in 2022, will increase its investments in the country by 8.7% compared to last year by contemplating resources of 3.62 billion pesos to open more stores and increase its logistics network for its e-commerce business.

The company’s CEO in the country, Jose Rodriguez, said they are very pleased to achieve historical results for the company, especially in a year full of challenges, so their plan is to continue investing, to continue growing and consolidating our position as the best option for Mexicans.

In fact, the 3.62 billion pesos contemplated for 2022 represent an increase of 8.7% against the 3.33 billion pesos committed for last year, which will be used, among other things, for the opening of 4 stores, as part of their plan to reach 150 units in Mexico in the next 4 years.

The Home Depot will also strengthen the interconnected retail strategy so that the in-store and online experience is the same and frictionless, as they will implement specific actions to improve the shopping experience of its three types of customers.

The Home Depot noted that the digital channel had grown significantly, registering 230 million visits per year, which is equivalent to 4 times more than visits to its physical stores, so this year will focus on improving the online experience, including more efficient processes for navigation, search, payment, and delivery.

According to Rodriguez, the goal will be to increase current customers’ loyalty, serve them in an increasingly personalized way, serve new customers, and even serve new market segments.

In this sense, he explained that a series of strategic initiatives will be implemented to strengthen the company’s capabilities, including reinforcing the logistics network, so that the product delivery experience to customers and stores is the fastest, most efficient, and reliable.

In addition, the company will increase its investment in the online store to accelerate its growth with the current, extended and exclusive mix.

In addition, new expansions will be made to the Multichannel Distribution Centers, and new specialized logistics nodes (LSC) will be opened.

SOURCE: Forbes Mexico

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TOWARDS THE “NEW NORMAL”

DISTRIBUTION OF DEATHS PER STATE DUE TO THE PANDEMIC

INFORMATION UPDATED ON MARCH 7, 2022 AT 19:00 HRS LOCAL TIME.

NEW CASES REPORTED: 4,684

SOURCE: https://www.gob.mx/salud/

CONFIRMED CASES: 5,566,669

NEW DEATHS REPORTED: 42

CONFIRMED DEATHS: 319,901

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INCREASE OF CONFIRMED CASES SINCE THE FIRST REPORT MAP WITH THE DISTRIBUTION OF THE INCIDENCE RATE OF ACCUMULATED CASES OF COVID-19 BY ENTITY OF RESIDENCE.

National rate 19.95

0 to 10.0 (7 states)

40.1 to 50 (3 states)

10.1 to 20 (12 states)

50.1 to 60 (0 states)

20.1 to 30 (8 states)

60.1 to 70 (1 states)

30.1 to 40 (0 states)

>70 (1 states)

Elaborated by Prodensa with information from the Health Ministry of Mexico

PANDEMIC’S SITUATION IN THE WORLD • As of March 7, 2022, globally there have been reported 445,096,612 confirmed cases (10,941,873 new cases) of COVID-19 and 5,998,301 deaths (3,959 new deaths*).

SOURCE: https://www.gob.mx/salud/

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TOWARDS THE “NEW NORMAL” INCIDENTS OF CONTAGIONS IN THE POPULATION

BY REGION AS OF MARCH 7

DEATH INCIDENTS IN POPULATION

BY REGION AS OF MARCH 7

SOURCE: https://www.gob.mx/salud/

EHS

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DAVID ANTUNEZ Environmental, Health, and Safety Director.

SPRING BREAK IS COMING. TESTING BEFORE YOU TRAVEL. If you are NOT up to date with your COVID-19 vaccines, get tested with a viral test as close to the time of departure as possible (no more than 3 days) before you travel.

Do NOT travel if…

• You are sick.

• You tested positive for COVID-19.

• Do not travel until a full 10 days after your symptoms started or the date your positive test was taken if you had no symptoms.

• You are waiting for the results of a COVID-19 test.

• You had close contact with a person with COVID-19 and are recommended to quarantine.

• Do not travel until a full 5 days after your last close contact with the person with COVID-19. It is best to avoid travel for a full 10 days after your last exposure.

• If you must travel during days 6 through 10 after your last exposure: • Get tested at least 5 days after your last close contact. Make sure your test result is negative, and you remain without symptoms before traveling. If you don’t get tested, avoid travel until a full 10 days after your last close contact with a person with COVID-19.

• Correctly wear a well-fitting mask when you are around others for the entire travel duration during days 6 through 10. If you cannot wear a mask, you should not travel during days 6 through 10.

LABOR

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ALVARO GARCIA

WAR AND THE WORPLACE All organizations in a globalized business world must be prepared and have a clear strategy on how to respond to the current situation and its possible escalation.

At this time, a suggested action for all companies is to perform internal communications. Although some large corporations also opt for public, external communications, we should all do so within our organizations. And not only for the issue of direct effects but also for possible concerns or doubts that workers may have. Studies show that people’s anxiety or concern increases in the face of armed conflict, especially if the company where they work has some link with the nations in conflict. In Mexico, there are close to 18 thousand companies with investment from the European Union. Communicating helps to mitigate these tensions.

Finally, when communicating, it is important to always put people at the center, remembering that many companies may have employees with family ties to one country or another among their staff, shareholders, or interested public.

HR, Vice President

www.prodensa.com contact@prodensa.com