Weekly Report 98 by PRODENSA

GENERAL SITUATION IN MEXICO

Weekly Review #98 I March 30, 2022

MANUFACTURING INDUSTRY PRIVATE SECTOR REQUESTS A GRADUAL INCREASE IN VACATION DAYS. Each day of vacation that is intended to be increased, according to the reform proposal on “Dignified Vacations” currently before the Senate of the Republic, impacts 25% of the vacation premium granted to each worker. Therefore, it is reflected in the social security contributions that must be covered. These are two aspects detected by representatives of the Consejo Coordinador Empresarial (CCE) and the Camara Nacional de Industria de la Transformacion (Canacintra) in the open parliament taking place in the Senate of the Republic, where they pointed out that it is essential to analyze the working hours of each worker because not all of them work five days and rest two. Lorenzo Roel, a representative of the CCE, stated that “it is not a rule” that increasing vacation periods increases productivity. Therefore, he stated that for the business sector, it is important that “if there is a change to article 76, it should be done gradually and granting nine days”. He detailed that there is already an important range of agreements and work schemes in which workers have more vacation days than those established by law (six in the first year). Therefore, he focused his proposal on only reforming article 76 of the Federal Labor Law, increasing from 6 to 9 days of vacation, “establishing a gradual increase. Those who have more than one year of service will enjoy an annual period of paid vacation that cannot be less than 9 days, and that will increase two days for each subsequent year of service until reaching 15”. While participating in the Open Parliament entitled Dignified Vacations, Jose Medina Mora Icaza, president of Coparmex, also agreed that the increase in vacation days should be

SOURCE: El Economista

gradual, going first to nine days and then to 12, and increasing two days per year. Human resources specialists recommended that 12 days be granted, especially because, worldwide, vacation periods help to attract and retain talent.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference March 21 –29, 2022

US-MEXICO BILATERAL RELATIONSHIP: AMLO mentioned that cooperation with the US in security has changed, looking towards development and cooperation, and is no longer in times of the Merida Initiative. He said about his meeting with US Security Secretary that the main topics were support for Central America and migration regulation. • About the claims made by the US General of the Northern Command on Russian spies in Mexico, AMLO replied Mexico is a free country with freedom of speech and no one’s colony. He reminded Mexico has a non-intervention policy. ENERGY: About remarks made by Ambassador Ken Salazar, Obrador mentioned the reform is already being discussed in the Deputy Chamber, that they and only they will be the ones to decide over the reform, and that all private enterprises shouldn’t be too worried for they would still represent 46% of total shares in the electricity market. Additionally, he mentioned CFE’s existence is of utmost importance, for the private sector is tax avoidant such as OXXO has been. He denounced that this is due to previous government sellouts signaling Iberdrola’s hiring of former Mexican president Felipe Calderon. He assured that the reform would be either passed or denied before spring break.

• He mentioned that in Baja California Sur, the capacity for energy generation is amplifying through the construction of a thermoelectric plant in the state for which bidding is already out. • AMLO affirmed protection for oil and petrochemical industries in the country, which were severely damaged in the neoliberal period. He assured gas and oil imports had reduced 48% since the beginning of his government. He mentioned the subsidy on oil and gas isn’t as significant, and it compensates itself through the price augmentation of the Mexican mix, allowing for inflation to be controlled and avoiding the general rise in prices. • He stated only two refineries were working in the whole country when he began his administration, and now the six refineries are up and running at 70% capacity. He said he does not rule out the possibility of a new refinery in Salina Cruz. He trusts that Mexico will be self-sufficient by next year and will not have to purchase gas or diesel. He said all personnel in Deer Park will remain as such. He said 85% of Deer Park’s capacity is already working and benefits Mexico. He signaled that US politicians made a politics show out of the buying of Deer Park by Pemex. ECONOMY: He assured the country is growing. The new econom-

ic crisis due to the war in Ukraine places Mexico on the top places with most economic investment opportunities, allowing full air and land transportation activation. • He said his primary message for the banking convention was to not stop promoting investment and take advantage of the good environment for the country’s development. • AMLO revealed before the official announcement of Banxico that the reference interest rate will rise 50 points to reach 6.5 percent. To this, he apologized for the “spoiler,” recognizing its illegality. • About Tianguis del Bienestar, The Secretary of Security and Citizen Protection, Rosa Icela Rodriguez, mentioned that 61 municipalities in 3 states of the Republic had been attended so far for the project’s operation. A total of 111,985 families have been assisted, and approximately 4 million 600 goods have been delivered. SECURITY: Following up on what happened at the Corregidora Stadium, Ricardo Mejia, Undersecretary of Security, highlighted that 27 people have been detained and affirmed that, although they have been in communication with the Queretaro Prosecutor’s Office, this is a local case. • General Luis Cresencio Sandoval pointed out that, in vehicle theft, homicides, and impact crimes, the state of Morelos is trending upwards. Meanwhile, the state has a downward trend in kidnappings, home robberies, transportation robberies, and extortion. Specifically on vehicle theft, in the first two months of 2022, 398 thefts were recorded, of which 214 were in February; in 2021, a total of 2,777 thefts were recorded. The national average is 269 thefts, so Morelos is in 5th place nationally. AIFA AND AEREAL TRANSPORT: President Lopez Obrador attended the inauguration of the new Felipe Angeles International Airport, ac-

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

companied by the Governor of the State of Mexico, Alfredo del Mazo; the Governor of Hidalgo, Omar Fayad; the Head of Government of Mexico City, Claudia Sheinbaum; the Secretary of Public Security, Rosa Icela Rodriguez; the Secretary of the Interior, Adan Augusto Lopez; the Secretary of Defense, General Luis Cresencio Sandoval Gonzalez; the Secretary of the Navy, Admiral Jose Rafael Ojeda Duran; the Secretary of Foreign Affairs, Marcelo Ebrard Casaubon; the Commander of the National Guard, General Luis Rodriguez Bucio; and the Commander of the AIFA Engineers Group, General Gustavo Ricardo Vallejo Suarez. • The 5 projects in Mexico are the creation of the AIFA Main Access Distributor, the extension of line 1 of the Mexibus, the completion of the Siervo de la Nacion Urban Highway, the completion of the road works for the eastern connection and connectivity with the AICM and the extension of the Naucalpan-Ecatepec highway and the improvement of the Insurgentes connection with the Mexico-Pachuca highway. • Regarding legal protections against AIFA, the President states that the populations around the AIFA have accepted the work and will be beneficiaries of urban development programs that will improve the quality of life in their cities. He indicated that the injunctions promoted against the work were not promoted by the townspeople but by law firms promoted and hired by his adversaries, such as Claudio X Gonzalez, or organizations such as Mexicans United against Corruption (MCC). He questioned that the main note in the media is given around “racism, classism, and anger.” ENVIRONMENT: The President criticized artists and media that have reproached the implementation of the Mayan Train. • It was made known that today a decree was published through which Lake Texcoco is declared a natural reserve area. The Secretary of the Envi-

ronment, Maria Luisa Albores, recalled the importance of Lake Texcoco and the activities that will be permitted as of the new decree. MEDIA: A reporter pointed out that the agency of Russian origin, Sputnik in Mexico, has suffered violations in freedom of expression. She complained that the IzzI system service that has a contract with Televisa and Univision had blocked access to this news portal. The President assured that the alleged blockades of the company and social networks to Russian media are more of an ethical issue. • When expressly asked about the INE’s request to take down some fragments of the morning conference on Monday, March 21, regarding the inauguration of the AIFA and to remove messages on social networks by the Head of Government Claudia Sheinbaum for considering them political-governmental propaganda before the exercise of the mandate revocation, the President pointed out that he understands the anger of his opponents, as they were used to corruption and today their displeasure is against the Fourth Transformation applied by the current government, which sees for all citizens rich and poor. He assured that taxes were condoned to large corporations in past administrations, and their opposition was not there to defend the people; today, nobody talks about that. However, they fail to recognize the great achievements and progress that the current government has made. CORRUPTION: About the Julio Scherer case. Andres Manuel Lopez Obrador mentioned that he will not pronounce on a matter of public denunciations; in any case, it will be a work of the public ministries and the justice system in Mexico. • Faced with a case presented by a reporter regarding expropriations of beaches in the state of Tam-

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

aulipas that could be related to Governor Francisco Garcia Cabeza de Vaca, the President stated that he had upheld the resolution that there should be no impunity for anyone. • The President criticized the little diffusion given to the revocation of the mandate by INE and the media, as well as the reduced number of polling stations to be installed; Moreover, AMLO announced a constitutional reform initiative will be sent to guarantee democracy in Mexico so that there will no longer be judges with “biased” attitudes in electoral matters with “biased” attitudes in electoral matters. He said that he is going to propose that the people should be the ones directly elect the electoral counselors and magistrates. He hopes that this will end the “agreements between the elite” against the people’s interests. HEALTH: The Secretary of Health, Jorge Alcocer, informed that 114,553,000 pieces of medicine had been distributed. He also mentioned that through the INSABI - IMSS, Ultima Milla program, 14,891,647 pieces of medical supplies were distributed in 1,301 health units in 31 entities. He emphasized that because of the contractual extension of purchases, the supply will be guaranteed for the first half of 2022 and that the joint purchase of INSABI and UNOPS will guarantee a supply of more than 95%. Undersecretary Hugo Lopez Gatell informed that the country had had eight consecutive weeks of reducing pandemic indicators. He mentioned that 90% of people over 18 years of age had been vaccinated.

MEASURES TAKEN BY STATES IN MEXICO

BAJA CALIFORNIA The State of Baja California is considered a low-risk or green light with 251 active cases in the past 14 days and 6 new cases in the past 24 hours, so the pandemic remains under control within the “new normal,” mentioned the Secretary of Health. He also mentioned that preventive measures must be kept, such as using face masks in closed spaces, hand washing, and healthy distance. However, the possibility of eliminating the mandatory use of the mask will be considered according to the trend of cases. The vaccination plan continues with the booster, first and second doses to the adult population.

SONORA The State of Sonora is considered a low-risk or green light. Official reports confirm 93 new cases in the last 24 hours. The vaccination plan continues this week with the first dose, complete scheme, and booster application to the adult population. The Governor of the State of Sonora mentioned that the economic development of Sonora is being strengthened with the creation of innovative, competitive, and sustainable projects so that the efforts become real benefits for Sonoran families.

MEASURES TAKEN BY STATES IN MEXICO

COAHUILA Authorities of the Government of the State of Coahuila and the Municipality of Acuña announced that more than 74 thousand children between five and 11 years of age will be vaccinated against Coronavirus in the municipalities of the Northern region and possibly some municipalities of the Carbonifera region. This will be done by donating doses of the Pfizer-BioNTech vaccine for children by authorities and individuals from the State of Texas. NUEVO LEON The government has decided to reduce the water pressure one day a week in 7 areas that make up the city of Monterrey and the metropolitan area in order to guarantee the vital liquid during the spring and summer season or until the rains restore in dam level.

MEASURES TAKEN BY STATES IN MEXICO

AGUASCALIENTES During the last two years, related to the COVID-19 pandemic, mental health has generated greater attention in the state of Aguascalientes in minors and adults since, according to the information provided by the College of Psychologists of the state, an increase of 60% has been noted: “We have seen a greater need for attention in children and adolescents than two years ago, and the disorders mainly involve depression and anxiety, including obsessive-compulsive disorder, post-traumatic stress disorder, panic attacks, social phobia, higher rates of depression,” said Alejandra Haydee Sandoval, president of the College of Psychologists of the state. The same source informed that there are no statistics in general on the mental health of the population. Still, they report that at least more than half of the population is not receiving mental health care since it has been seen that private treatment has become saturated and has a higher cost compared to public treatment, which, although much of the time the attention is free, there is not much diffusion of the spaces for mental health care.

QUERETARO The Secretary of Health of Queretaro reported this Monday, March 21, zero deaths due to COVID-19. However, in the last three days, 34 cases of the disease have been added in the state, and at the moment, there are 4 municipalities free of infection. The municipalities that no longer have COVID-19 cases are Landa de Matamoros, Toliman, Huimilpan and Amealco. Concerning the availability of general hospitalization beds and beds with ventilators, with information as of March 20, there is an occupancy rate of 16 percent, based on the Negative Network of Acute Respiratory Infections (IRAG). In Queretaro, 14 percent occupancy of beds with ventilators and 16 percent occupancy of beds without ventilators.

MEASURES TAKEN BY STATES IN MEXICO

GUANAJUATO The COVID-19 pandemic in Guanajuato, as well as in all of Mexico, has entered a very low-intensity stage; however, it has not ended because there are still 42 people hospitalized throughout the state with acute respiratory infections, of which 20 have already been confirmed to have COVID-19. With the new infections over the weekend, Guanajuato now has 281,154 confirmed and recognized cases during the last two years of health contingency. Of these cases, 265,597 are people who have recovered, but 15,068 Guanajuato residents have not been able to overcome the disease and have already lost their lives. As for the number of active cases, there are only 475 cases, which corresponds to citizens who have been infected with this disease during the last 7 to 10 days.

JALISCO According to the epidemiological follow-up carried out by the Ministry of Health of Jalisco, in coordination with the Ministry of Education, it is reported that in the 3 to 14 years old age group, who attend basic education, 89 cases started symptoms in the last 14 days, five of which were identified in schools. Most of the positive cases in this age group occurred in the Guadalajara Metropolitan Area with 75 due to the higher demographic concentration in this area. According to the Ministry of Education, 87.94 percent of preschool, elementary and high school students attended this last week; that is, 1,460,266 students decided to return to the on-site educational model. 99.64 percent of schools are open to receiving students in their classes. Since January 19, the COVID 19 Random Test Application Model for Educational Personnel has been implemented in schools. This week, 677 antigen tests were taken in 61 schools, of which six were positive, i.e., 0.9 percent positive.

MEASURES TAKEN BY STATES IN MEXICO

SAN LUIS POTOSI The Federal Ministry of Health ratified the green traffic light for two more weeks for San Luis Potosi, which will be in effect from March 21 to April 3. In recent weeks, the state has managed to reduce the number of daily infections, as well as deaths due to COVID-19; with data until March 21; one death was registered due to the virus. Given the proximity of the Easter holiday period and the state’s epidemic traffic light, it was determined that the permitted capacity in places will be 75 percent. Also, camps will have to respect 50 percent of the capacity, and the importance of taking care of vulnerable groups such as minors and older adults is reiterated. The State Committee for Health Security and Health Services, regarding the COVID-19 daily report of cases, informed that 153 new infections had been reported in the last 24 hours, registering 179,120 total cases of this disease up to this day.

MEASURES TAKEN BY STATES IN MEXICO

STATE OF MEXICO This Thursday, March 24, the State of Mexico surpassed 30 million applications of vaccines against COVID-19, making it the entity that has applied the most doses in the country. With this, the vaccination percentage in the State of Mexico is above 87 percent, which is above the national average.

CDMX The director of the National Center for Preventive Programs and Disease Control, Ruy Lopez Ridaura, informed that the Ministry of Health is drafting a new protocol against COVID-19 due to the low incidence of COVID-19 in the country. In addition, a group of specialists is analyzing the risks of eliminating the obligatory use of masks in closed spaces in the eyes of a threat of a fifth wave. The new protocols will be applied to Mexico City when drafted.

NATIONWIDE: The epidemic curve has shown a sustained reduction of 41%. For the tenth week in a row, the country has reached the minimum level of new cases. This period is expected to be the most sustainable period of case reduction between the different waves.

ECONOMIC RECOVERY MEXICAN ECONOMY MANAGED TO START 2022 IN POSITIVE TERMS; IT GREW BY 0.4%. In January 2022, the level of economic activity in Mexico registered an increase of 0.4% concerning the previous month, at the close of 2021, driven mainly by the good dynamism of the national industry. The Global Economic Activity Indicator (IGAE) added three consecutive months of growth, according to seasonally adjusted figures from Inegi (National Institute of Statistics and Geography). The information shows that, although the advances are modest, Mexico’s economy is following a positive recovery trend during the end of 2021 and the beginning of 2022. At the beginning of the year, the level of economic activity was pressured by a setback in primary activities and still a complex recovery for secondary and tertiary activities. In January 2022, the agriculture, hunting, fishing, and forestry sector recorded a 2.3% drop compared to the level recorded in the previous month (December 2022). Manufacturing, electricity, gas and water, construction, and mining advanced 1.0 percent. The most important sector of the Mexican economy, commerce and services grew only 0.2 percent. This sector contributes close to 65% of the total national GDP.

SOURCE: El Economista

Additionally, the IGAE showed a significant advance in its inter-annual comparison: it grew 1.8% in January 2021. According to information from Inegi, in this analysis, the sector that has recovered most strongly is industrial activities. International institutions, financial entities, and analysts have projected economic growth for Mexico between 1.5 and 3% in 2022. Mexico’s economy faces external pressures, such as uncertainty due to the Russian intervention in Ukraine, globalized inflation, and problems in global supply chains. In addition, internal problems related to governance, public policies, and increasing violence are pressures on economic activity.

TOWARDS THE “NEW NORMAL”

DISTRIBUTION OF DEATHS PER STATE DUE TO THE PANDEMIC

INFORMATION UPDATED ON MARCH 28, 2022 AT 19:00 HRS LOCAL TIME.

NEW CASES REPORTED: 657

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

CONFIRMED CASES: 5,651, 553

NEW DEATHS REPORTED: 11

CONFIRMED DEATHS: 322,750

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 7.65

0 to 10.0 (25 states)

40.1 to 50 (0 states)

10.1 to 20 (4 states)

50.1 to 60 (0 states)

20.1 to 30 (1 states)

60.1 to 70 (0 states)

30.1 to 40 (2 states)

>70 (0 states)

Elaborated by Prodensa with information from the Health Ministry of Mexico

PANDEMIC’S SITUATION IN THE WORLD • As of March 28, 2022, globally there have been reported 480,170,572 confirmed cases (10,957,867 new cases since last week´s report) of COVID-19 and 6,124,396 deaths (47,144 new deaths*).

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

TOWARDS THE “NEW NORMAL” INCIDENTS OF CONTAGIONS IN THE POPULATION BY REGION AS OF MARCH 28

DEATH INCIDENTS IN POPULATION BY REGION AS OF MARCH 28

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

LABOR

ALVARO GARCIA HR, Vice President

STATUTORY VACATIONS IN MEXICO The Mexican legislation that set the right for vacations dates back to mid last century. Since then, the minimum legal, after the first year of services is of six days. Mexico stands as one of the nations with the lowest statutory vacation days in the world, not only below European or top Asian economies but also below all Latin American countries. There is an ongoing debate in both chambers of the Mexican Congress about increasing the mandatory vacation days. Just this week, the upper house organized an open conversation with representatives from workers, academia, and employers chambers to discuss about the different bills that are looking to increase the vacation days. All voices agreed that the minimum vacation days in Mexico must increase to match international standards. The International Labor Organization indicates that vacation days should be no less than three weeks. Mexico is far from achieving that. Most probably, statutory vacations in Mexico will increase in the near future.

BUSINESS CONTINUITY

SALES AND OPERATION PLANNING - S&OP

WHAT IS THE VALUE OF SALES AND OPERATION PLANNING (S&OP)? S&OP Creates cohesiveness across all functions of a business. Creating visibility allows organizations to see the opportunities. The most common problems at S&OP. Sales & Operations planning aims to predict, balance, and control the integration of supply and demand within the supply chain. Despite the fact that all organizations endorse the importance of S&OP, they often get stuck in a large sandbox of detailed information and metrics. So much so that the executives cannot make the right decisions when it comes to achieving the strategic goals and mitigating risks. What can S&OP do for your organization? It helps the organization’s Ownership, Accountability, and Visibility thruout the organization, A focused Organization with the same set of data and goals instead of silo-driven departments. What are some of the S&OP process results? Improve collaboration: Allow better, a broader collaboration between departments and greater involvement of middle management in the decision-making process. Build consensus: Gain consensus from all stakeholders on changes to nearterm forecasts and plans, with instant insight into the impact on revenue projections, manufacturing capacities, and inventory levels. Align plans with goals: Ensure your company operates on a single plan that supports your financial and service level goals, synchronizing across multiple departments and external trading partners. Improve revenue: Quantifies revenue improvements. Improve working capital: Working capital improvements impact inventory, payables, receivables, and the ability to convert cash to run the business. Improve forecast accuracy: It’s crucial to have a valid forecast driving the demand plan. Demand plan inaccuracies cascade through the supply chain and cost money every step of the way. Increase on-time delivery: Improve on-time delivery. Drive customer satisfaction and brand loyalty. Optimize inventory: Reduce inventory and safety stock. Executives implement the S&OP process because the benefits are tangible. Best-in-class companies report consistent, repeatable performance after implementing these processes, and predictability is all-important.

KURT SCHMIDT Consulting Director

MARKETING

THE ERA OF RECRUITMENT MARKETING When we talk about Recruitment Marketing, we refer to all marketing strategies and activities involved in attracting & engaging a candidate in our company. It doesn’t just involve posting to multiple job boards, and it isn’t the same thing as employer branding. Recruitment Marketing is how you introduce your company’s brand in the candidate journey. It isn’t just executed by recruiters but also by a company’s HR, employer branding, and business leaders. If you’d like to improve your recruitment KPI’s and also candidate’s quality and satisfaction, this is a concept you should be learning more about. Some examples of tactics of Recruitment Marketing include: • Digital & Traditional Media Presence (Social Media, Billboards, TV, Newspaper) • Communication of the company’s values, culture, and EVP • Presence in Networking events/Job Fairs

EMMANUEL SAUCEDO Business Development & Market Intelligence Manager