Prodensa's Weekly Report: General Situation in Mexico

RELEVANT NEWS

NEARSHORING ATTRACTS MORE THAN 20 JAPANESE COMPANIES TO INVEST IN MEXICO.

The Japan External Trade Organization (Jetro) announced that more than 20 Japanese companies are interested in investing in Mexico due to the phenomenon of relocating production lines, also known as “nearshoring”.

Currently, more than 20 Japanese companies are conducting feasibility studies, but it is not known how many of these companies will actually decide to invest in Mexico,” said Takao Nakahata, director of Jetro in Mexico, in an interview.

The companies are involved in a variety of industries, ranging from the manufacture of medical devices and batteries to those specializing in sustainable paper for restaurants for the specific market of California, United States.

Likewise, the director of Jetro in Mexico pointed out that most of the companies with Japanese investment plan to expand their existing operations in the country. “Also, Japanese companies already present in Mexico, and there are quite a few, are thinking of expanding their production lines,” he added.

Nakahata explained that “there is no more room for production” for some Japanese companies, so they will expand their investments and even build new factories to meet their high demand.

“This kind of plan to increase investment or as an expansion plan exists,” he stressed. Nakahata highlighted investments by companies such as air conditioner manufacturer Daikin, which recently expanded its operations in San Luis Potosi, a state in central Mexico.

The Jetro representative in Mexico also said that Japan is confident in the future of the manufacturing industry in Mexico as a focal point for supplying North America.

“We are confident in the future of manufacturing in Mexico to supply the North American market. Mexico is a very important place for manufacturing production; every year it increases its production volume,” he said.

An example of this, he added, is the promotion of large industries already established in the country, such as the automotive industry, but also new technologies and the “Internet of Things” for Industry 4.0.

Nakahata noted that they are looking for Japanese companies to set up their factories in Mexico and also add value to the Mexican maquila industry with technological solutions, automation, and services.

“We want to promote the technology of Japanese companies to solve or add more value to the Mexican manufacturing industry,” he said. Jetro data shows that there are at least 1,300 Japanese companies in Mexico, more than 50% of which are in the manufacturing sector.

Meanwhile, three out of ten companies with Japanese investment in Mexico operate in Guanajuato, a state in the center of the country.

Jetro has been present in Mexico since 1958 and has grown from a manufacturer of oil extraction machinery to a major player in the automotive industry.

SOURCE: FORBES MEXICO

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

POLITICAL AGENDA

? Changes in the Government: The President announced that a replacement has been found for Ricardo Sheffield as the head of the Federal Consumer Protection Agency, although he did not reveal the name. Moreover, President Lopez Obrador also mentioned that he will continue naming replacements for officials who have resigned to pursue political candidacies.

? INAI: President Lopez Obrador mentioned that the Supreme Court’s order to the Senate to appoint the pending commissioners of the National Institute for Transparency, Access to Information, and Personal Data Protection (INAI) is an issue between the Judicial and Legislative branches.

? Judicial Power: President Lopez Obrador reiterated the need for judicial reform, criticizing the judiciary for serving “conservative” interests. He cited reasons for the reform, including attempts to block his government’s public projects through legal challenges. He accused the judiciary of favoring foreign companies against the Federal Electricity Commission, leading to excessive electricity tariffs. The president also mentioned a corruption investigation involving businesses and local and federal judges, emphasizing his commitment to combating corruption. He requested the reporter to share the investigation for review by the Ministry of Public Administration.

? TEPJF: Regarding the criticism that most of the candidates proposed for these magistrates have connections with Minister Aguilar, Minister Norma Pi?a, and the current president of the tribunal, Reyes Mondragon, President Lopez Obrador expressed confidence in the legislators’ decision-making proforeign investment and the anticipated remittances, which are expected to surpass $63 billion

BILATERAL RELATION

? Meeting with Blinken: President Lopez Obrador announced that on October 5th, there will be a meeting at the National Palace with Antony Blinken, the Secretary of State, and Merrick Garland, the Attorney General of the United States, to discuss security, migration, and drug trafficking issues.

? Energy: President Lopez Obrador mentioned that during the meeting with Amos J. Hochstein, the Special Presidential Coordinator for Global Infrastructure and Energy Security in the United States government, they discussed the advancement of investment projects in Mexico, including the Sonora Plan. In this context, he highlighted the $30 billion that have flowed into the country because of Nuevo Leon.

? Migration: The president discussed migration, expressing sadness over the deaths of Cuban migrant women in a Chiapas accident. He praised President Biden for not continuing the border wall and called for cooperation to prevent such accidents. He announced a meeting with US officials and neighboring countries’ ambassadors to address migration and drug trafficking. Despite close collaboration with the US, he believes these issues are used for political propaganda by Republicans during US elections, but he doesn’t think their measures will work due to an informed public.

? Bilateral Relation: President Lopez Obrador dismissed criticisms from the US Republican Party as part of an electoral strategy for the upcoming US presidential elections. He revealed his plan to visit seven municipalities in Baja California from November 10th to 12th to address migration and border issues and mentioned attending Governor Marina del Pilar Avila’s Government Report on November 12th. Lastly, he urged US lawmakers to maintain support for programs in Central America and the Caribbean aimed at reducing poverty, creating jobs, and curbing illegal migration.

INDUSTRY

? Nearshoring: President Lopez Obrador highlighted the growth of foreign investment in Mexico, with companies from the United States, Canada, Taiwan, and Japan among those investing in the country. He emphasized the government’s efforts to facilitate investment, citing the example of Tesla and their agreements to address water-related issues in Nuevo Leon. The president also noted that in the second half of this year, Mexico has attracted nearly $30 billion in Foreign Direct Investment.

INFRASTRUCTURE

? Maya Train: The Secretariat of National Defense provided updates on the Maya Train’s second section and the construction of the Edzna Hotel in Campeche. Governor Layda Sansores praised Grupo Carso’s work on the project and criticized other business groups for tax evasion. The director of the National Institute of Anthropology and History (INAH) emphasized their support for the project, which has led to the recovery and preservation of natural and archaeological features, including 2,252 such features like caves and cenotes.

? Water Supply: President Andres Manuel Lopez Obrador emphasized that CONAGUA (National Water Commission) has a plan in place to address and ensure water supply despite the low rainfall this year. He requested the head of the agency to present next week to provide details on the plans, projects, and direct support to municipalities facing water shortages.

ENERGY

? Mining Concessions and Lithium Nationalization: President Lopez Obrador clarified that mining concessions were primarily related to minerals like gold, silver, and copper, with the Chinese mining company being the only notable case of cancellations. He emphasized the importance of nationalizing lithium, a strategic mineral, for the country’s development..

? Oil Extraction and Contracts: President Lopez Obrador discussed the oil industry, noting that despite the energy reform granting 110 oil exploration contracts, only three are currently in production, far below the promised 3 million barrels per day. Many companies have sold their oil concessions to Mexican, American, and Dutch firms. He highlighted for a field capable of producing 200,000 barrels per day. Despite renewable energy efforts, oil demand is expected to continue for the next 30 years.

? Amparos and Electric Industry Law: When asked about amparos (legal protections) against the Electric Industry Law, President Lopez Obrador did not provide a specific response and instead focused on criticizing past administrations.

NEWS BY STATE

SONORA

The presentation of the Sonora Sustainable Energy Plan to different exponents of the economy in Asia awakened the interest of the electrical and electronics industry to move their operations to the state, said Alfonso Durazo. At the end of the international work tour, the governor met with members of the Taiwan Electrical and Electronics Manufacturers Association (TEEMA), to whom he showed what is being done in the state in the use of clean energy and electromobility.

SOURCE: PROYECTO PUENTE

BAJA CALIFORNIA

Baja California ranked first nationally with the highest number of manufacturing and non-manufacturing IMMEX establishments, with 1,169 establishments, representing 18% of these companies in the country. Of these 1,169 companies, 956 were manufacturing and 213 were non-manufacturing, according to information from the Monthly Statistics of the Manufacturing, Maquiladora and Export Services Industry Program (IMMEX) published by INEGI.

SOURCE: EL UNIVERSAL

CHIHUAHUA

With the participation of experts, energy operators, equipment and infrastructure manufacturers, Index’s Energy and Sustainability Forum kicked off with the objective of being a meeting point, dialogue and analysis in energy and sustainability management for the Immex and its interaction with the national electricity system.

“Energy is the engine that drives the progress of our communities and the growth of our companies. At Index Chihuahua, in the industry in general, there is a commitment to productivity, doing more with less and all this with a focus on sustainability and zero-polluting practices,” said Myrna de las Casas, director of Index Chihuahua.

SOURCE: DIARIO MX

COAHUILA

In six years Coahuila recorded considerable progress in the aerospace industry, which began with the planning in this administration, which was linked to the extraction of Shell gas, which was going to put the state as a spearhead in this area, said Governor Miguel Riquelme. In this activity, more than 150 thousand jobs were projected, but the Federal Government did not allow the exploitation of this energy by means of the socalled “fracking” process, which will finally have to be used, he said.

SOURCE: VANGUARDIA

NUEVO LEON

The hiring of Tesla and many other large companies coming to Nuevo Leon due to the nearshoring boom will be done in phases; next year it could be managers in finance and human resources, then engineering, and by 2025 it could be manufacturing, said Jorge Alberto Guerrero Limon, director of PageGroup Northern Zone.

He indicated that salary increases are already occurring as a result of the nearshoring effect and will continue to increase due to inflation and talent retention, with percentages ranging from 5 to 15%, while last year companies increased salaries between 3 and 4%. The Nuevo Leon Compensation Study 2023-2024 shows that Monterrey is currently one of the cities with the highest acceleration of manufacturing growth in the country.

SOURCE: EL ECONOMISTA

TAMAULIPAS

The role of an aerocluster is to promote the aeronautics sector and help small and medium-sized companies in the state to integrate into this industry, said former senator Lizette Clavel Sanchez, who recognized the work being carried out by the Aerocluster of Tamaulipas. He explained that in Mexico, all areas of an airplane are developed, from landing gear, turbines and interiors, to structures and maintenance; and although a complete airplane is not yet assembled in the country, it is estimated that this goal will be achieved in the next few years. SOURCE: A21

GUANAJUATO

Nearly 70% of the total investment that has come to Guanajuato in the current six-year term is through nearshoring, said Ramon Alfaro Gomez, Secretary of Sustainable Economic Development. In an interview with El Economista, he explained that by the end of the first semester of 2023, the investment goal set by the administration of Diego Sinhue Rodriguez Vallejo had already been exceeded. The goal was to reach 5,000 million dollars and we already have 6,200 million. SOURCE: EL ECONOMISTA

AGUASCALIENTES

In her first year in office, the governor of Aguascalientes, Tere Jimenez, promoted programs and actions to strengthen the state’s economy, attract new investments and generate more and better jobs. To this end, Tere Jimenez made working tours to Japan, Germany, the United States, Italy, Spain and France, which resulted in more than 2 billion dollars in committed investment for the state from companies in Japan, Germany, China and Turkey.

SOURCE: EL SOL DE CENTRO

SAN LUIS POTOSI

San Luis Potosi registered an increase of close to 30 percent in exports abroad compared to 2020, with a total of 17,754.3 million dollars, another sign that San Luis Potosi has already taken off in terms of growth of the state’s economy and international promotion policies.

This was informed by the head of the Secretariat of Economic Development, Juan Carlos Valladares Eichelmann, who emphasized that, in accordance with the policy of development and economic dynamism promoted by the current state administration, follow-up and support is given to the industrialists and entrepreneurs of San Luis Potosi, in order to place the state in a better place in the eyes of the world.

SOURCE: EL SOL DE SAN LUIS

JALISCO

The national Silicon Valley in full expansion. According to the Institute of Statistical and Geographic Information of Jalisco (IIEG), based on data from the Mexican Social Security Institute, the electronics industry currently generates 77,148 jobs, a much higher number compared to the 27,509 jobs it generated in 1998.

In addition, during July 2023, employment increased 10.71 percent over the same month of the previous year. Mireya Pasillas Torre, director of Statistical, Economic and Financial Information of the IIEG explained that in terms of employment, the industry will continue to grow due to the large number of projects in the sector. SOURCE: INFORMADOR

QUERETARO

According to the National Institute of Statistics and Geography (INEGI), exports for the second quarter of 2023, indicate that the states with the highest contribution to the total value of exports were: Chihuahua (13.8 percent), Coahuila de Zaragoza (12 percent), Nuevo Leon (10.4 percent), Baja California (10.3 percent) and Guanajuato (6.1 percent).

Together, these states accounted for 52.6 percent. Meanwhile, the state of Queretaro is the eleventh largest exporter (in all types of inputs), with an export value of 4,742.2 million dollars, accounting for 3.5 percent of Mexico’s exports. SOURCE: AM QUERETARO

CDMX

The 2024 budget proposal in Mexico shows that three entities, namely Mexico City, Tabasco, and Yucatan, are set to receive over 100 billion pesos each, making up 53.4% of the total investment spending. This distribution reflects Mexico City’s role as a hub for federal institutions and the federal government’s focus on southern and southeastern regions for projects like the Tren Maya and the Corredor Interoceanico.

While some states will receive substantial funding, others, including Baja California Sur, Aguascalientes, and Colima, are expected to receive less than 10 billion pesos, representing 5% of the total investment spending. The allocation is expected to impact the development and economics of these regions, particularly in the case of the Tren Maya project’s influence on Yucatan.

SOURCE: EL ECONOMISTA

STATE OF MEXICO

An afternoon clash on Monday between residents of Tonanitla and municipal police officers from Tecamac resulted in at least five people injured and damage to five official vehicles. The incident occurred around noon on Ojo de Agua Boulevard, which connects both localities, reportedly stemming from territorial boundary disputes between the two areas.

SOURCE: MILENIO

INVESTMENT NEWS

NORTHEAST

MARTINREA

Canadian company Martinrea has established its seventh plant, an investment of $85 million was al it took for ”The Estampados II Plant” to open its doors, the new plant will generate around 450 jobs and its activities will be mainly focused in stamping and complex assembly.

SUNSTRONG

Sunstrong Internacional has committed a substantial $20 million investment in Torreon, Coahuila, where it will establish operations focused on the production of Milwaukee tool chargers. This strategic move, marking the 57th investment project in Coahuila for the year, is poised to create a robust employment base of 500.

MARS

American company Mars has invested an initial $17 million in Coahuila, Mexico, for the development of a new industrial park. Located in Frontera, the park covers 88 hectares and comprises 79 lots, with plans for an additional 80 hectares in a second phase. This investment supports Coahuila’s efforts to attract new businesses and create jobs in the region.

CDMX

MERCEDES BENZ

Mercedes-Benz has invested over $6 million dollars in a new Vehicle Preparation Center (VPC) in, Tlaxcala, Mexico, expected to create over 80 jobs in its final phase. Cuapiaxtla This VPC inspects and prepares high-end vehicles before sale, contributing to employment in the region and showcasing Mercedes-Benz’s commitment to Tlaxcala’s environment and mobility.

CENTRAL MEXICO

BROSE

German company BROSE plans to build a fourth plant in Queretaro, Mexico, dedicated to producing automotive window systems, creating 600-700 jobs starting in 2025. The expansion reflects BROSE’s confidence in the state’s workforce and education quality, reinforcing its presence in the automotive sector.