Prodensa's Weekly Report: General Situation in Mexico

Weekly Review I June 26, 2024

RELEVANT NEWS

INDUSTRIES

AUTOMOTIVE

India and Mexico are strengthening supply chains in the automotive industry amidst potential geopolitical disruptions to facilitate a shift towards electromobili- ty and capitalize on nearshoring opportunities. Prasad Sitaram Shinde, India’s economic and commercial attache?, highlighted Indian investments in Mexico amounting to $4 billion across IT, pharmaceuticals, and auto- motive sectors, with an upcoming $2 billion investment in autoparts in Nuevo Leo?n.

The focus is on diversifying and safeguarding trade amid geopolitical uncertainties, making Mexico a strategic hub for Indian investments. Initiatives include UPL’s $11 million research project in Saltillo and Tata Group’s Titan X plant for automotive cooling parts. Mexico’s attractiveness to global firms, despite trade tensions, is underscored by its role as a major supplier of vehicle parts to North America, generating substantial economic growth and enhancing labor conditions. Both nations are promoting sustainability with tax incentives for electric vehicles and infrastructure development, aiming for 30% electric vehicle adoption by 2030.

SOURCE: EL ECONOMISTA

At the AMDA Forum 2024, experts underscored the crucial need for regulatory certainty in Mexico’s automotive sector to attract investments, create jobs, and boost tax revenue. Discussions focused on Mexican Standard NOM-044-SEMAR- NAT-2017, which sets emissions limits for heavy vehicles. Stakeholders advocated for revising EURO 5-EPA 2007 and EURO 6-EPA 2010 standards amid concerns over ultra-low sulfur diesel (ULSD) avai- lability. They emphasized the importance of balancing emission reductions and fuel efficiency to benefit both transport users and investors. Additionally, the forum ad- dressed upcoming revisions to USMCA regulations, highlighting challenges and opportunities for North American economic integration amidst issues with Chinese steel and US trade conflicts.

SOURCE: MEXICO BUSINESS NEWS

EV

Mexico is pushing forward with its electromobility agenda, highlighted at the COPARMEX Forum Nearshoring Talks 2024. The focus is on attracting investments, particularly in Aguascalientes, to establish it as a leading hub for electric vehicle (EV) manufacturing and to expand nationwide charging infrastructure. However, the industry faces a challenge with a shortage of skilled workers. Mari?a Teresa Jime?nez Esquivel, Governor of Aguascalientes, outlined plans for fiscal reforms, tax incentives, and legislative changes to support these initiatives, aiming to make Aguascalientes a preferred destination for industrial investment.

Francisco Gonza?lez of the National Auto Parts Industry emphasized the sector’s readiness to adopt cleaner energy sources for EV manufacturing, crucial for both environmental sus- tainability and global competitiveness. Despite growth in Mexico’s vehicle manufacturing sector employment, experts like Fernando Enciso from Grupo Surman stress the need for skilled workers versed in environmental regulations and sustainable manufacturing practices to sustain momentum in EV production.

SOURCE: MEXICO BUSINESS NEWS

BYD plans to establish an electric vehicle plant in Mexico, potentially creating 10,000 jobs according to Jorge Vallejo, BYD Me?xico’s general director. The exact location is being finalized, with an official announcement expected soon. The plant would employ more workers than some existing automakers in Mexico, such as Volkswagen’s Puebla facility which employs around 6,100 assembly line workers. BYD has narrowed down potential loca- tions to three states after proposals from 23 states. The company aims to produce 150,000 vehicles annually for the Mexican market and recently introduced its first hybrid pickup truck model, the BYD Shark, in Mexico.

SOURCE: MEXICO NEWS DAILY

NEWS BY STATE

SONORA

During President Andre?s Manuel Lo?pez Obrador’s morning press conference, the Federal Electricity Commission (CFE) presented progress updates on 22 sustainable energy projects in Mexico. Highlights included the 91% completion of the Puerto Pen?asco Photovoltaic Plant, set to become Latin America’s largest upon its conclusion. This development aligns with Mexico’s energy transition goals, as emphasized by Sonora’s Governor Alfonso Durazo Montan?o. Sonora also advances with the operation of the El Novillo hydroelectric plant and progress on other projects like the San Luis Ri?o Colorado Combined Cycle Plant (80% complete) and the Altar Internal Combustion Plant (already operational).

SOURCE: EL ECONOMISTA

BAJA CALIFORNIA

Governor Marina del Pilar A?vila Olmeda of Baja California announced the allocation of 100 scholarships for teacher training as part of the strategy to support investments in the semiconductor industry. These scholarships, supported by Santander Universities and in collaboration with the Emtech Institute, aim to enhance specialized talent development. The initiative underscores Baja California’s role in a semiconductor mega-region, contributing to local development and quality of life. It fosters closer industry-academia collaboration to leverage the region’s strategic position, promoting research, innovation, and practical train- ing opportunities. The program, spanning five months and conducted online, involves educators from various institutions including the Autonomous University of Baja California, the Technological University of Tijuana, the Technological Institute of Tijuana, and the CICESE.

SOURCE: INDUSTRIAL NEWS BC

NUEVO LEON

The government of Nuevo Leo?n aims to expedite the process in 2024 to obtain US presidential approval for the expansion of the International Bridge Colombia. Governor Samuel Garci?a Sepu?lveda has reached agreements with Laredo, Texas, and various federal Mexican authorities. Marco Gonza?lez, Secretary of Regional and Agricultural Development, outlined that they plan to submit the final expansion project to US authorities before December 31. This initiative involves collaboration with multiple Mexican federal agencies, including Customs, Foreign Relations, Finance, National Defense, Infrastructure, Com- munications, Transportation, the National Guard, and the Mexican Consul in Laredo. Cooperation with Laredo city and their consulting firm aims to ensure timely approval for this strategic infrastructure up- grade, supported by federal and municipal partnerships.

SOURCE: MEXICO INDUSTRY

COAHUILA

Coahuila is positioned as the fifth Mexican state with strong economic growth prospects for 2024, according to Citibanamex Economic Studies. Governor Manolo Jime?nez Salinas highlighted collaborative efforts across sectors and emphasized the state’s role as a national example. The administration focuses on fostering investor confidence, creating jobs, and improving quality of life through public policies. Enhanced security has also bolstered investment, with significant funds allocated to this area. The state has seen increased investment projects amid the nearshoring trend, aiming to boost employment and competitiveness.

SOURCE: MEXICO INDUSTRY

CHIHUAHUA

Chihuahua aims to become Mexico’s leading aerospace hub within three years by bolstering its aerospace industry. Mayor Marco Bonilla Mendoza announced plans for a new aerospace park near the airport to enhance local manufacturing capabilities. Currently hosting five of Mexico’s eight aerospace firms, including Textron Aviation and Bell, Chihuahua plans to in- crease assembly capacity for Bell helicopters to 100%. The city’s strategic location and competitive advantages position it well to develop fully domestically manufactured aircraft, supported by a robust network of certified suppliers and favorable conditions recognized by the Mexican Institute for Competitiveness (IMCO).

SOURCE: MEXICO BUSINESS NEWS

TAMAULIPAS

The meeting of the Binational Council for Economic Development of Reynosa (Cobifer) in June focused on enhancing economic development in Reynosa by improving air connectivity at the Lucio Blanco International Airport. Discussions included plans for direct road access from the Reynosa-Rio Bravo highway, public transportation to hotels and industrial parks, and development of a bonded warehouse to boost commercial cargo in- flux.

Airport Administrator Omar Rodrigo Lo?pez emphasized the airport’s role in facilitating investment and growth, aiming to solidify its leadership position. Currently served by Vivaerobus and Aeromexico with routes to Mexico City, Guadalajara, Veracruz, and Cancun, the airport saw significant passenger traffic growth in 2024, handling 202,000 passengers by May, representing 37.4% of the previous year’s total. Cobifer President Luis Cantu? highlighted efforts to promote Reynosa internationally, including engagements with Indian firms and partnerships with organizations like Border Trade Alliance, aiming to attract new businesses and jobs to the growing industrial city.

SOURCE: MEXICO INDUSTRY

GUANAJUATO

In Irapuato, Guanajuato, 20 projects have been successfully implemented, bringing a total investment of $1.563 billion USD and creating 9,954 new jobs. These projects involve prominent companies like Aztema, Ford, Webasto, Procter & Gamble, Walor, Evercast, and Metso Outotec. The investments span diverse sectors including automotive, plastics, mining, personal care, and textiles. This influx of international capital from countries like the US, Germany, Japan, France, Finland, and China solidifies Irapuato’s status as a thriving hub for global investment and business expansion.

SOURCE: MEXICO INDUSTRY

QUERETARO

From January to May, Quere?taro accumulated investment announcements totaling $6,249.8 million USD, maintaining its position as the leading recipient among Mexican states according to the Ministry of Economy (SE) records. These investments are expected to create 4,284 jobs in the state, contributing 16% of the nationwide total of $39,156.5 million USD in investment announcements, which will generate 54,347 jobs across the country. Secretary of Sustainable Development (Sedesu), Marco Antonio Del Prete Tercero, noted that these announcements include projects in various stages from planning to operational phases.

Key among these is Amazon Web Services’ $5 billion USD project, progressing as sched- uled with plans to begin operations next year, focusing on establishing a data center region with three availability zones in Quere?taro. Additionally, investments by DHL and LS Cable & System Me?xico un- derscore Quere?taro’s economic growth prospects.

SOURCE: EL ECONOMISTA

STATE OF MEXICO

Governor Delfina Go?mez A?lvarez of the State of Mexico announced at an event with private sector representatives that MXN 5.06 billion in foreign investment was secured in the state over 8 months. Laura Gonza?lez Herna?ndez, the Secretary of Economic Development, detailed that 62% of this investment is in manufacturing and 38% in services and com- merce. Additionally, 68,465 formal jobs were created, making the State of Mexico the leader in job creation nationwide.

For regulatory improvement, six working groups were established to simplify administrative processes, and an agreement with the Health Department was signed to ensure legal certainty in administrative verifications. A group of economic development experts was also formed to evaluate policies, and efforts have begun to create the investment brand for the State of Mexico.

SOURCE: LA JORNADA

CDMX

Pablo Yanes, a member of the new Mayor of Mexico City, Clara Brugada, Advisory Council, announced at the Coparmex Nearshoring Talks 2024 that the new administration plans to transform Mexico City’s productive profile and capitalize on nearshoring opportunities. Recognized as the 35th largest economy globally and the 7th in Latin America, Mexico City is poised for dynamic and shared growth.

Brugada’s plan aims to shift towards a high productivity, high-value, and tech-dense economy, targeting sectors like electromobility, renewable energy, waste management, creative industries, and various services. This transformation seeks to boost economic growth, improve working conditions, and enhance environmental sustainability through a metropolitan-wide policy. Additionally, a new agency will be established to attract and support investments, ensuring a smooth investment process and addressing future challenges.

SOURCE: EL FINANCIERO

INVESTMENT NEWS

CENTRAL MEXICO

AGCO

The American agricultural machinery manufacturer invested 45 million dollars for the expansion of operations in Corregidora, Quere?taro. The project expects to create 230 jobs.

ITALIKA

The Mexican motorcycle manufacturer announces the construction for the first facility in El Salto, Jalisco with

an investment of 27.9 million dollars and the creation of 1,200 jobs.

NORTH

HAMMOND POWER SOLUTIONS

With an investment of 13.9 million dollars, the company opened the fourth facility for power transformers production in Guadalupe, Nuevo Leo?n. It will create up 450 jobs.

SOURCES: MEXICONOW, CLUSTER INDUSTRIAL

PRODENSA INSIGHTS

Explore our latest blogs and stay updated with valuable insights! Visit our website today: www.prodensa.com

DOING BUSINESS IN MEXICO:

On this blog we made a deep research about forming a business entity in Mexico outlines key steps for foreign investors. It discusses the necessary legal requirements, including obtaining various documents and a tax ID, and explains different business structures such as wholly-owned maquiladoras and profit centers. The post also highlights the importance of compliance with Mexican regulations and understanding the local infrastructure.

THE NEARSHORING SERIES:

The blog “The Nearshoring Series: The Impact of the Shorings in Investment and Economic Development” discusses how global investment strategies like reshoring, offshoring, and tech-shoring are influencing economic development, particularly in the electronics sector. It highlights the significant roles of Mexico and Vietnam in the evolving electronics supply chain and the increasing foreign direct investment from China. The article also emphasizes the importance of sectoral and regional differences and the strategic expansion of American and local companies in cities like Monterrey.

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