Prodensa's Weekly Report: General Situation in Mexico
RELEVANT NEWS U.S.
AUTOMOTIVE STRIKE ENDS WITH ‘HISTORIC’ VICTORY FOR WORKERS
The United Auto Workers (UAW) officially ended the U.S. strike against General Motors (GM), Ford, and Stellantis, which began on September 15, on Monday, after achieving what has been described as a “historic” victory for the workers.
The third and final agreement with GM was announced simultaneously on Monday by UAW President Shawn Fain and GM President Mary Barra. Fain said in a video posted on social media that the tentative pact, which must now be ratified by workers, was reached in the morning.
“Now that we have a landmark tentative agreement with GM, we are officially suspending our strike against the Big Three (GM, Ford, and Stellantis),” the union leader added.
For her part, GM President and CEO Mary Barra said in a statement that the company was pleased with this pact, which “reflects the contributions of workers” while allowing the manufacturer to continue investing in the United States.
BIDEN REVEALED THE AGREEMENT
The existence of the agreement was leaked hours earlier by U.S. President Joe Biden, who revealed Monday that negotiations had indeed come to fruition after months of meetings. “I just spoke with (UAW President) Shawn Fain. They have reached a historic agreement with GM, Ford, and Stellantis. A lot of hard fought for,” he declared.
The UAW president also called the concessions extracted from the companies historic as Fain briefed his members Sunday on the contents of the agreement signed with Ford on Oct. 25, which was followed by the Stellantis deal on Saturday.
Biden said the new contracts with Detroit’s Big Three “reward workers who accepted major concessions to keep the industry alive during the financial crisis more than a decade ago.
The agreements include 25 percent wage increases, better retirement benefits, more opportunities for temporary workers to become permanent employees in less time, and billions of dollars in investment in new U.S. plants.
They also give Detroit’s Big Three labor peace for the next four years. The strike has cost each of the three manufacturers about $200 million a week, for a total of between $1.2 billion and $1.3 billion during the sixweek dispute. Michelle Fecteau, director of the Center for Labor and Community Studies at the University of Michigan, told EFE that the new contracts negotiated by the UAW are “very positive” for the workers.
KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE
October 25-31, 2023
NATURAL DISASTERS AND ENVIRONMENTAL CONCERNS
? Damages from Hurricane OTIS in Guerrero
The President acknowledged severe damage caused by Hurricane Otis in Guerrero’s coastal areas. He noted a loss of communication and initiated the Plan DN-III for disaster relief and communication restoration. Secretary Rosa Icela Rodriguez detailed the hurricane’s evolution and the government’s extensive response, with President Lopez Obrador overseeing relief efforts.
Ongoing efforts involve the assessment and reconstruction of damaged infrastructure, support for affected communities, and plans for restoring essential services and communication. General Luis Crescencio Sandoval, Secretary of National Defense, informed that Aeropuerto Internacional de Acapulco was established as an air bridge and that flights from Mexico City facilitated evacuation.
The Governor, Evelyn Salgado, reported 46 casualties and 58 missing persons as of October 31st, highlighting the success of the emergency search program in locating 214 individuals previously unaccounted for. Progress was also reported by the General Director of CFE, Guillermo Nevarez Elizondo, on restoring power and water to the region. Lastly, the President denied accusations of delayed hurricane alerts and explained the extraordinary speed of Otis’s escalation to Category 5.
? Sonora River
Discussions involved the negligence of Grupo Mexico and persistent health issues in communities affected by the Rio Sonora spill. Efforts are being made to resolve this, contingent on the company’s willingness.
? Natural Disaster Fund (FONDEN)
The President defended his decision to cancel the Natural Disaster Fund (FONDEN) due to allegations of corruption during the previous administration and highlighted mismanagement and misuse of funds.
LEGAL AND GOVERNANCE MATTERS
? Elimination of trusts from the Judiciary
President Lopez Obrador supported the cancellation of 13 judicial trusts, expressing concerns over high judicial salaries and possible corruption within the Supreme Court.
? Federal Revenue Law 2024
The President expressed gratitude for the approval of the Federal Revenue Law, highlighting that it doesn’t introduce new taxes or fuel price increases. He emphasized that the law provides sufficient resources to ensure the country’s growth and the people’s welfare without indebting the nation.
It maintains a deficit that keeps the debt below the GDP, far lower than the increments seen during previous administrations. Stressing no imminent economic crisis, he underscored the current economic and employment growth, awaiting the approval of the budget, exclusive to the Chamber of Deputies.
? Samuel Garcia’s leave of absence
the President Acknowledged his good relationship with Samuel Garcia, the Governor of Nuevo Leon despite their differing political affiliations and confirmed his support for Garcia during his leave of absence.
? Public financing for political parties
The President discussed returning funds designated for bridge repair in Sinaloa, arguing that the reduced party funding proposal faced opposition. He stressed the need for constitutional reforms and a thoughtful vote based on programs and candidates rather than party lines. Moreover, he highlighted challenges faced by expatriate voters and the perpetuation of misinformation during elections. The President urged ethical business practices and announced adjustments in the conference schedule for the coming days.
ECONOMIC AND BUSINESS TOPICS
? Investments in Tamaulipas
Discussing significant energy investments in Matamoros by the Australian company Woodside Energy, expected to extract 140,000 barrels of oil per day from around 2027, the President highlighted the burgeoning foreign interest in Tamaulipas due to its potential, including a project for a commercial and industrial hub, the Development Transformation Center, and New Fortress Energy’s construction of a liquefaction plant. He also celebrated Mexico’s economic growth, creasing foreign investment, and its continuing status as the US’s primary trade partner.
? Tax collection
President Lopez Obrador noted that nearly 2 trillion pesos have been reclaimed by combating corruption and tax waivers. He highlighted that as of October 25, tax revenues reached 3.677 trillion pesos, marking a 9.9% real increase from the previous year. He emphasized support for PEMEX in its tax obligations due to its significant contribution and the need for its economic independence.
SOCIAL ISSUES
? Development of Sonora
The President highlighted the importance of Sonora’s development due to its strategic mineral contributions, ongoing construction, and upcoming projects with the US, emphasizing resources essential for electric vehicles.
? Situation of coffee producers in Veracruz
Nestle’s subsidiaries reportedly reduced coffee prices, sparking discontent among farmers. The President addressed the issue, advocating for dialogue between Nestle representatives and the affected farmers. Despite accusations and arrests, the President expressed hope for a resolution, emphasizing the need to address the situation through the Secretary of Governance.
INTERNATIONAL AFFAIRS:
? Palestinian conflict
President Lopez Obrador informed that Mexico’s Foreign Secretary is overseeing the release of individuals detained by Hamas in Palestine.
? Elections in Guatemala
Lopez Obrador advocated for respect toward Guatemala’s democratic choice and the elected candidate, Bernardo Arevalo. He emphasized the cultural ties between Mexico and Guatemala inherited from the Mayan civilization, while expressing hopes for peaceful resolutions if any conflicts arise from the election results.
NEWS BY STATE
BAJA CALIFORNIA
Baja California’s economic sector grew during the second quarter of the year, registering an increase of 4.4% and ranking ninth nationally, according to the National Institute of Statistics and Geography (Inegi). During the second quarter of 2023, Baja California’s economic activity showed an annual movement of 4.4%, resulting from the advance of primary, secondary and tertiary activities of 18.9%, 5.9% and 2.2%, respectively.
SOURCE: EL IMPARCIAL
SONORA
Electricity supply interruptions in Sonora caused the Federal Electricity Commission (CFE) to allocate 433.48 million pesos to reinforce the electricity infrastructure in the state, said Hugo Martinez Lendechy, distribution manager of the CFE’s northwest division, and Hugo Alberto Niebla, head of the CFE’s northwest commercial division. With this amount, the CFE will seek to guarantee the electricity supply of 1.17 million Sonora users.
SOURCE: EL FINANCIERO
NUEVO LEON
Ivan Rivas, Secretary of Economy of Nuevo Leon assured that Tesla already has all the federal and state permits to set up in the state, after rumors arose that the company would not carry out the construction of the Gigafactory in the municipality of Santa Catarina. On the other hand, the official stated that in general there is great news for Nuevo Leon, given that it is going through an economic boom with foreign direct investment at record levels.
SOURCE: TELEDIARIO
CHIHUAHUA
Chihuahua, as an investment destination, has great competitive advantages. It is the first place nationally in manufacturing employment with more than 518,000 workers. It has 53 industrial parks and has attracted 1.8 billion dollars in Foreign Direct Investment (FDI). Chihuahua climbed four positions in the Competitiveness Index. It went from twelfth to eighth place nationally.
This places Chihuahua in the top of the most competitive states in the country, according to the Mexican Institute for Competitiveness (IMCO). According to the organization’s analysis, Chihuahua was the second state with the greatest progress compared to the previous edition.
SOURCE: ALTO NIVEL
COAHUILA
During the session of the Congress of Coahuila held this Tuesday, the opinion of the Finance Commission of the LXII Legislature was approved by majority vote regarding the initiative of decree through which Article 24 of the Finance Law for the State of Coahuila is amended, signed by Governor Miguel Angel Riquelme, in order to increase the Payroll Tax (ISR) rate in the state from 2 to 3 percent.
Through this increase, it will be possible to raise up to 1.5 billion additional pesos for Coahuila, which will be administered through two trusts. It is worth mentioning that the first of these trusts would administer 80 percent of the increase of the percentage point for the collection of the Payroll Tax, which would be focused on investment for works that generate competitiveness, labor stability with more and better jobs, economic development, preservation of the rule of law and in general the necessary actions to capitalize nearshoring and promote the state to be a “Global Coahuila”.
SOURCE: HERALDO DE SALTILLO
QUERETARO
Industrial micro, small and medium-sized enterprises (MSMEs) are betting on joining the business opportunities arising from the relocation of companies (nearshoring). Therefore, they are working to strengthen their training and certifications, explained the president of the Association of Industrial MSMEs of Queretaro (Amiqro), Jose Luis Camara Gil, stating that one of the sector’s challenges is to take advantage of nearshoring.
SOURCE: EL ECONOMISTA
JALISCO
So far in 2023, Jalisco is the national leader in the creation of new companies with the registration, from January to September, of 1,757 new employers before the IMSS, which speaks of a “pro-business” state, said the strategic general coordinator of Growth and Economic Development, Xavier Orendain de Obeso. The official emphasized that the generation of more and better entrepreneurship “is key to the growth and development of the state”, which is why, for the second consecutive year, the state government presented the Jalisco Entrepreneurship Award 2023.
SOURCE: EL ECONOMISTA
AGUASCALIENTES
The German company Balluff started operations at its plant in the Santa Fe Tecnopark industrial park, in the municipality of Jesus Maria. With a capital of 50 million euros and the generation of 700 new jobs, it will manufacture sensors and automation systems in a 7,000 square meter building.
SOURCE: EL UNIVERSAL
CDMX
The Mexico City Tourism Secretariat reported that it is collaborating with the National Fund for Tourism Development (Fonatur) on a new initiative to bolster the current momentum in the city’s tourism sector. This initiative is known as the Tourism Development Program of Mexico City, New Tourist Centralities.
As per the fifth activity report to the city’s Congress, the aim of this program is to create a comprehensive tourism planning study for Mexico City. This study will enable the Tourism Secretariat to propose new strategies and initiatives across all districts. The objective is to develop fresh tourism products and move away from focusing solely on the traditional tourist zones.
SOURCE: EL ECONOMISTA
STATE OF MEXICO
The State Government of Mexico, led by Maestra Delfina Gomez Alvarez, will provide comprehensive support to companies to streamline pending procedures from previous administrations, aiming to attract and maintain investment in the region. Laura Gonzalez Hernandez, Secretary of Economic Development of the State of Mexico (Sedeco), confirmed during a meeting with the National Chamber of the Canned Food Industry (CANAINCA) that the Economic Development Secretariat will handle every step of the procedures initiated in previous stages.
The government is working on resolving regulatory improvements through the State Commission for Regulatory Improvement under the Secretariat. Additionally, the administration is focusing on implementing digital government schemes to stimulate capital investment and job creation in the state.
SOURCE: NDL NEWS
INVESTMENT NEWS
NORTH
HONEYWELL
The recent announcement of a 150-million-dollar investment by Honeywell marks a significant stride in its ongoing expansion within the Nuevo Leon region, highlighting its commitment to the area’s economic and technological development. On October 26, 2023. Governor met with executives from Honeywell at the Government Palace in Monterrey, confirming a substantial increase in the company’s regional presence.
VITRO
VITRO inaugurated its Coater 8 in Mexicali, with an initial investment of 60 million USD, aiming to serve the construction and automotive sectors, specifically for electrified vehicle models. The total investment is projected to reach 100 million USD by 2025. This strategic move leverages.
CENTRAL MEXICO
BALLUF
German electronic components manufacturing company Balluf has just announced an expansion amounting $53 MD in Aguascalientes that will generate over 100 jobs in the short term and over 700 jobs in the long term.
GEBAUER & GRILLER
Austrian company dedicated to electrical wiring for the automotive industry has just announced an expansion in San Juan del Rio, Queretarothat is expected to create over 300 new jobs in the region. The amount was not disclosed at the time.
SAFRAN
Safran SAESA inaugurated a major expansion in Queretaro, investing around $78.7 million USD to boost its aerospace engine repair capacity. Led by Marco Antonio Del Prete Terceroof SEDESU, the event marked a milestone for the Mexican aerospace industry and will create 480 new jobs in the area.
DAEDONG DOOR
The Governor of Zacatecas led the Investment Intention Signing with Korean company Daedong Door in Zacatecas, aimed at bolstering the region’s economic development. With a projected investment of around $32.8 million. Daedong Door plans to establish its first plant in the area, resulting in the creation of an initial 300 jobs.
NEARSHORING: FAILURES IN CUSTOMS SYSTEMS HINDER NEARSHORING
The failures that the country’s customs systems have suffered, which could be cyber-attacks, go against the spirit of nearshoring and the competitiveness of exporting and importing companies.
Having robust systems, investing in new technologies, cybersecurity and the resilience of Mexico’s trade systems is an indispensable part of national security and, of course, trade efficiency and the speed of nearshoring.
Companies want to get closer to their target market and get there as quickly as possible, so these short-term factors create more serious problems. There are factors that cause the relocation of value chains in Mexico to be here and to be here for some time, but obviously, the failures in the customs systems do not help day-to-day trade or competitiveness.
SOURCE: EL FINANCIERO