Prodensa's Weekly Report: General Situation in Mexico

RELEVANT NEWS

RENEWAL OF THE REGISTER OF SPECIALIZED SERVICE PROVIDERS (REPSE)

The Ministry of Labor has published a new decree that modifies the general regulations for specialized service providers, particularly with regard to the procedure for renewing registrations. Any company providing or benefiting from a specialized service must take measures to ensure that the so-called REPSE is processed within three months before its expiry date. If your company uses service providers or provides a specialized service, you must ensure that the RESPE is renewed before its expiration date.

RENEWAL SCHEDULE FOR REPSES OBTAINED IN 2021

Did You Know?

The requirement of specialization to obtain a REPSE has already been declared unconstitutional by the Second Chamber of the Supreme Court of Justice of the Nation. The Court’s ruling is a setback for the guidelines of the Secretary of Labor and Social Security (STPS), limiting it to the implementation of a list of specialized service providers, but this does not mean that it becomes the administrative authority that approves who may or may not develop or execute specialized works or services.

But be careful, the court’s decision does not exempt employers from ensuring that their specialized service providers are registered in the public registry. Are all your specialized service providers already compliant? If you have any doubts or need advice, please do not hesitate to contact us.

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

February 14-20, 2024

ENVIRONMENTAL ISSUES

? Environmental Protection Reforms: The Secretary of Environment and Natural Resources, Maria Luisa Albores, outlined various environmental protection reforms:

? Open-pit mining: Albores emphasized its detrimental environmental impact, including the removal of vegetation, displacement of wildlife, soil and subsoil destruction, water contamination, and toxic dust generation.

? Fracking: She highlighted the use of hazardous chemicals and the lack of effective wastewater treatment, noting the absence of concessions granted during the current administration.

? Water management: The reforms prioritize personal and domestic water consumption over other uses and aim to prohibit water concessions in water-scarce areas.

? Animal welfare: The reforms seek to prohibit animal abuse, regulate their protection, prevent abuse in breeding and consumption, address pest control and sanitary risks, and integrate animal welfare into the education system.

? Prohibition of transgenic maize: The reforms protect native maize, citing its significance to national identity and the lack of safety studies regarding transgenic maize consumption.

? Water Shortage: The president informed that efforts are underway to repair well equipment needing attention for water extraction, and new wells are being drilled to provide water in the short term in the Valley of Mexico. He reported a medium-term plan to ensure water availability and emphasized the need for an agreement with the State of Mexico, Hidalgo, and Mexico City to guarantee supply.

Also, AMLO criticized the concession granted to the brewery Constellation Brands in Mexicali as it was for export purposes, not for domestic consumption. The president mentioned that this case raised awareness about water issues among the population, as seen in the conducted consultation. Additionally, he revealed efforts to address the situation in Cuatro Cienegas, Coahuila, where ponds are drying up due to irrational water extraction.

? Corn Production: In response to a reporter’s question regarding data published by the National Agricultural Council (CNA), warning that Mexico could become the world’s largest importer of corn, surpassing China, and therefore not achieve food self-sufficiency in corn, the president affirmed that corn production has increased. The president mentioned that the CNA was composed of “elite farmers.” He also said that many of the organizations are linked to the PAN (Partido Accion Nacional), such as COPARMEX.

President Lopez Obrador communicated live with the Secretary of Agriculture, Victor Villalobos Arambula, specifically asking him about the CNA’s statements. The secretary commented that there was a reduction in production in the central-northern region of the country; however, this was offset by corn production in the south-southeast and the delivery of 600 thousand tons of free fertilizer to producers as a result of the “Sembrando Vida” (Sowing Life) program.

SOCIAL AND POLITICAL REFORMS

? Pension Reform: The president discussed the proposed Seed Fund in the pension reform, aimed at compensating affected workers. He highlighted efforts by the government to gather funds before May 1st through savings and budget allocations. The fund is intended to be managed by the Bank of Mexico and will consist of assets confiscated from criminal activities, state debts to ISSSTE and SAT, and savings from the cancellation of autonomous bodies, among other sources.

? Anti-Corruption Efforts: Pablo Gomez, head of the Financial Intelligence Unit, highlighted the government’s efforts to combat systemic corruption, particularly through mechanisms like corporatism and Ramo 23. He outlined the UIF’s operations, including filing 540 complaints with the public ministry, involving 3,115 individuals and 2,087 companies. While declining to comment on ongoing cases, he mentioned ongoing analysis of accounts operated from Barbados involving Mexican individuals.

LEGAL MATTERS

? Trial against Genaro Garcia Luna: Pablo Gomez, the head of the Financial Intelligence Unit, mentioned an ongoing civil process in Florida, aiming to reclaim $634 million allegedly misused by Genaro Garcia Luna. He emphasized the government’s commitment to seeking restitution for stolen funds.

TRANSPORTATION AND INFRASTRUCTURE

? National Strike of Transporters: The President assured ongoing discussions with transporters to provide increased guarantees and security, emphasizing the presence of the National Guard on highways. He acknowledged potential political motives among some transporters related to the upcoming elections, stating that current issues are being addressed and rejecting the notion of government manipulation. He characterized the threat of road blockades as a tactic to incite conflict during the electoral process.

? Rail System Passenger Transport: The president discussed his administration’s efforts to promote the railway system in Puebla, aiming to grant concessions for passenger transportation through a constitutional reform initiative. He plans to reserve 3,500 km of tracks for passenger trains out of the total 18,000 km through the presented reform. Additionally, he emphasized the advantages of this transportation method, highlighting speed, environmental benefits, and plans to connect Mexico-Puebla, Puebla-Veracruz, and Veracruz-southeast routes for passenger transport.

? Interoceanic Corridor: President Lopez Obrador highlighted economic growth in the Isthmus of Tehuantepec and Oaxaca, with Oaxaca experiencing a 13% annual growth rate. He mentioned significant workforce engagement in construction projects in Salina Cruz and Coatzacoalcos, including refinery maintenance and port improvements, contributing to the region’s economic development.

REGIONAL CONCERNS

? Reconstruction of Acapulco: Government officials provided updates on the reconstruction efforts in Acapulco following Hurricane Otis. Key points include:

? Secretary of the Interior thanked businesses for their support and reported a federal investment of 28.463 billion pesos.

? Governor of Guerrero noted operational hotels and stores, progress in debris cleanup, and ongoing efforts to ensure water supply. They also have collected more than 700 thousand tons of garbage.

? Secretaries of the Navy and Defense detailed aid distribution, security measures, and appliance delivery from China.

? Director of CONAGUA outlined actions for water and sanitation improvement.

? Secretary of Health highlighted operational healthcare facilities and ongoing commitments.

? Secretary of Infrastructure announced the upcoming completion of Acapulco Airport reconstruction.

? Secretary of Foreign Affairs mentioned the reopening of the passport office.

NEWS BY STATE

BAJA CALIFORNIA

Through strategic meetings with government, academic, and business leaders from Arizona, the Governor of Baja California, Marina del Pilar Avila Olmeda, strengthened the ties between both states, in addition to creating conditions to empower the talent of young people to ensure a more prosperous future.

On the other hand, Marina del Pilar signed a Memorandum of Understanding with the Mayor of Phoenix, Kate Gallego, in which they agreed to work hand in hand to promote the common binational mega-region through actions that promote the development of markets in both states.

SOURCE: KSDY CHANNEL 50

SONORA

With the arrival of Kyungshin Corp. in Ciudad Obregon, other Korean companies have shown interest in investing in Sonora, so that in the coming months we may see the arrival of new concepts in different municipalities.

The Secretary of Economy of the State, Margarita Velez de la Rocha, commented that they have held talks with representatives of Asian consortiums, both from this country and Japan, dedicated to the manufacturing or automotive sector.

SOURCE: EL SOL DE HERMOSILLO

COAHUILA

Ramos Arizpe has a record of more than 114,000 jobs registered with the Mexican Social Security Institute, and the challenge is to continue to facilitate the growth of the various industries in the municipality. Jose Luis Chapa Resendiz, Undersecretary of Employment and Labor Productivity, emphasized that Ramos Arizpe has the most qualified workforce, with the highest per capita income in Coahuila and one of the highest in the northeast of the country.

SOURCE: EL DIARIO DE COAHUILA

NUEVO LEON

The outlook for the industrial real estate market this year is positive due to new projects driven by nearshoring and electromobility, as well as the boost provided by the electric vehicle assembly plants in Monterrey. However, after two record years of gross demand (leased space), a slight slowdown is expected, according to an analysis by CBRE, a global leader in commercial real estate and investment services.

“Strengthening the power and transportation infrastructure in the city are the main challenges, and we are working on them so that they can provide sufficient supply for the companies that continue to show interest in coming to the region,” he said in a statement. However, he believes that industrial activity will be sufficient to continue driving market growth and that Monterrey’s market indicators will remain very healthy.

SOURCE: EL ECONOMISTA

AGUASCALIENTES

The governor, Maria Teresa Jimenez Esquivel, declared that Aguascalientes is a “state of peace, that knows how to work and give results”, as well as provide facilities for investments: “we have everything that companies require to establish themselves in Mexico”, she said.

At the Nearshoring Mexico Summit “Productivity with a Vision of the Future”, Jimenez Esquivel said that Aguascalientes is consolidating its position as one of the most attractive states for national and foreign investment, due to its competitive advantages, its social and labor peace, as well as the constant university preparation of its young people and the facilities provided to entrepreneurs.

SOURCE: EL UNIVERSAL

GUANAJUATO

Index Guanajuato reports industrial growth and the arrival of new sectors in 2024. According to President Alfonso Valdez, the medical, chemical and cosmetic industries are increasingly present, strengthening the automotive, aerospace, metal-mechanical, plastics and agro-industrial sectors that already lead the manufacturing sector.

As a multisectoral state, the investment portfolio also includes other more traditional sectors, such as textiles and footwear. Guanajuato is currently home to more than 200 IMMEX companies, which together provide approximately 220,000 jobs.

SOURCE: MEXICO INDUSTRY

QUERETARO

Governor Mauricio Kuri Gonzalez participated in the inauguration of the Nearshoring Mexico Summit, where he shared the competitive advantages that the relocation of suppliers has brought to the state and that together with other axes have been its bet for development. Investment, business, education, formality and quality labor as supports for growth and development, according to the governor. He also explained that there are already plans to continue attracting investments next month.

SOURCE: EL DIARIO DE QUERETARO

CDMX

Mexico City is facing severe water stress, with dwindling water reserves and the potential for increased public debt. Standard and Poor’s Global Ratings (S&P) identifies the Mexico City metropolitan area as highly vulnerable to water scarcity, necessitating costly and potentially unsustainable solutions like infrastructure construction, importing water, and conservation programs.

This stress not only impacts natural resources but also strains government finances, leading to increased borrowing. Despite the city’s financial autonomy, it must incur more debt to address the crisis. The economic impact includes limitations on potential growth and the relocation of water-sensitive industries. Overall, water scarcity poses significant risks to Mexico’s economic and fiscal stability, necessitating urgent action and investment in water management and infrastructure.

SOURCE: EL CEO

STATE OF MEXICO

The State of Mexico’s Finance Secretariat has disclosed the allocation of 2.5 billion pesos from the State Municipal Strengthening Fund (Fefom) for the current fiscal period. At least half of these funds are earmarked for social investment, contingent upon municipalities being current with their contributions to ISSEMyM. An agreement signed by the department head, Paulina Moreno Garcia, mandates withholding half of the allocated 877 million pesos from 35 participating municipalities in the special Fefom program.

Ecatepec is set to receive the highest allocation of 102.2 million pesos, with Chimalhuacan, Naucalpan, Nezahualcoyotl, Tlalnepantla, and Toluca following suit. Resource distribution is based on 2020 Census data, factoring in population, level of marginalization, and population density. Municipalities such as Almoloya del Rio, Atizapan, Capulhuac, Chapultepec, among others, are slated to receive comparatively smaller sums, each below 10 million pesos.

SOURCE: MILENIO

INVESTMENT NEWS

NORTH

FREIGHTCAR AMERICA

The railway wagon manufacturer announced the opening of its 35 million dollars investment in its facility in Casta?os, Coahuila. The project estimates the creation of 500 jobs in the region. XCMG The Chinese heavy machinery manufacturer announces expansion of its plant with an investment of 80 million dollars and the creation of 500 jobs in Cienega de Flores, Nuevo León.

SANTA FE INDUSTRIAL PARK

Government of Coahuila announces the groundbreaking of a new Industrial Park with a 35 million dollars investment in Torreón, Coahuila. The amount of jobs that will be created has not been disclosed yet.

SKYJACK

The handling equipment manufacturing company announced the opening of its second facility with a 80 million dollars investment and the creation of 900 jobs in Ramos Arizpe, Coahuila.

CENTRAL MEXICO

DHL SUPPLY CHAIN

The company announced the groundbreaking of a logistics campus in Nextlalpan, Estado de México with a 4 billion dollars investment. The project is set to create 2,500 in the region.

EATON

The energy management company announces an 85 million dollars investment and the creation of 300 job opportunities in Querétaro.

VOLKSWAGEN

The automotive company announces an investment of 1 billion dollars for a new EV assembly line in Cuatlancingo, Puebla. The amount of jobs that will be created has not been disclosed yet.

SOURCES: CLUSTER INDUSTRIAL, MEXICO INDUSTRY