Mexico Economic Weekly - November 20

UNCLAS SECTION 01 OF 05 MEXICO 003311 SIPDIS SENSITIVE STATE FOR WHA/MEX, WHA/EPSC STATE FOR EEB USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GWORD TREASURY FOR IA ENERGY FOR WARD, LOCKWOOD AND DAVIS E.O. 12958: N/A TAGS: ECON EFIN ETRD ENRG ELTN EAIR PGOV SENV MX SUBJECT: Mexico Economic Weekly - November 20 ¶1. (U) The Mexico Economic Weekly supplements reporting from Mission Mexico Consulates and the Embassy Mexico Economic Section to provide a sense of ongoing trends. Please contact Adam Shub (shubam@state.gov) or Sigrid Emrich (emrichs@state.gov) for questions or comments about this report. ¶2. (U) Table of Contents: ECONOMY AND FINANCE: -------------- INFONAVIT MORTGAGE ORIGINATION DOWN 20 PERCENT IN 2009 - Ciudad Juarez PROPOSED 2010 JALISCO BUDGET: MORE FEDERAL MONEY, PUBLIC TRANSPORTATION INVESTMENT - Guadalajara THOUSANDS ATTEND MONTERREY JOB FAIR - Monterrey REAL ESTATE AND CONSTRUCTION MARKET IN YUCATAN REMAINS WEAK - Merida JALISCO CREATES JOBS IN OCTOBER - Guadalajara TRADE AND INVESTMENT: -------------- MATAMOROS MAQUILA MEMBERSHIP HOLDING STEADY; EMPLOYMENT NUMBERS UP IN LAST QUARTER - Matamoros JOHNSON CONTROLS EYES NEUVO LEON FOR HYBRID BATTERY PLANT - Monterrey DEMAND DOWN, PRICES UP AS CHRISTMAS TREE SALES BEGIN - Monterrey TEQUILA INDUSTRY PURSUES FURTHER PROTECTIONS - Guadalajara ENERGY: -------------- TORREON ANNOUNCES US INVESTMENT IN BIOENERGY PLANT - Monterrey PEMEX: PETROLEUM PRODUCTION TO STABILIZE AT 2.5 MILLION BARRELS A DAY - Mexico City LABOR: -------------- SME ACTIVITIES - AFTER THE NATIONAL PROTEST - Mexico City ENVIRONMENT, SCIENCE TECHNOLOGY AND HEALTH: -------------- 2ND MEETING OF GLOBE STUDENTS AND TEACHERS IN MEXICO CITY - Mexico City NEW TECHNOLOGY AND SCIENCE PARK OPENS IN CIUDAD VICTORIA - Matamoros -------------- ECONOMY AND FINANCE -------------- ¶3. (U) INFONAVIT MORTGAGE ORIGINATION DOWN 20 PERCENT IN 2009: Mexico's largest mortgage lender, Infonavit, reported a 20 percent year-over-year decrease in mortgage originations in Chihuahua this year to November (24,000 loans Jan-Nov 2009; 31,000 loans Jan-Nov 2008). Infonavit's Chihuahua state delegate attributed the decline to the state's high unemployment rate, which at 9.7 percent is the highest of any Mexican state. MEXICO 00003311 002 OF 005 Infonavit specializes in lending to lower-income segments of the population employed in the formal sector of the economy. Workers in the hard-hit maquila sector in Ciudad Juarez comprise the largest percentage of the state's 216,000 borrowers. Infonavit said non-performing loans in the state were equivalent to 5.45 percent of its portfolio as of the end of October (11,000 non-performing loans),compared to 4.9 percent nationally. (Ciudad Juarez) ¶4. (U) PROPOSED 2010 JALISCO BUDGET: MORE FEDERAL MONEY, PUBLIC TRANSPORTATION INVESTMENT: Last minute negotiations from Jalisco federal legislators earmarked USD $770 million to the state. Over a quarter of the federal earmarks heading to the University of Guadalajara, but much of the rest is headed to specific infrastructure programs including a major dam and water project as well as highway improvements. Of note, the state government is moving ahead with its larger public transportation projects. The second line of Guadalajara's rapid-transit bus system Macrobus, started earlier this fall, will receive USD $21 million from state funds and received the Secretary of the Environment's authorization earlier this week to continue with its construction. The project will also replace a main thoroughfare through the historic center with the bus line and an enlarged pedestrian plaza. In addition, USD $11.5 million from the federal budget is earmarked for a third line of the light-rail Tren Ligero. Theoretically destined towards a feasibility project, its ultimate use and the fate of the project rest on debates between a PAN state government administration that supports Macrob#s and incoming PRI mayors that prefer Tren Ligero. (Guadalajara) ¶5. (U) THOUSANDS ATTEND MONTERREY JOB FAIR: Over 7,000 people attended the first state government organized job fair in Monterrey, where over 150 companies accepted applications for nearly 6,000 open positions. Although Neuvo Leon generated more jobs than any other Mexican state in the two most recent quarters, the state still has a deficit of over 52,000 jobs compared to 2008. Positions advertised at the fair included 900 professional positions and 100 for disabled people. (Monterrey) ¶6. (U) REAL ESTATE AND CONSTRUCTION MARKET IN YUCATAN REMAINS WEAK: While the tourist industry remains optimistic based on reservation numbers for the upcoming holiday season, real estate and construction continue to lag. In Yucatan, both of these sectors have had a strong influence from American buyers. One contact in the real estate business in Merida reported that his twenty-agent firm, which largely concentrates on American buyers, has not closed a contract in four months. Contacts here attribute the continued slowdown to the fact that most U.S. buyers borrow against other real estate assets in order to purchase in Mexico, and U.S. banks are still reluctant to make those loans. (Merida) ¶7. (U) JALISCO CREATES JOBS IN OCTOBER: Jalisco's Secretary of Economic Promotion announced that Jalisco created 12,437 jobs in October, the strongest such job creation of any Mexican state. While rural jobs have historically led Jalisco to job growth in October, prior to last month only 8,409 jobs had been created for the entire year. The Secretary took the opportunity to announce that the government's efforts had succeeded in its economic promotion packages and that the statistics signal that Jalisco is emerging from recession. (Guadalajara) -------------- TRADE AND INVESTMENT -------------- ¶8. (U) MATAMOROS MAQUILA MEMBERSHIP HOLDING STEADY; EMPLOYMENT NUMBERS UP IN LAST QUARTER: The Matamoros Maquila association membership has remained steady with 97 maquilas in the last year according to Roberto Mattus, director of the association. However, member companies MEXICO 00003311 003 OF 005 reported a decrease of 12,209 employees (from 47,829 employees to 35,620) between March 31, 2008, and June 30, ¶2009. For the quarter ending September 30, members reported an increase in hiring for a total of 1,452 new positions across all 97 members. (Matamoros) ¶9. (U) JOHNSON CONTROLS EYES NEUVO LEON FOR HYBRID BATTERY PLANT: Johnson Controls, the Milwaukee-based manufacturer of automotive interiors and batteries, is viewing Nuevo Leon as a potential site for a hybrid battery manufacturing facility. Vice President Mauricio Leon, head of the company's Building Efficiency unit in Mexico, told media that as the company continues to recover from the economic crisis and looks to position itself for expected growth in global demand for hybrid batteries, it is exploring further investment opportunities in Nuevo Leon. Johnson Controls recently opened a conventional battery plant in the Monterrey suburb of Garcia. (Monterrey) ¶10. (U) DEMAND DOWN, PRICES UP AS CHRISTMAS TREE SALES BEGIN: Christmas tree importer Cesar Marroquin estimated that tree imports from the U. S. and Canada are down about 50% from last year. He blames lower demand on the economic crisis and a 20% increase in the customs duty on pine trees. (Monterrey) ¶11. (U) TEQUILA INDUSTRY PURSUES FURTHER PROTECTIONS: To celebrate its 15th anniversary the Tequila Regulatory Authority (CRT for its Spanish acronym) hosted an international summit for greater cooperation among products derived from specific regions of origin. Signing bilateral agreements with regulators of brandy, red wine and coffee, among others, the CRT worked towards creating globalized standards to protect the quality and origin of such products through collaboration and training. The CRT proposed creating a regulatory body to protect "typical" products in Latin America such as Peruvian pisco, Colombian coffee, and Panamanian hats by referring to Geneva-based NGO, OriGIn, that covers 85 products including European wines. In addition, the CRT signed an accord with the Public Health Laboratory of Madrid to verify the authenticity of suspected false tequila in Europe. (Guadalajara) -------------- ENERGY -------------- ¶12. (U) TORREON ANNOUNCES US INVESTMENT IN BIOENERGY PLANT: Pedro Vazquez Rodriguez, Vice President of the Chamber of Farming and Agriculture of Torreon, Coahuila (est population 1 million),announced that an unnamed American company, backed by investment from the Netherlands and Colombia, would be building a bioenergy plant in the city, which will eventually provide 600 new jobs. The local partner will be Mexico City based Ferro Fuls S.A. de C.V. The US$ 200 million facility, which should open within a year, will generate 30 MW/day of electricity from sorghum, corn and cow manure and also produce around 387 million liters of ethanol annually. Upon reaching full production capacity, the plant will consume about 50 percent of the manure produced annually in Torreon, about 4 million tons. The site for the facility contains space for construction of three more plants should the initial one prove successful. (Monterrey) ¶13. (U) PEMEX: PETROLEUM PRODUCTION TO STABILIZE AT 2.5 MILLION BARRELS A DAY: The Exploration and Production Division (PEP) of PEMEX estimates that Mexico's petroleum production will stabilize at 2.5 million barrels a day for the next five years. In the medium to long term, production forecasts vary significantly. A key factor according to energy experts is how quickly PEMEX and the Energy Secretariat can implement the new contract models foreseen under the 2008 energy reform, and how successful these models will be in attracting international oil companies to participate in Mexico. According to the production forecast provided to the Finance Secretariat, production could fall to 2.4 million barrels or reach 2.9 MEXICO 00003311 004 OF 005 billion barrels a day by 2015. (Mexico City) -------------- LABOR -------------- ¶14. (U) SME ACTIVITIES - AFTER THE NATIONAL PROTEST: Martin Esparza and the remaining ex-workers of the Sindicato Mexicano de Electricistas (SME) continue to struggle against the Mexican government shut-down of Luz y Fuerza del Centro (LFC). After the November 11 national protest, the rate of people accepting severance picked up so dramatically that the GOM decided to open the centers on Saturday, November 14, to accommodate all the workers. By the close of business, slightly more than 60% of workers had been processed. Esparza denies the numbers the GOM is claiming and insists that the workers are standing strong. On November 17, five full weeks after the shut-down, the SME published information on what it claims various GOM secretariats owe in unpaid electrical utility bills; the GOM has denied any debts to LFC and has published its latest bill receipts. On November 19 the SME announced that it would begin hunger strikes between November 20 and November 23 in five locations around Mexico City: in the Zocalo, outside the Chamber of Deputies and the Supreme Court, in front of the Comision Federal de Electricidad museum, and at the intersection of Paseo de la Reforma and Boulevar de Insurgentes, two very important arteries in the capital. There will be around ten people fasting in each location, and they will be regularly attended by doctors. At this point, SME leadership will not join the fast. As predicted by many Laboff contacts and other observers, the SME protests will likely continue to shrink and become simultaneously more dramatic and disruptive. (Mexico City) -------------- ENVIRONMENT, SCIENCE TECHNOLOGY AND HEALTH -------------- ¶15. (U) 2ND MEETING OF GLOBE STUDENTS AND TEACHERS IN MEXICO CITY: Mexico City's Technical Secondary Schools System (DGEST) celebrated their second GLOBE meeting November 18-19 with the participation of 250 students from 13 public secondary schools. Mexico joined the GLOBE program in 1996 and DGEST celebrated ten years of participation in the GLOBE program. The GLOBE program is U.S.-developed and disseminated globally and engages students to do practical scientific fieldwork, including taking measurements of climate indicators, and send their measurements in to a central database for inclusion with other statistics from other countries that are available to environmental scientists around the world. Students presented their GLOBE activities and took advantage of this opportunity to discuss climate change and other environmental challenges in their surroundings. Officials from the Secretariat of Environment and Natural Resources (SEMARNAT),the Secretariat of Public Education and the US Embassy enjoyed GLOBE students' presentations and witnessed the positive impact of GLOBE in student education. (Mexico City) ¶16. (U) NEW TECHNOLOGY AND SCIENCE PARK OPENS IN CIUDAD VICTORIA: TECNOTAM Science and Technology Park, which seeks to bring together the private, public, and academic sectors in order to develop a competitive workforce with capabilities in engineering and information technologies (IT),opened November 11th. Park tenants include: CINVESTAV, a center for research and advanced studies specializing in IT and computer science, granting Master's and PhD's; the Universidad Autonoma de Tamaulipas, specializing in technology education to support the IT sector; TiT@M, the Tamaulipas Information Technology cluster; an IT business incubator; and SVAM International, a global IT services provider with offices in the U.S., India, and Mexico. Academic institutions on site are already working with companies such as SVAM to tailor their academic offerings, and will offer internships on site. (Matamoros) MEXICO 00003311 005 OF 005 PASCUAL