R 271903Z FEB 09
FM AMEMBASSY MEXICO
TO SECSTATE WASHDC 5363
DEPT OF COMMERCE WASHINGTON DC
DEPT OF ENERGY WASHINGTON DC
DEPT OF TREASURY WASHINGTON DC
NSC WASHINGTON DC
INFO ALL US CONSULATES IN MEXICO COLLECTIVE

UNCLAS MEXICO 000582 
 
 
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 - February 27 
 
¶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: 
------------------- 
 
BAJA CALIFORNIA ELECTRONIC INDUSTRY DECREASES PRODUCTIVITY - 
Tijuana 
 
GASOLINE PRICES INCREASE IN TIJUANA - Tijuana 
 
TRUCKING COMPANIES PROTEST HIGH FUEL PRICES, TAXES - Monterrey 
 
 
TRADE AND INVESTMENT: 
--------------------- 
 
FOREIGN DIRECT INVESTMENT (FDI) DROPPED 31.6% IN 2008 
- Mexico City 
 
CHINESE FIRM/NISSAN TO BUILD MORE CARS IN MEXICO - Mexico City 
 
NEW COMPANY OPENINGS- Monterrey 
 
AIRLINES:  UP FROM THE ASHES? - Guadalajara 
 
 
LABOR: 
------ 
 
JOBLESS RATE HIT RECORD HIGH- Mexico City 
 
TIJUANA MUNICIPALITY SUPPORTING UNEMPLOYED - Tijuana 
 
MEXICAN LABOR CONGRESS RE-ELECTS LEADER - Mexico City 
 
 
-------------------- 
ECONOMY AND FINANCE: 
-------------------- 
 
¶3.  (U) BAJA CALIFORNIA ELECTRONIC INDUSTRY DECREASES PRODUCTIVITY: 
Production in the electronics industry in Baja California has fallen 
20%, forcing the industry to cut staff according to the President of 
the National Chamber of Industry (CANIETI), Jose Antonio Arroyo. 
According to Arroyo, the situation is so serious that one company 
had to lay off two thousand workers.  Unemployment in the city has 
reached over four percent from under two percent just a year ago. 
(Tijuana) 
 
¶4.  (U) GASOLINE PRICES INCREASE IN TIJUANA:  The price of Premium 
gasoline went up from 9.39 pesos per liter to 9.46 pesos per liter 
confirmed the president of the Association of Petrol Station Owners 
of Tijuana (APEGT) February 24.  Magna and Diesel remained at the 
same price.  Gas price increases in the border region have angered 
locals.  (Tijuana) 
 
¶5.  (U) TRUCKING COMPANIES PROTEST HIGH FUEL PRICES, TAXES:  On 
February 24, 600 cargo truck drivers with the support of CANACAR 
took part in a protest primarily against the high cost of diesel and 
the flat tax (IETU) on trucking companies.  Similar to other 
trucking protest that have taken place around the country, the 
protesting truckers drove around the city in long caravans slowing 
down traffic.  The protest was peaceful and the protest route was 
announced ahead of time so commuters could make other plans.  In 
late January, President Calderon announced that the government would 
reduce the monthly increase of diesel prices by 75%, from 20 cents 
every month to 5 cents every month but CANACAR points out that 
diesel prices continue to be higher in Mexico than the U.S.  In 
addition to lower fuel costs and the elimination of the flat tax, 
CANACAR is also demanding a 50% reduction in highway tolls, more 
security for trucks on national highways and a ban on the import of 
used cars.  (Monterrey) 
 
--------------------- 
TRADE AND INVESTMENT: 
--------------------- 
 
¶6.  (U) FOREIGN DIRECT INVESTMENT (FDI) DROPPED 31.6% IN 2008: 
Foreign direct investment flows to Mexico reached USD$ 18.6 billion 
in 2008, dropping 31.6% from 2007, the most significant decline 
since 1982.  The Secretariat of the Economy explains that the 
decline was more significant because FDI bounced back in 2007 when 
several companies began to invest again after the uncertainty that 
the 2006 presidential elections generated.  The global financial 
crisis hurt investors' expectations mirroring their pessimism on the 
economic outlook.  Of the total FDI received 33.1% was channeled to 
the manufacturing sector; 22.9% to mining; 21.4% to the financial 
sector; 9.3% to retail sales; 4.3% to services; 4.2% to 
transportation and communications; and 4.8% to others.  Most FDI in 
manufacturer has gone into the aeronautic and medical device 
sectors.  The majority of the investment came from the U.S. (45.7%); 
Canada followed with 11.8%, and Spain with 11.1% of the total.  The 
government expects FDI to decline even further in 2009 to total USD 
15 billion.  Analysts noted that in order for Mexico to attract more 
investment, the government would have to open the following sectors: 
telephony, infrastructure and energy.  (Mexico City) 
 
¶7.  (U) CHINESE FIRMS/NISSAN TO BUILD MORE CARS IN MEXICO:  Changan 
Auto plans to set up a factory in Mexico to produce 50,000 
automobiles per year in partnership with Mexican firm Autopark, the 
Chinese firm announced on February 24.  A framework agreement 
between the two companies has been signed and the firms are now 
negotiating the details of a joint venture.  Changan joins two other 
Chinese manufacturers who recently announced investments in Mexico - 
Geely and First Auto Works.  The First Autoworks joint ventnure 
involves an investment of $150 million and will produce up to 
100,000 vehicles when it reaches full capacity.  The plant will 
begin operations in 2010.  The Japanese carmaker Nissan said that 
with the yen revaluation it will transfer part of its production to 
Mexico, either to the plants in Cuernavaca or Aguascalientes. 
Nissan4s plan is to export the vehicles from Mexico to Asia. 
Meanwhile, Honda said that it would continue to produce its CVR in 
El Salto, Jalisco and Mazda announced price increases for all of its 
models.  Companies such as Toyota have stopped importing units 
because the peso4s depreciation has increased prices almost 30%. 
(Mexico City) 
 
¶8.  (U) NEW COMPANY OPENINGS:  Despite lowered economic forecasts 
for Mexico, foreign direct investment has not completely dried up in 
Nuevo Leon and neighboring Coahuila.  In the first two months of the 
year several large manufacturing/production facilities have opened 
including plants for companies such as Lenovo, Hershey's, 
Schlumberger and Lenox.  Coahuila has been hit hard by declines in 
auto-parts exports and welcomed the opening of the non-auto related 
plants.  Lazy Boy and Daimler Trucks factories are expected to open 
soon in Coahuila as well.  In the Monterrey area, Lowe's Companies 
is still on track to open five stores in 2009.  Each store 
represents an investment of US$18 to $20 million.  (Monterrey) 
 
¶9.  (U) AIRLINES:  UP FROM THE ASHES?:  Less than four months after 
the demise of Guadalajara-based ALMA airlines with the loss of more 
than 600 jobs, Mexicana Airlines announced it will create a new 
subsidiary, Mexicana-Inter, to fill the resulting gap in regional 
air travel.  The new airline is scheduled to launch operations on 
March 14, using former ALMA aircraft and gates in Guadalajara, and 
could possibly employ up to 400 ex-ALMA employees.  If it succeeds, 
the new carrier will provide a much needed boost to the aviation 
sector in western Mexico.  (Guadalajara) 
 
------ 
LABOR: 
------ 
 
¶10.  (U) JOBLESS RATE HIT RECORD HIGH:  The official unemployment 
rate reached 5% in January, the highest since INEGI updated the 
figures in 2000.  The number of unemployed reached 2.2 million, 
416,000 more than in January of 2008.  Although President Calderon4s 
employment programs will help to marginally mitigate the impact, the 
situation is expected to get worse in the coming months because of 
the economic situation and stricter migration controls in the U.S. 
Migration to the U.S. has traditionally provided an escape valve 
which kept the jobless rate under a certain control.  Official 
unemployment statistics can be misleading since the figures do not 
distinguish between fully employed persons, underemployed persons or 
persons actively seeking work.  Moreover, the OECD estimates that up 
to 45 percent of all Mexicans who are currently "employed" work on 
the informal economy.  (Mexico City) 
 
¶11.  (U) TIJUANA MUNICIPALITY SUPPORTING UNEMPLOYED:  At a February 
24 Employment Fair sponsored by the municipality, 7,573 job-seekers 
showed up for only 2,700 openings on offer.  The municipal 
government announced it will give one thousand pesos ($USD 70) to up 
to five thousand job-seekers who did not find work (the fact that 
the city announced this prior to the job fair may have increased 
attendance).  The municipal government has been working hard to 
publicize its efforts to ameliorate the economic pain brought on by 
the slowdown of the U.S. economy.  (Tijuana) 
 
¶12.  (U)  MEXICAN LABOR CONGRESS REELECTS LEADERSHIP:  On February 
23-24 the Confederation of Mexican Workers (CTM), the country's 
largest association of labor unions held its 130 Ordinary General 
Assembly.  The event was one of the CTM's regularly scheduled 
gathering of the organization's state and national leadership.  As 
is customary at such events the CTM's National Executive Committee, 
it board of directors if you will, presented a number of reports on 
the state of the organization, its most pressing priorities for the 
coming year and a summary of the CTM's recent accomplishments.  One 
of the most significant occurrences at this year's gathering was the 
nomination (as the sole candidate) and approbation (by a show of 
hands) of the CTM's next Secretary General for the period 2010-2016. 
To no one's surprise the current national leader of the CTM, Joaquin 
Gamboa Pascoe, was reelected.  Gamboa Pascoe has a close "go along 
to get along" relationship with President Calderon and, barring the 
unforeseen, his reelection means that the GOM will most likely have 
few real problems with the CTM for the remainder of the Calderon 
administration. (Mexico City) 
 
BASSETT