VZCZCXRO7344
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #1145/01 1131333
ZNR UUUUU ZZH
R 231333Z APR 09
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 6223
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE

UNCLAS SECTION 01 OF 04 MEXICO 001145 
 
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 - April 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: 
-------------------- 
 
MEXICO STILL HAS FURTHER TO FALL - Monterrey 
 
FALLING SALES IN TIJUANA - Tijuana 
 
STATE GOVERNMENT OFFERS FINANCIAL SUPPORT - Tijuana 
BORDER COMPANIES AFFECTED BY ECONOMIC CRISIS - Tijuana 
 
 
TRADE AND INVESTMENT: 
--------------------- 
 
MEXICAN GOVERNMENT STEPS IN TO HELP VITRO - Monterrey 
 
TEQUILA EXPORTS INCREASING IN 2009 - Guadalajara 
 
FIRE AT INDUSTRIAL PARK DESTROYS THREE MAQUILADORAS - Ciudad Juarez 
 
UTB TO BEGIN MBA CLASSES IN MEXICO - Matamoros 
 
 
ENERGY 
------ 
 
MEXICAN PETROL RISES AGAIN - Tijuana 
 
 
LABOR 
----- 
JALISCO CREATES JOBS IN MARCH - Guadalajara 
 
MEXICAN EMPLOYERS ARE MOVING TO THE U.S. - Tijuana 
 
PACE OF STATE JOB LOSSES DECELERATES - Ciudad Juarez 
 
 
TOURISM 
------- 
LESS TOURISTS IN BAJA CALIFORNIA IN 2009 - Tijuana 
 
TOURISM FALLS 53 PERCENT DURING "SEMANA SANTA" - Ciudad Juarez 
 
 
AGRICULTURE 
----------- 
TAMAULIPAS FARMERS CONTINUE TO LAMENT PROCAMPO REDUCTION - 
Matamoros 
 
AGRARIAN REFORM - Monterrey 
 
 
 
 
-------------------- 
ECONOMY AND FINANCE: 
-------------------- 
 
¶3.  (SBU) MEXICO STILL HAS FURTHER TO FALL:  Miguel Martinez, the 
CEO of financial services firm BASE, believes that the Mexican 
economy still has not bottomed out.  Econoffs met with Martinez on 
April 13 and he argues that as Mexico is the source of many second 
order inputs, such as car parts, the full effects of falling sales 
in the United States have not yet hit.  Martinez said Mexico is 
lagging the U.S. recession by about a year and will not fully 
recover until late 2010 or sometime in 2011.  Also weighing heavily 
on the Mexican economy is the high and uncertain price of the peso. 
The peso value has fallen dramatically in relation to the dollar 
despite a +6 to 7 point spread between Mexican and U.S. short term 
government bonds.  In Nuevo Leon, the recession is already having a 
deeper than expected impact on Nuevo Leon state finances.  Payroll 
taxes, which represent 30% of the state's revenue, have fallen far 
more than forecasted and will cause the state to readjust its 
 
MEXICO 00001145  002 OF 004 
 
 
finances.  (Monterrey) 
 
¶4.  (U) FALLING SALES IN TIJUANA:  Merchants in eastern Tijuana, 
declared that sales were down by fifty percent, partly because of 
closures of streets and roads. Slow work on road repairs is believed 
to be the factor compounding the difficulties of an already-stressed 
economy in Tijuana.  (Tijuana) 
 
¶5.  (U) STATE GOVERNMENT OFFERS FINANCIAL SUPPORT:  The governor of 
Baja California, Jose Guadalupe Osuna Millan provided economical 
support to the shelter homes in the State. More than 500 people 
benefited from the money given by the State Government and the 
Secretary of State for Social Development (SEDESOE). Benefited 
shelters include: Casa del Migrante and Casa Matriz.  (Tijuana) 
 
¶6.  (U) BORDER COMPANIES AFFECTED BY ECONOMIC CRISIS:  Industrial 
manufacturers expressed concern due to the possibility that the 
resources offered by the Secretary of Economy through the PRODIAT- 
Program Development of High-Tech Industries will be given until the 
companies conclude their technical slowdowns (paros tecnicos).  The 
Vice President of the Association of Border Maquiladoras, Mr. 
Humberto Rodriguez Jaramillo reported that 25 companies in the 
border region are already under this "work stoppage" program; out of 
these, 10 are located in Baja California.  As for the risk of 
companies shutting operations, Mr. Rodriguez commented: "few 
companies have closed, they are either seeking to consolidate their 
operations or attain additional budget to avoid cutting staff." 
(Tijuana) 
 
--------------------- 
TRADE AND INVESTMENT: 
--------------------- 
 
¶7.  (U) MEXICAN GOVERNMENT STEPS IN TO HELP VITRO:  On April 8, 
Vitro stock jumped 30% based on a strong expectation that the 
Mexican government will step in and provide a line of credit to the 
struggling glass maker.  Earlier this year the company had already 
announced that it would suspend its debt payments, and the credit 
rating agency Moody's withdrew its rating for the company until 
Vitro completed its restructuring.  The company has nearly 15,000 
employees and the Calderon administration is reluctant to let such a 
large employer fail.  Vitro was unable to restructure its 1.8 
billion debt in the private market due to large derivative losses 
incurred in 2008 which put the viability of the company in doubt. 
Similarly, the cement company Cemex has also had difficulty 
restructuring its debt load and there is speculation the Mexican 
government will need to intervene soon.  Across Mexico, 9,000 
businesses have closed in the last five months representing a loss 
of over 524,000 jobs.  (Monterrey) 
 
¶8.  (U) TEQUILA EXPORTS INCREASING IN 2009:  After exporting a near 
record 137 million liters of tequila in 2008, Mexico saw a 2.62% 
rise in exports in the first quarter of 2009.  Tequila exports 
continue to grow to the U.S. and although 68% of exports head there, 
Mexico sees the greatest opportunity for growth in Asia.  The 
Consejo Regulador del Tequila is currently studying the possibility 
of opening an office in Shanghai to capitalize on China's newfound 
taste for Mexico's national drink.  (Guadalajara) 
 
¶9.  (U) FIRE AT INDUSTRIAL PARK DESTROYS THREE MAQUILADORAS:  On 
April 7, a fire broke out at an industrial park located directly 
across the highway from the Juarez International Airport.  The fire 
destroyed property owned by three international maquiladoras.  The 
affected companies included MCS de Mexico, the Taiwan-based 
technology group, Foxconn, and the Swedish-owned Dometic.  According 
to the Director of the Juarez Financial Development Office, Alvaro 
Navarro Garate, approximately 600 employees from MCS de Mexico and 
Dometic temporarily lost their jobs as a result of the fire.  He 
explained that the companies plan to re-hire their employees once 
the factories resume operations.  MCS de Mexico and Dometic are 
currently in negotiations with their employees to determine the 
appropriate compensation packages for the period they will be 
laid-off.  FoxConn reportedly salvaged its production line equipment 
from the factory before it burned, and has moved its production and 
the 800 affected employees to another plant on the outskirts of 
Juarez.  (Ciudad Juarez) 
 
¶10.  (U) UTB TO BEGIN MBA CLASSES IN MEXICO:  The University of 
Texas-Brownsville (UTB) announced at the monthly meeting of the 
Matamoros Maquiladora Association (AMMAC) that it would begin 
offering some of its MBA courses at the AMMAC facility in Matamoros 
beginning this fall. According to UTB business professor Tom Coyle, 
 
MEXICO 00001145  003 OF 004 
 
 
the goal is to offer maquiladora employees more flexibility, 
particularly for Mexican employees who may be deterred from the 
program due to scheduling and long waits at international bridges. 
In addition to special tuition rates for Mexican residents, special 
links between the University and AMMAC for graduate certifications, 
and other similar programs, this is one of the first that will 
actually include UTB graduate classes being taught in Mexico. 
(Matamoros) 
 
------ 
ENERGY 
------ 
 
¶11.  (U) MEXICAN PETROL RISES AGAIN:  Ramiro Zuniga Salazar, 
president of the Association of Owners of Petrol Stations (ONEXPO 
Baja), reported Tuesday that gasoline prices had risen from 9.12 
pesos per liter to 9.21, an increase of 9 cents.   Also, diesel has 
risen more than 28% so far this year, and is now selling at 7.46 
pesos per liter, as opposed to its April, 2008 price of 5.7/liter. 
Diesel prices are expected to rise an additional five cents again 
early May as part of an adjustment for the month by the Ministry of 
Finance.  (Tijuana) 
 
----- 
LABOR 
----- 
 
¶12.  (U) JALISCO CREATES JOBS IN MARCH:  On the heels of losing 
11,000 jobs in January and February the state of Jalisco created 
4,124 jobs in March, according to the Secretary of Labor and Social 
Security.  That figure makes Jalisco the state with the second most 
jobs created last month, behind only Veracruz.  Of the job gains in 
Jalisco roughly 60% were part-time positions.  Analysts believe that 
the gains could be attributed in great part to a part-time worker 
program organized between the state government and various 
municipalities that gives the unemployed jobs in landscaping and 
public works, among other employment opportunities.  (Guadalajara) 
 
¶13.  (U) MEXICAN EMPLOYERS ARE MOVING TO THE U.S.:  On Tuesday, 
March 31st, the president of the Employer's Confederation of Mexico 
(Coparmex), Ricardo Gonzales, said that Mexican employers from 
border cities have migrated to the United States due the security 
situation, threats and extortion attempts.  Coparmex has documented 
a significant number of businessmen in the border cities of Tijuana 
and Ciudad Juarez who have moved to locations in San Diego and El 
Paso in the United States.  (Tijuana) 
 
¶14.  (U) PACE OF STATE JOB LOSSES DECELERATES:  In March, 
Chihuahua's labor market lost 6,243 formal sector jobs, according to 
the Mexican Social Security Institute (IMSS).  This latest report 
follows a six month period in which the state lost a total of 70,000 
formal sector jobs, primarily in the manufacturing sector.  With 
these latest losses, total statewide formal sector employment stood 
at 596,000 at the end of March 2009. Manuel Ochoa, Vice President 
for the El Paso Regional Economic Development Corporation, forecasts 
that manufacturing activity in Chihuahua will begin to improve by 
the third quarter of this year.  The lower number of job losses in 
March raises the specter that labor market conditions may already be 
stabilizing.  Nonetheless, local economists contend that more 
investment will be required for the labor market to return to peak 
employment levels reached in late 2000.  The maquila industry, in 
particular, made significant productivity gains in response to the 
2001 crisis.  As such, at current production capacity levels, the 
industry is less labor intensive than it was ten years ago.  (Ciudad 
Juarez) 
 
------- 
TOURISM 
------- 
 
¶15.  (U) LESS TOURISTS IN BAJA CALIFORNIA IN 2009:  According to the 
press during the Easter Holiday "spring break", there were fewer 
tourists this year. Approximately 50,000 thousand tourist visited 
the beaches of Baja California, when last year's numbers reached 
more than 140, 000 thousand tourists thus affecting the sector in 
Baja California.  (Tijuana) 
 
¶16.  (U) TOURISM FALLS 53 PERCENT DURING "SEMANA SANTA:" 
South-bound border crossings into Ciudad Juarez from the United 
States declined 53 percent year-over-year during the Easter holiday 
(Semana Santa), according to Chihuahua state tourism authorities. 
The representative for the Chihuahua State Tourism Department in 
 
MEXICO 00001145  004 OF 004 
 
 
Ciudad Juarez, Demetrio Sotomayor Cuellar, told local press that the 
local decline in tourism mirrors international trends, which have 
been impacted by the economic crisis.  He denied that the drop in 
visitors is associated with the poor security environment.  Cuellar 
estimated that Chihuahua lost $US 2.5 million in tourism revenue as 
a result of the decline in travel to the state.  (Ciudad Juarez) 
 
 
----------- 
AGRICULTURE 
----------- 
 
¶17.  (U) TAMAULIPAS FARMERS CONTINUE TO LAMENT PROCAMPO REDUCTION: 
Agricultural organizations claim that the reduction of qualifying 
land for PROCAMPO subsidies from 200 hectares to 103 is an 
"injustice." In particular, seasonal farmers, such as the state's 
large contingency of sorghum farmers, are said to be most at risk as 
the lost subsidy income will harm investments in irrigation and 
other technology that can help reduce potential crop and financial 
losses in poor seasons. The director of the Local Agriculture 
Association of Matamoros, Refugio Leonel Soto Perez, also noted that 
the lost of roughly 50 percent of the subsidies received by larger 
farmers could threaten some farmers abilities to cover debts to 
creditors. Tamaulipas Governor Eugenio Hernandez Flores is also 
quoted as stating that Tamaulipas needs the federal support to 
continue in its role as the nation's agricultural leader and that 
the subsidy loss would be a severe blow to food production in 
Mexico. The subsidy reduction represents an estimated loss of 250 
million pesos for Tamaulipas farmers.  (Matamoros) 
 
¶18.  (U) AGRARIAN REFORM:  The Federal Attorney General for 
agricultural issues in Nuevo Leon (Procuraduria Agraria) is actively 
working to attract foreign capital to the rural sector.  Private 
investors have been reluctant to invest in ejidos and communally 
owned properties because of onerous ownership and rights issues but 
now the federal government is backing private investments to 
overcome these hurdles.  A major local issue is the unavailability 
of large unused tracts of land in the Monterrey area.  (In contrast, 
the federal government has been crucial in getting multiple property 
owners together to combine their properties for large scale 
industrial development.)  The Procuraduria Agraria in Neuvo Leon has 
a 2009 goal of creating 42 new investment projects, improving 6,758 
hectors of land and attracting US$1.5M in new investment. 
(Monterrey) 
 
 
 
BASSETT