VZCZCXRO7356
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #0106/01 0132204
ZNR UUUUU ZZH
R 132203Z JAN 10
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 0043
INFO ALL US CONSULATES IN MEXICO COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 06 MEXICO 000106 
 
SENSITIVE 
SIPDIS 
SIPDIS 
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 - January 9 
 
¶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: 
 
-------------------------------- 
 
 
 
REMITTANCES FALL AS PRICES FOR BASIC GOODS RISE - Mexico City 
 
 
 
DECEMBER RETAIL SALES UP IN REYNOSA IN SPITE OF RETAIL COMPETITION 
FROM TEXAS - Matamoros 
 
 
 
ECONOMY AND VIOLENCE CAUSE SHARP DECLINE IN EL PASO BORDER TRAFFIC; 
SANTA TERESA BENEFITS - Ciudad Juarez 
 
 
 
BANORTE BECOMES FOURTH LARGEST RETIREMENT FUND IN MEXICO - 
Monterrey 
 
 
 
 
 
TRADE AND INVESTMENT: 
 
-------------------------------- 
 
 
 
METALSA ACQUIRES ASSETS FROM U.S. CORPORATION - Monterrey 
 
 
 
 
 
TRANSPORTATION AND INFRASTRUCTURE: 
 
--------------------------------------------- -------- 
 
 
 
ANZALDUAS INTERNATIONAL BRIDGE UPDATE - Matamoros 
 
 
 
 
 
LABOR: 
 
--------- 
 
 
 
SME CLASHES WITH POLICE - Mexico City 
 
 
 
MEXICO NOT REQUESTED TO REPORT ON CHILD AND FORCED LABOR - Mexico 
City 
 
MEXICO 00000106  002 OF 006 
 
 
NUEVO LEON UNEMPLOYMENT REMAINS HIGH - Monterrey 
 
 
 
 
 
ENERGY AND ENVIRONMENT: 
 
------------------------------------- 
 
 
 
RAISE IN GAS AND DIESEL PRICES PROVOKES LIMITED TRANSPORTATION 
STRIKE - Mexico City 
 
 
 
POLITICIANS AND BUSINESSMEN COMPLAIN ABOUT FUEL PRICE INCREASES - 
Tijuana 
 
 
 
PEMEX BEGINS BIOFUEL PRODUCTION AT CADEREYTA REFINERY - Monterrey 
 
 
 
 
 
SCIENCE AND TECHNOLOGY: 
 
----------------------------------- 
 
 
 
I2T2 SIGNS AGREEMENT WITH QUEBEC BIOTECH CENTER - Monterrey 
 
 
 
SCHNEIDER ELECTRIC OPENS INNOVATION AND TECHNOLOGY CENTER - 
Monterrey 
 
 
 
------------------------------- 
 
ECONOMY AND FINANCE 
 
------------------------------- 
 
 
 
¶3.  (U) REMITTANCES FALL AS PRICES FOR BASIC GOODS RISE:  The 
downward trend in remittances continues as November statistics show 
a 14.4% drop in year-over-year measurements.  Remittances, down on 
average 13% since 2008, are currently at levels close to what they 
were in 2005.  Manuel Orozco, Director of the Remittances and 
Development Program at the Inter-American Dialogue and one of the 
original students of modern Latin American remittances, predicts 
that remittances could recover by as much as 5% by the second 
trimester of 2010 as the U.S. job market begins to recover and add 
jobs. 
 
 
 
Mexico's Minimum Wage Commission approved an increase in the 
minimum wage of around 5% or 2 pesos, effective January 1. 
Depending on the geographic area, Mexicans currently earn between 
MX$57.46 pesos daily (US$4.45) and MX$54.47 (US$4.22).  Mexican 
newspapers announced in early January that prices for staple foods 
and fuels are likely to rise at least in early 2010.  Gasoline and 
diesel fuel have already increased from 6.3 to 8.16 pesos per 
liter, and tortillas are likely to follow, increasing in cost by 
around 50 centavos.  The price of items in the basic basket of 
goods in Mexico City has increased by around 30% due to the 
increased costs of gas and gasoline.  An announcement about the 
cost of bread, thus far stable, will be made in early January. 
 
MEXICO 00000106  003 OF 006 
 
 
Mexicans also face the increased Value-Added Tax (IVA) rate, up 1% 
from 15% to 16% this year.  (Mexico City) 
 
 
 
¶4.  (U) DECEMBER RETAIL SALES UP IN REYNOSA IN SPITE OF RETAIL 
COMPETITION FROM TEXAS:  Retailers had a strong, positive December 
close due to strong sales December 22-24, according to Ad????n 
Cisneros de la Rosa of the Camara Nacional de Comercio (CANACO) in 
Reynosa.  De la Rosa added Reynosa retail businesses are at a 
disadvantage competing against retail in south Texas.  He said 
there is a lack of retail advertising that could capture some 
Mexican shoppers who pass through Reynosa on their way to south 
Texas.  (Matamoros) 
 
 
 
¶5.  (U) ECONOMY AND VIOLENCE CAUSE SHARP DECLINE IN EL PASO BORDER 
TRAFFIC; SANTA TERESA BENEFITS:  Passenger vehicle and commercial 
truck traffic at El Paso ports-of-entry fell by a combined 16 
percent from 2008 to 2009, according to Customs and Border 
Protection statistics.  The number of commercial trucks entering 
the El Paso sector fell from 834,435 in 2008 to 707,230 in 2009, 
while 2.7 million fewer passenger vehicles crossed northbound 
(15,972,615 - '09; 13,289,381 - '08).  El Paso CBP spokesman Roger 
Maier said the recession and concerns about safety in Juarez were 
responsible for the decline.  In contrast to this downward trend, 
the Santa Teresa POE located ten miles west of Juarez was the only 
border crossing in the El Paso Sector to experience an increase in 
traffic, with passenger vehicle and cargo traffic both increasing 
by 13 percent year-over-year (passenger vehicles:  424,797 - '09; 
377,573 - '08; commercial trucks: 51,276 - '09; 45,499 - '08). 
Assistant El Paso Port Director Isabel Mullens attributed the 
increase to expanded hours at the Santa Teresa POE, improved 
highway infrastructure south of the Santa Teresa POE, and the 
opening of a major new manufacturing plant near the POE.  (Ciudad 
Juarez) 
 
 
 
¶6.  (U) BANORTE BECOMES FOURTH LARGEST RETIREMENT FUND IN MEXICO: 
Banorte Financial Group, a Monterrey-based bank, bought out Afore 
Argos, a pension fund manager, for US$46.2 million on December 21. 
Banorte will take over Argos' 22,000 clients and become the fourth 
largest retirement fund in Mexico.  This comes after a June 10 
acquisition of Ixe Afore, another pension fund with assets over 
US$420 million.  (Monterrey) 
 
 
 
------------------------------- 
 
TRADE AND INVESTMENT 
 
------------------------------- 
 
 
 
¶7.  (U) METALSA ACQUIRES ASSETS FROM U.S. CORPORATION:  Metalsa 
(formerly Monterrey Metals Manufacturing), an automobile parts 
manufacturer based in Apodaca, acquired the structural products 
business of U.S.-based Dana Holding Corporation for US$ 150 
million.  This acquisition strengthens Metalsa's position as a 
global supplier providing structural components to the light and 
commercial vehicle markets.  Under the terms of the agreement, 
Metalsa, a subsidiary of Grupo Proeza, will assume control of 10 
Dana manufacturing facilities that produce structural components 
for chassis and body structures in light and commercial vehicles, 
including accompanying administrative, technical and sales centers. 
These facilities are located in Argentina, Australia, Brazil, the 
U.S., and Venezuela.  (Monterrey) 
 
 
 
--------------------------------------------- ------- 
 
TRANSPORTATION AND INFRASTRUCTURE 
 
MEXICO 00000106  004 OF 006 
 
 
--------------------------------------------- ------- 
 
 
 
¶8.  (U) ANZALDUAS INTERNATIONAL BRIDGE UPDATE:  The ceremonial 
opening of Anzalduas International Bridge is scheduled to take 
place January 11th.  Ambassador Kirk, U.S. Trade Representative and 
Mexican President Calderon will inaugurate the bridge along with 
officials from the Mexican state of Tamaulipas and Texas. 
According to traffic reports, the bridge has averaged 2,400 
southbound vehicles per day since opening December 15th.  Local 
U.S. and Mexican media reports have highlighted that the new 
crossing is up to 30 minutes faster than the Pharr-Reynosa Bridge 
for travelers coming north from Monterrey.  On Dec 23rd Customs and 
Border Patrol (CBP) recorded the first drug seizure of 123 pounds 
of Marijuana.  On December 30th, CBP officers arrested Isis Cristal 
Sanchez-Hernandez on alien smuggling charges in the first alien 
smuggling case recorded at Anzalduas.  According to news reports, 
Sanchez-Hernandez attempted to smuggle two Mexican citizen children 
into the U.S. using fake birth certificates from Hidalgo and Starr 
Counties in Texas.  (Matamoros) 
 
 
 
-------- 
 
LABOR 
 
-------- 
 
 
 
¶9.  (U) SME CLASHES WITH POLICE:  On December 3, a violent 
confrontation took place between ex-members of the defunct 
Sindicato Mexicano de Electricistas (SME) and Comision Federal de 
Electricidad (CFE) workers who replaced them.  Federal police were 
present in their function of protecting the electricity 
distribution plants from disturbances like this, and they were able 
to prevent the violence from escalating dramatically.  According to 
news sources, ex-members of the SME attempted to prevent CFE 
workers from leaving the electricity plant.  The police responded 
in defense of the CFE workers, and the scuffle left six wounded. 
Ex-SME members claimed that they were protecting their property 
from privately hired workers (non-CFE) who were badly damaging 
their goods.  The SME continues to accuse the police of provoking 
the confrontation.  On the morning of January 6, the Day of the 
Three Kings in Mexico, ex-SME workers carried three pi????atas shaped 
like Labor Secretary Javier Lozano to the Lozano's house and broke 
them open with a baseball bat. 
 
 
 
Since late November the SME's cause has suffered serious legal 
setbacks.  The courts have ruled consistently that the GOM's 
actions in shutting down Luz y Fuerza del Centro (LFC) were legal 
and that, while unfortunate, it was legal to dismiss all the 
workers.  The SME has only one case outstanding at this point, and 
it is likely to be decided against the workers.  Around 63% of 
former workers have accepted the severance package offered, many 
under economic duress.  (Mexico City) 
 
 
 
¶10.  (U) MEXICO NOT REQUESTED TO REPORT ON CHILD AND FORCED LABOR: 
Mexico will not report to the Department of Labor (DOL) this year 
on the Trade Development Act (TDA) or the Trafficking Victims 
Protection Reauthorization Act (TVPRA) reports.  Mexico is not on 
DOL's Worst Forms of Child Labor list this year, excusing it from 
the TDA report.  DOL believes it has sufficient information from 
previous reports and research to also exclude Mexico from the TVPRA 
report, despite Mexico's appearance on DOL's September 2009 TVPRA 
list of goods.  The TVPRA report requires reporting only on 
products not already listed on the TVPRA list of goods.  (Mexico 
City) 
 
 
 
¶11.  (U) NUEVO LEON UNEMPLOYMENT REMAINS HIGH:  According to IMSS 
 
MEXICO 00000106  005 OF 006 
 
 
statistics, 45,823 people in Nuevo Leon were laid off in October 
2009 and were unable to find new jobs by November.  Overall, the 
state registered 145,881 job losses in the first trimester of 2009, 
149,580 in the second trimester, and 178,840 in the third 
trimester.  (Monterrey) 
 
 
 
------------------------------------ 
 
ENERGY AND ENVIRONMENT 
 
------------------------------------ 
 
 
 
¶12.  (U) RAISE IN GAS AND DIESEL PRICES PROVOKES LIMITED 
TRANSPORTATION STRIKE:  Members of the National Confederation of 
Retailers and Carriers of the Republic of Mexico (CNCTRM) blocked 
highways in Hidalgo, Veracruz, and Puebla on December 4.  They are 
protesting the increase in prices of diesel from 6.3 ($0.49) to 
8.16 ($0.63) pesos/ liter.  The CNCTRM has called for a national 
strike and has promised to announce it 24 hours in advance to 
minimize problems for the GOM and for Mexicans.  Two other 
important transportation groups - the Mexican Alliance of 
Organizations of Carriers (Amotac) and the National Association of 
Private Carriers (ANTP), who between them control 90% of cargo 
shipping in Mexico - have announced that they will not participate 
in the CNCTRM strike.  (Mexico City) 
 
 
 
¶13.  (U) POLITICIANS AND BUSINESSMEN COMPLAIN ABOUT FUEL PRICE 
INCREASES:  Rogelio Badillo Arcadia, president of the Baja 
California chapter of the Camara Nacional de Autotransporte de 
Carga (CANACAR) claims the eight-cent increase for magna and diesel 
and nine-cent increase for premium fuels which went into effect in 
Tijuana, Rosarito, and Tecate on January 1 will have a negative 
impact on jobs and prices in the region, noting that 82% of 
products in Mexico are transported by truck.  Gas station owners in 
Baja are particularly concerned that customers will look for 
cheaper gas in California (NOTE:  the opposite occurred when gas 
prices spiked in the U.S. in 2008 and both U.S. and Mexican 
truckers, unsurprisingly, chose to fill up on cheaper, subsidized 
Mexican gas.  However, stories that surfaced at the time of throngs 
of Americans filling up in Baja were exaggerated).  (Tijuana) 
 
 
 
¶14.  (U) PEMEX BEGINS BIOFUEL PRODUCTION AT CADEREYTA REFINERY:  In 
December 2009 PEMEX began production of biodiesel at the Cadereyta 
refinery in Nuevo Leon.  The president of the Federal Congress' 
Energy Commission, Felipe de Jesus Cantu Rodriguez, stated that the 
company plans to invest rigorously in the refinery in the coming 
years to convert it into one of Mexico's most important fuel 
sources.  Cantu said that over the next 20 years, an investment in 
the order of USD$20 billion would be necessary to increase the 
efficiency of existing biofuel technology.  The refinery currently 
produces 8.7 million liters of biodiesel every year; managers hope 
to increase this amount to 108 million liters per year during the 
2011-2014 time-frame.  (Monterrey) 
 
 
 
---------------------------------- 
 
SCIENCE AND TECHNOLOGY 
 
---------------------------------- 
 
 
 
¶15.  (U) I2T2 SIGNS AGREEMENT WITH QUEBEC BIOTECH CENTER:  Jaime 
Parada, director general of the Institute of Innovation and 
Transference of Technology (I2T2), announced on December 17 an 
agreement between I2T2 and the Quebec Center of Biotech Innovation 
(CQIB) to exchange advice, counseling, and business opportunities. 
The two organizations have invested US$5 million in an effort to 
 
MEXICO 00000106  006 OF 006 
 
 
establish a biotechnology business incubator.  The director general 
explained that the Canadians would guide I2T2 to lessen the 
learning curve, support scientific exchange of ideas, and 
strengthen Canadian and Mexican relations.  Meanwhile, I2T2 
contemplated helping Quebec take advantage of venture capital 
opportunities, thereby fostering entrepreneurship in the region. 
CQIB has raised US$8 billion for venture capital investments and 
launched the Nuevo Leon Fund for Innovation (Fonlin), which is in 
the process of analyzing 200 projects, four of which have already 
been approved for funding.  (Monterrey) 
 
 
 
¶16.  (U) SCHNEIDER ELECTRIC OPENS INNOVATION AND TECHNOLOGY CENTER: 
Schneider Electric, a French electric equipment company operating 
in Mexico through its U.S. subsidiary, held an inauguration 
ceremony for a new Center of Innovation and Technology (CIT) in 
Monterrey.  According to the company, the center was created at the 
request of clients.  The center will support clients in developing 
methods for increasing processing productivity and finding 
competitive advantages in their respective markets.  AmCham 
Monterrey also played a significant role in persuading Schneider to 
expand its operations locally.  (Monterrey) 
PASCUAL