VZCZCXYZ0001
RR RUEHWEB

DE RUEHME #0230/01 0251522
ZNR UUUUU ZZH
R 251521Z JAN 10
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 0170
INFO RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHME/AMEMBASSY MEXICO

UNCLAS MEXICO 000230 
 
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 22 
 
¶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: 
 
-------------------------------- 
 
 
 
EMPLOYMENT CONTINUES DOWNWARD TREND - Mexico City 
 
 
 
OVER ONE THOUSAND COMPANIES CLOSE IN NUEVO LEON IN 2009 - Monterrey 
 
 
 
NUEVO LEON RECOVERS LOST JOBS IN 2009 - Monterrey 
 
 
 
ECONOMIC SLOWDOWN LOWERS UNIVERSITY ENROLLMENT, THREATENS HUMAN 
CAPITAL DEVELOPMENT - Ciudad Juarez 
 
 
 
 
 
TRADE AND INVESTMENT: 
 
-------------------------------- 
 
 
 
ACCELERATED OIL DECLINE IN CANTARELL - Mexico City 
 
 
 
MATAMOROS MAQUILA EXPANSION STATISTICS FOR 2009 AND FORECAST FOR 
2010 - Matamoros 
 
 
 
FDI FOR 2009 FALLS IN NUEVO LEON - Monterrey 
 
 
 
CEMEX CONTINUES TO OFFER BONDS - Monterrey 
 
 
 
ALFA REPORTS BEST EBITA IN ITS HISTORY - Monterrey 
 
 
 
HEINEKEN BUYS FEMSA FOR US$7.64 BILLION - Monterrey 
 
 
 
 
 
TRANSPORTATION AND INFRASTRUCTURE: 
 
--------------------------------------------- ------- 
 
 
 
US CONSULATE SUPPORTS AEROSPACE FORUM IN TIJUANA - Tijuana 
 
ENERGY AND ENVIRONMENT: 
 
------------------------------------ 
 
 
 
NSC OFFICIALS VISIT MEXICO CITY - Mexico City 
 
 
 
NUEVO LEON RECEIVES USD 3.2 MILLION FOR GREEN INITIATIVES - 
Monterrey 
 
 
 
 
 
------------------------------- 
 
ECONOMY AND FINANCE 
 
------------------------------- 
 
 
 
¶3.  (U) EMPLOYMENT CONTINUES DOWNWARD TREND:  Mexico's national 
statistics agency (INEGI) released an employment report for 
December that indicates a continued downward trend.  The 
unemployment rate was 4.8 percent in December, somewhat lower than 
market expectations of about 5.5 percent.  In seasonally-adjusted 
terms, Mexico's ratio of unemployed individuals to total workforce 
declined to 5.4 percent in December, from 5.6 percent a month 
earlier.  Men's jobless rate declined to 5.4 percent, from 5.7 
percent in November, while the proportion of unemployed women to 
the country's economically-active female population shrunk to 5.3 
from 5.4 percent.  (Mexico City) 
 
 
 
¶4.  (U) OVER ONE THOUSAND COMPANIES CLOSE IN NUEVO LEON IN 2009: 
According to the Mexican Social Security Institute (IMSS), the 
number of employers in Nuevo Leon fell from 58,071 in 2008 to 
56,947 in 2009, a loss of 1,124 companies, marking the largest drop 
in employers in nine years.  The hardest hit sectors included 
manufacturing industry, construction, commercial services and 
transportation and communications.  (Monterrey) 
 
 
 
¶5.  (U) NUEVO LEON RECOVERS LOST JOBS IN 2009:  Despite a nine-year 
record loss of employers, since May 2009 Nuevo Leon has recovered 
around 50 percent of the 80,000 jobs the state lost from October 
2008 to May 2009, according to a Nuevo Leon Secretariat of 
Employment and Social Security (STPS) official.  According to Banco 
de Mexico figures, in 2009 Nuevo Leon lost 45,452 jobs, fourth 
worst among Mexican states.  Overall, the Mexican Social Security 
Institute (IMSS) reported that Nuevo Leon began 2010 with 150,000 
unemployed.  (Note:  Nuevo Leon has a sizeable informal sector not 
covered by IMSS statistics.  The actual number of unemployed may be 
significantly higher.  End note.)  (Monterrey) 
 
 
 
¶6.  (U) ECONOMIC SLOWDOWN LOWERS UNIVERSITY ENROLLMENT, THREATENS 
HUMAN CAPITAL DEVELOPMENT:  The economic slowdown in Ciudad Juarez 
has led to a decline in university student enrollment and a spike 
in late or unpaid tuition payments.  "Juarez students are 
increasingly abandoning their studies because of economic 
difficulties," said Dr. Diana Natalicio, President of the 
University of Texas at El Paso.  From 2008 to 2009, Mexican student 
enrollment at UTEP fell from 1,700 to 1,415.  According to 
Natalicio, these students are largely lower middle class residents 
of Juarez, who are unable to pay tuition because their family 
business closed or their parents were laid off.  Since 2007, as 
 
many as 3,000 small and medium enterprises (SMEs) have closed in 
Ciudad Juarez and nearly a third of the city's maquila workforce 
has been fired.  The Juarez Technological Institute (ITCJ), one of 
the three largest universities in the city, reported a 300% 
year-over-year increase (200 to 800 students) in students 
requesting tuition payment extensions for 2009.  University 
administrators from ITCJ, and two other major universities in the 
city told local media they are working to expand scholarship 
programs to keep talented students in school.  Despite these 
efforts, they expressed concern that the current crisis may have a 
long term impact on local human capital development.  (Ciudada 
Juarez) 
 
 
 
------------------------------- 
 
TRADE AND INVESTMENT 
 
------------------------------- 
 
 
 
¶7.  (U) ACCELERATED OIL DECLINE IN CANTARELL:  The decline in 
Cantarell's oil output has accelerated from a decline of 100,000 
bpd in 2005 to 400,000 in 2008 and 2009.  Oil output in Cantarell 
grew until 2004, when it reached a record production of 2.13 
million bpd, but Pemex extracted only 633,000 bpd from January 
through November of 2009, a decline of 405,000 bpd only partially 
offset by production in KMX.  Total oil output in Mexico dropped by 
310,000 bpd during the same period.  In 2009, KMZ surpassed 
Cantarell as Mexico's main oil field.  In 2008, Mexico registered 
the worse oil output decline in the world.  According to Pemex and 
the Energy Secretariat, Cantarell's decline has been controlled. 
However, if the outlook does not improve, Mexico could become a net 
oil importer in 2020.  (Mexico City) 
 
 
 
¶8.  (U) MATAMOROS MAQUILA EXPANSION STATISTICS FOR 2009 AND 
FORECAST FOR 2010:  On January 21st, the Matamoros Economic 
Development Committee (CODEM) reported expansion statistics for 
maquilas in the Matamoros area during 2009.  Ten maquilas added an 
additional 287,000 square feet (sq ft), which represents 5 percent 
of the available industrial square footage in Matamoros.  The 
maquilas, which employ over 600 people, come from a variety of 
industries, including automotive, plastics, medical, 
petrochemicals, general manufacturing, and industrial services. 
Rodolfo Saucedo, director of CODEM also said nine additional 
prospects for 2010 from the US, Mexico and Russia have the 
potential to add 400,000 sq ft of industrial square footage.  They 
represent industries such as automotive, plastics, petrochemicals, 
wind energy, and electronics.  (Matamoros) 
 
 
 
¶9.  (U) FDI FOR 2009 FALLS IN NUEVO LEON:  Foreign direct 
investment (FDI) in Nuevo Leon fell four percent in the past year 
according to the state's Secretary of Economic Development Othon 
Ruiz Montemayor.  In 2009, FDI dropped to USD 1.39 billion in 
contrast to the 2008 total of USD 1.44 billion.  Ruiz attributed 
the drop to the worldwide economic downturn rather than investor 
security concerns about Mexico's rising crime problems.  For 2010, 
an official at the Secretariat of Economic Development predicted 
FDI inflows would remain relatively constant at USD 1.4 billion and 
generate 7,500 jobs.  (Monterrey) 
 
 
 
¶10.  (U) CEMEX CONTINUES TO OFFER BONDS:  On January 13, the 
multinational building materials company Cemex returned to the 
securities market with a USD 500 million bond offering, the 
company's second international issue in as many months.  In 
December, Cemex sold USD 1.25 billion in bonds, which marked the 
company's return to international bond markets.  The December 
offering came nine months after Cemex failed to sell USD 500 
million of securities, forcing it to extend payments on bank debt. 
Cemex reached a USD 15 billion refinancing agreement with its banks 
in August to avoid default after the weak economy in the U.S. 
 
eroded revenue.  (Monterrey) 
 
 
 
¶11.  (U) ALFA REPORTS BEST EBITA IN ITS HISTORY:  Alfa, the 
Monterrey-based conglomerate, reported fourth-quarter earnings 
before interest, taxes, depreciation and amortization (Ebitda) at 
USD 290 million on January 11.  For all of 2009, Ebitda, a measure 
of cash flow, is estimated to have grown 9 percent in 2009 to USD 
1.06 billion.  "We can confirm that last year's Ebitda was the best 
we've had in our history, which is even more relevant considering 
that in 2009 we passed through the worst global economic crisis of 
the past 80 years," said Mario Paez, the company's director of 
planning and finance in a press release.  Alfa expects to report 
2009 revenues of US$8.54 billion.  Alfa's businesses include a 
petrochemicals company (Alpek), auto parts manufacturer (Nemak), 
telecommunications unit (Alestra), and refrigerated foods producer 
(Sigma).  The company's local shares recently traded 1.2 percent 
higher at 86.60 pesos (USD 6.84).  (Monterrey) 
 
 
 
¶12.  (U) HEINEKEN BUYS FEMSA FOR US$7.64 BILLION:  Dutch Heineken 
NV announced its purchase of drinks-and-retail giant Femsa's beer 
unit for US$7.64 billion on January 11.  The all-stock transaction 
will place Heineken as the second largest brewer in Mexico. 
Heineken, which triumphed over rival bidder SABMiller PLC, will 
assume USD 2.1 billion of Femsa's debt.  Monterrey-based Femsa will 
get a 20 percent stake in Heineken and Femsa representatives will 
get two seats on Heineken's supervisory board.  Femsa's beer 
business in Mexico has a 43 percent market share by volume, but has 
lost ground to Corona producer Grupo Modelo SAB.  Heineken, the 
world's third largest brewer by sales volume, secured a 10-year 
exclusivity agreement with Femsa that enables it to sell beer in 
Oxxo, Femsa's convenience-store chain.  (Monterrey) 
 
 
 
--------------------------------------------- ------- 
 
TRANSPORTATION AND INFRASTRUCTURE 
 
--------------------------------------------- ------- 
 
 
 
¶13.  (U) US CONSULATE SUPPORTS AEROSPACE FORUM IN TIJUANA:  The 
American Consulate in Tijuana and the U.S. Commercial Service's 
Northwest office are supporting the 1st Aerospace Supplier's Forum 
to be held in Tijuana on March 17 -18.  The event is sponsored by 
the Tijuana Secretariat of Economic Development and the Ministry of 
Economy.  The forum will consist of morning conferences and midday 
one-on-one business matchmaking meetings.  Baja California has over 
40 firms that manufacture, assemble, repair and design aircraft 
parts and components.  Most of these companies are located in the 
Mexicali-Tecate-Tijuana corridor.  The aerospace industry employs 
more than 12,000 people in Baja California, which represents 50% of 
the Aerospace employment in Mexico.  Buyers planning to attend the 
event include Eaton, Zodiac Aerospace, Lockheed Martin, Parker, 
Delphi, Suntron.  (Tijuana) 
 
 
 
------------------------------------ 
 
ENERGY AND ENVIRONMENT 
 
------------------------------------ 
 
 
 
¶14.  (U) NSC OFFICIALS VISIT MEXICO CITY:  Senior officials from 
the National Security Council (NSC) attended G20 meetings hosted by 
the GOM on January 13 and 14.  They also met with the new Governor 
of the Bank of Mexico, Augustin Carstens, and the Hacienda 
Secretary Ernesto Cordero to discuss bilateral economic issues. 
NSC representatives then met with counterparts at the Ministry of 
Foreign Affairs (SRE) to discuss the outcome of the COP 15 climate 
change meetings and how to move forward with the Copenhagen Accord. 
 
Officials from the SRE confirmed that the GOM plans to host COP 16 
in Cancun, rather than Mexico City, from November 29 to December 10 
of this year.  (Mexico City) 
 
 
 
¶15.  (U) NUEVO LEON RECEIVES USD 3.2 MILLION FOR GREEN INITIATIVES: 
The 2010 Mexico Federal Expenditures Budget has designated US 3.2 
million for environmental and natural resource projects in Nuevo 
Leon, the only state to receive federal funding for "green 
projects".  These projects include USD 284,500 for the purchase of 
a new environmental monitoring station, US 103,000 for reducing 
health risks in landfills, and USD 1.1 million for research into 
clean development mechanisms.  (Monterrey) 
FEELEY