VZCZCXYZ0001
RR RUEHWEB

DE RUEHME #0428/01 0391449
ZNR UUUUU ZZH
R 081447Z FEB 10
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 0370
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 000428 
 
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 - February 5, 2010 
 
¶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 NEARLY 16% IN 2009 - Mexico City 
 
 
 
LOWER OIL SHARES REDUCES FEDERAL FUNDING TO NUEVO LEON - Monterrey 
 
 
 
 
 
TRADE AND INVESTMENT: 
 
-------------------------------- 
 
 
 
ALFA ANNOUNCES BEST QUARTER IN HISTORY - Monterrey 
 
 
 
CEMEX REPORTS US$265 MILLION IN PROFITS FOR FOURTH QUARTER - 
Monterrey 
 
 
 
SMITHS MEDICAL DELAYS US$15 MILLION INVESTMENT, CONSIDERS 
RELOCATION DUE TO CRIME - Monterrey 
 
 
 
INDIA PROMOTES COMMERCIAL INTERACTION WITH MEXICO - Monterrey 
 
 
 
MATAMOROS-BASED MEXICHEM FLUOR PURCHASES INEOS FLUOR HOLDINGS 
LIMITED - Matamoros 
 
 
 
 
 
TRANSPORTATION AND INFRASTRUCTURE: 
 
--------------------------------------------- ------- 
 
 
 
TIJUANA TRIES (AGAIN) TO IMPLEMENT MASS TRANSIT - Tijuana 
 
 
 
 
 
ENERGY AND ENVIRONMENT: 
 
------------------------------------ 
 
COPENHAGEN ACCORD UPDATE - Mexico City 
 
 
 
CALDERON ON COPENHAGEN - Mexico City 
 
 
 
 
 
LABOR: 
 
--------- 
 
 
 
SME FILES CLAIM UNDER THE NAALC - Mexico City 
 
 
 
NUEVO LEON SALARY PURCHASING POWER DROPS - Monterrey 
 
 
 
UNEMPLOYMENT PERSISTS IN TIJUANA - Tijuana 
 
 
 
 
 
------------------------------- 
 
ECONOMY AND FINANCE 
 
------------------------------- 
 
 
 
¶3.  (U) REMITTANCES FALL NEARLY 16% IN 2009:  Remittances from the 
U.S. to Mexico fell nearly 16% in 2009, disrupting the spending 
patterns of recipients.  Remittances are expected to regain their 
2008 levels of around US$21 billion per year as the job market in 
the U.S. recovers and Mexican migrant workers can once again find 
work.  (Mexico City) 
 
 
 
¶4.  (U) LOWER OIL SHARES REDUCES FEDERAL FUNDING TO NUEVO LEON: 
According to the Secretary of Finance, Nuevo Leon state posted a 
2009 budget deficit of US$100 million (lower than expected), which 
includes accumulated debt from the previous administration.  The 
state received US$1.4 billion in federal funds for 2009 (a drop of 
16.9 percent over 2008), less than the US$1.5 billion it had 
budgeted.  For 2010, Nuevo Leon predicts a budget deficit of US$194 
million pursuant to its total budget of US$3.58 billion.  Nuevo 
Leon expects US$1.6 billion in federal funding for 2010. 
(Monterrey) 
 
 
 
------------------------------- 
 
TRADE AND INVESTMENT 
 
------------------------------- 
 
 
 
¶5.  (U) ALFA ANNOUNCES BEST QUARTER IN HISTORY:  On January 27, 
Monterrey-based conglomerate Alfa announced record 2009 fourth 
quarter net earnings of US$132 million, ending the year with US$155 
million in net income, in contrast to 2008's US$791 million loss. 
Mario Paez, Alfa's Director of Planning and Finance, reported that 
Alfa will invest US$380 million in 2010 in its own development: 
US$100 million each in its petrochemical, automotive, and food 
subsidiaries (Alpek, Nemak, and Sigma), and US$80 million in its 
telecommunications subsidiary, Alestra.  Alfa also recently 
announced its intention to invest around US$62 million to develop 
an oil and gas field it recently discovered in Texas along with 
 
U.S. partner Pioneer Natural Resources.  (Monterrey) 
 
 
 
¶6.  (U) CEMEX REPORTS US$265 MILLION IN PROFITS FOR FOURTH QUARTER: 
On January 26, Monterrey-based Cemex SAB announced fourth quarter 
profits of US$265 million, a rebound from a US$743 million loss in 
the same period in 2008.  Cemex said the profit came on gains from 
foreign exchange positions and financial instruments, as well as 
cutbacks in operating costs and spending.  Indeed, consolidated net 
sales declined 17 percent in the fourth quarter to US$3.4 billion 
and were down 28 percent for the full year to US$14.5 billion.  The 
company reported that weak demand hit sales in the U.S. and Spanish 
construction markets but pointed to signs of stabilization and said 
it had modest increases in some areas like U.S. highway building. 
Cemex sales in the fourth quarter in the United States decreased 39 
percent compared to the same quarter in 2008.  Fourth-quarter sales 
in Spain were down 21 percent.  The company's net debt declined by 
US$2 billion in the fourth quarter (to US$15.1 billion). 
(Monterrey) 
 
 
 
¶7.  (U) SMITHS MEDICAL DELAYS US$15 MILLION INVESTMENT, CONSIDERS 
RELOCATION DUE TO CRIME:  Lorenzo Casas, Director of Operations for 
UK-based Smiths Medical, warned that his company may close its 
800-employee plant in Apodaca and relocate to another state or a 
different country due to their concerns for employee public safety. 
The company had planned to invest US$15 million to expand its 
existing plant by 50,000 square feet, but the worsening security 
situation has delayed plans.  Casas said employees have been 
assaulted and their cars and computers have been stolen outside of 
the plant's facilities.  Moreover, he said, traffic police have 
extorted and harassed employees.  Smiths Medical has three other 
plants in Tijuana and employs over 4,000 people in Mexico. 
(Monterrey) 
 
 
 
¶8.  (U) INDIA PROMOTES COMMERCIAL INTERACTION WITH MEXICO:  The 
Indian community in Monterrey recently announced the creation of 
the Northeast Chapter of the India-Mexico Chamber of Commerce, 
Culture, Industry, Tourism, and Technology (CIMCITT).  CIMCITT's 
goal is to promote commercial relations between India and the 
states of Coahuila, Nuevo Leon, and Tamaulipas as well as initiate 
a census of the Indian population in northeast Mexico.  Thus far, 
400 Indians have been registered in the census.  Pablo Longoria 
Trevino, Executive Chairman of CIMCITT, stated that trade between 
the two countries in 2009 totaled around US$3 billion and predicted 
that figure to rise to US$5 billion in 2010.  Nuevo Leon has 
attracted investment from Indian companies such as Saskens, 
Aricent, Infosys, and Wipro.  (Monterrey) 
 
 
 
¶9.  (U) MATAMOROS-BASED MEXICHEM FLUOR PURCHASES INEOS FLUOR 
HOLDINGS LIMITED:  Mexichem Fluor is one of the world's largest 
producers of hydrofluoric acid (HF), a key ingredient in 
refrigerants and essential to the production of aluminum, 
high-octane gasoline, nuclear fuels, electronic circuitry cards, 
Teflon, and other items.  A company contact confirmed press reports 
that Mexichem Fluor has purchased INEOS Fluor Holdings Limited, a 
U.K.-based manufacturer and supplier of fluorinated chemicals and 
feedstocks with plants in the U.K., Louisiana, and Japan. 
According to media reports, the deal is valued at US$350 million 
and should close in March 2010.  With the purchase of INEOS, 
Mexichem Fluor will become an integrated, global producer of 
specialty fluorochemicals and forecasts annual sales revenues of 
more than US$500 million.  Mexichem Fluor - Matamoros has an 
installed capacity of 208 million pounds of HF a year and exports 
98 percent of its production to the U.S.  (Matamoros) 
 
 
 
--------------------------------------------- ------ 
 
TRANSPORTATION AND INFRASTRUCTURE 
 
--------------------------------------------- ------ 
 
¶10.  (U) TIJUANA TRIES (AGAIN) TO IMPLEMENT MASS TRANSIT:  In a 
forthright presentation to the Committee on Binational Regional 
Opportunities, Jorge Gutierrez, of Tijuana's planning agency, 
explained the poor state of public transit in the city, resulting 
from monopolistic concessionaires who control bus and taxi lines in 
the city.  Concessions are often granted due to political 
considerations, and routes do not make sense for commuters.  This 
feeds the city's traffic problems because residents opt to buy used 
cars (usually imported illegally from the U.S.) instead of using 
the city's expensive and inconvenient public transit.  Gutierrez 
explained the city has tried on four previous occasions to 
implement light rail or other forms of transportation, but failed, 
making it difficult for the current municipal administration to get 
federal funds for its plans to construct Brazilian-style VRT buses 
in the city.  The city has been more successful implementing a 
"white-topping" pavement program, an improvement over asphalt 
streets which are quickly destroyed in rains due to the city's lack 
of adequate sewers.  (Tijuana) 
 
 
 
------------------------------------ 
 
ENERGY AND ENVIRONMENT 
 
------------------------------------ 
 
 
 
¶11.  (U) COPENHAGEN ACCORD UPDATE:  Annex I countries, identified 
as major economies under the Copenhagen Accord, were to commit to 
implement quantified economy-wide emissions mitigation targets for 
2020 in writing to the UNFCC Secretariat by January 31, 2010.  The 
non-Annex I countries were to implement mitigation actions and 
submit their mitigation plans to the Secretariat by January 31, 
¶2010.  Mexico, as a non-Annex I country, inscribed its actions in 
Appendix II on January 31, 2010, aimed at reducing GHG emissions up 
to 30% with respect to the business as usual scenario by 2020. 
With the provision of adequate financial and technological support 
from developed countries as part of the global agreement, non-Annex 
I countries will act under the principle of common but 
differentiated responsibilities.  These responsibilities were 
framed in Kyoto-like language indicating that Mexico sees its 
commitments as being those of a developing country and dependent 
upon provision of assistance from the developed countries.  As of 
February 2, 87 countries (including the EU 27 and the United 
States) have inscribed or associated with the Accord.  (Mexico 
City) 
 
 
 
¶12.  (U) CALDERON ON COPENHAGEN:  During his participation in the 
World Economic Forum in Davos last week, Mexican President Felipe 
Calderon urged governments and companies to set targets to cut 
their GHG emissions, looking forward to a successful outcome at 
COP-16 in Cancun, Mexico.  On February 2, President Calderon was 
the keynote speaker at the UN University in Tokyo, where he pointed 
out the importance of the Copenhagen Accord and all countries' 
responsibility to adopt measures to face climate change.  He noted 
the historically enormous responsibility of developed countries and 
the need to strengthen actions of developing countries with 
technology and financing.  (Mexico City) 
 
 
 
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LABOR 
 
-------- 
 
 
 
¶13.  (U) SME FILES CLAIM UNDER THE NAALC:  Members of the Sindicato 
Mexicano de Electricistas (SME) traveled to Washington, DC, to 
present their claim against the GOM for the shutdown of the 
 
electrical company, Luz y Fuerza del Centro (LFC) and the 
subsequent dissolution of the union.  The complaint was presented 
at the Department of Labor, and the SME was accompanied by the 
AFL-CIO and the ITUC.  The SME submitted the claim on January 29 
and coupled its actions in Washington, DC, with a large protest in 
Mexico City.  Mexican courts continue to rule against the SME's 
active cases in Mexico.  (Mexico City) 
 
 
 
¶14.  (U) NUEVO LEON SALARY PURCHASING POWER DROPS:  In 2009, Nuevo 
Leon wage earners had the third highest purchasing power loss in 
the country (-6.5 percent) according to the Federal Secretariat of 
Labor and Social Security.  During the year, Nuevo Leon had the 
lowest average upward adjustment in salaries and wages paid by 
employers of all the Mexican states.  The only workers who saw a 
nominal wage increase were union workers; their salaries rose 4.7 
percent but, in real terms, decreased 2.2 percent in light of 
higher inflation.  Monterrey posted a 4.87 percent increase, 36.4 
percent higher than the national average increase of consumer 
prices, and the third highest increase of the 46 Mexican cities 
analyzed by Banxico.  According to the Secretariat, some 250,000 
workers in Nuevo Leon experienced contractual salary revisions. 
(Monterrey) 
 
 
 
¶15.  (U) UNEMPLOYMENT PERSISTS IN TIJUANA:  Despite continued flows 
of FDI into the city, the global economic downturn means 
unemployment is hovering at 9%, according to INEGI.  Statewide 
unemployment is around 7.6%, up from 2-3% just two years ago.  Baja 
California State Secretary for Economic Development Alejandro 
Mugarray Lagarda blames an influx of unemployed workers from 
California and central Mexico for the uptick in unemployed persons. 
(Tijuana) 
PASCUAL