UNCLAS MEXICO 000195
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 23
1. (U) The Mexico Economic Weekly supplements individual reporting
from the 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:
TRADE AND INVESTMENT:
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HONDA CONTINUES UNINTERRUPTED PRODUCTION - Guadalajara
"TIME" FOR A CHANGE IN NAYARIT? - Guadalajara
ATM THEFTS THREATEN MAQUILADORAS ANEW - Matamoros
ENERGY:
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OIL PRODUCTION FALLS TO 13 YEAR LOW - Mexico City
CEMEX SHIFTING TO RENEWABLE ENERGY SOURCES - Monterrey
CROSS-BORDER ENERGY SHARING CATCHING ON SLOWLY - Matamoros
TRADE AND INVESTMENT:
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3. (U) HONDA CONTINUES UNINTERRUPTED PRODUCTION: A senior
executive of Honda-Mexico, which operates a motorcycle and vehicle
production plant in the Guadalajara suburb of El Salto, told the CG
that Honda has no current plans for a temporary suspension of
operations. This is in contrast to competitors Nissan, Volkswagen,
General Motors, and Ford, all of whom have recently closed their
Mexican plants for varying periods of time. In addition to domestic
sales, Honda exports vehicles made in the El Salto plant to the U.S.
and various South American countries. (Guadalajara)
4. (U) "TIME" FOR A CHANGE IN NAYARIT? A Federal Deputy has
introduced a bill to switch the Pacific coast state of Nayarit from
the Mountain to the Central time zone as a means of facilitating
trade, commerce, and tourism. Neighboring Jalisco state observes
Central time, and this causes confusion especially in the greater
Puerto Vallarta area, where the state and time zone border divides
the tourist zone. The change might also lead to improved
coordination between the municipalities of Puerto Vallarta, Jalisco
and Bahia de Banderas, Nayarit on common development and
infrastructure issues. (Guadalajara)
5. (U) ATM THEFTS THREATEN MAQUILADORAS ANEW: In August, a string
of thefts of ATMs placed in maquiladoras threatened industry in
Reynosa, Tamaulipas. The Tamaulipas Special Police (PET) were
stationed in Reynosa's industrial parks to protect the plants from
these and other thefts and reports of significant thefts stopped
almost immediately. New incidents have again spread fear among plant
managers and many are considering removing ATMs from their
facilities despite the service and convenience they offer to
employees. Approximately two weeks ago, "armed commandos," according
to the manager of a neighboring plant, allegedly entered a General
Motors facility in Reynosa and held employees at gunpoint, forcing
them to make withdrawals from their accounts one-by-one before
making off with the cash. Similarly, rumors in the Reynosa and
Matamoros maquiladora communities that the kidnapping of the manager
of Lear Jet in Ciudad Juarez last week was tied to a similar ATM
theft have increased concerns of kidnappings, as well. In a meeting
with the Reynosa Maquiladora Association (RAMMAC) on January 19,
Tamaulipas Secretary of Public Security, Jose Ives Soberon, promised
to increase PET forces in Reynosa's industrial parks if managers'
concerns continue to rise. Additionally, maquiladora managers
continue to strongly consider the value of maintaining ATMs in their
plants as a service to their employees in light of the incidents.
(Matamoros; Reftel 08 Matamoros 294)
ENERGY:
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6. (U) OIL PRODUCTION FALLS TO 13 YEAR LOW: Mexican oil production
fell to an average of 2.8 million barrels a day in 2008, its lowest
level since 1995. Pemex estimates that oil production will begin to
increase again by 2011 reaching 3 million barrels a day by 2015.
Industry experts discount this forecast as overly optimistic given
the decline of the Cantarell field, the challenges PEMEX faces in
Chicontepec and Ku Maloop Zap and the lack of investment in
exploration in the deep waters of the Gulf of Mexico. Oil exports
are Mexico's largest source of foreign exchange and oil revenues
account for almost 40% of the federal budget. Declining oil
production coupled by low energy prices will create fiscal problems
for Mexico unless the government takes action soon. (Mexico City)
7. (U) CEMEX SHIFTING TO RENEWABLE ENERGY SOURCES: On January 22,
the Monterrey-based multinational Cemex announced the opening of a
new wind farm in La Ventosa, Oaxaca. The wind farm administered by
a Spanish company, Iberdrola, will supply energy to Cemex plants
located in various parts of the country. The US$ 100 million
project is able to generate 80 megawatts of energy and, according to
press reports, will also supply energy to other companies such as
Barcel, Bimbo, Cerveceria Cuauhtemoc-Moctezuma, Conductores
Monterrey, and Kimberly Clark. Cement production is an energy
intensive industry and Cemex considers the use of renewable energy
an important part of its growth strategy. The company plans to
invest an additional US$ 420 million over the next two years to
increase the wind farm's capacity. (Monterrey)
8. (U) CROSS-BORDER ENERGY SHARING CATCHING ON SLOWLY: In late
2007, Sharyland Utilities in McAllen, Texas, announced an agreement
with CFE to allow cross-border commercial energy sharing - one of
only two such agreements allowing commercial energy trade along the
Texas border. Despite claims of up to 15 percent energy cost savings
annually due to "peak" hour differences between the US and Mexico
(US "peak" rates occur between 5:00pm and 7:00pm, with Mexico's
"peak" hours falling between 6:00pm and 10:00pm), only six companies
in Reynosa have taken advantage of the "natural arbitrage" situation
and obtained the required permits, according to Michael Landgraf of
energy consultancy Crosspoint Global which helps market Sharyland's
services in Reynosa. According to Landgraf, a 600,000 square foot
plant in Reynosa saved more than 300,000 USD in 2008 (a 12.6 percent
annual saving) due to the agreement. Despite continued complaints
from the maquiladora sector about rising energy costs - up roughly
30 to 40 percent in 2008, according to Reynosa Maquiladora
Association (RAMMAC) members - the international energy sharing
opportunity remains virtually untouched. Industry leaders report
that the potential savings for many companies are not significant
enough to overcome the perceived hassle and upfront costs of
obtaining the required permits, especially those required from CFE.
(Matamoros)
ENVIRONMENT:
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MEXICO AS A LEADER ON CLIMATE CHANGE: The Center of Dialogue and
Analysis on North America (CEDAN) workshop on Regional Climate
Governance January 19- 20 focused on future paths of collaboration,
including a possible a carbon emissions trading regime for North
America. Dr. Fernando Tudela, Undersecretary of Planning and
Environmental Policy of the Secretariat of Environment and Natural
Resources (SEMARNAT) pointed out that Mexico has been the most
proactive developing country on climate change. At the UNFCC-COP 14
in Poznan, Mexico announced its goal of reducing green house gas
emissions fifty percent from 2000 to 2050 - if there are financial
and cooperation mechanisms to facilitate this goal. Tudela said that
Mexico's per capita emissions are one fifth of the U.S. and Canada
and that a cap and trade system could be feasible in the North
American region if regional U.S. initiatives and President Obama's
proposal is implemented. Tudela commented that the European Union
has the most developed experiment on cap and trade and it would be
very useful to use its lessons learned. The trilateral Commission
for Environmental Cooperation (CEC) could be the organization to
help the three countries coordinate positions. (Mexico City)
Bassett