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Cablegate: Mexico Economic Weekly - December 4

VZCZCXRO8326
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #3418/01 3382029
ZNR UUUUU ZZH
R 042029Z DEC 09
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 9275
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 003418

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 - December 4

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. (SBU) Table of Contents:


ECONOMY AND FINANCE:
--------------------

REMITTANCES DROP 35.8% - Mexico City


TRADE AND INVESTMENT:
---------------------

MEXICO HOSTS CONGRESS ON COMBATING COUNTERFEITING AND
PIRACY - Mexico City

SUCCESSFUL SHRIMP INDUSTRY ATTRACTS BIOFUEL RESEARCH -
Hermosillo

(SBU)COSMETIC PACKAGING FIRMS RELOCATE TO NORTHEAST
MEXICO - Matamoros

(SBU) MATAMOROS MAQUILAS PRAISE MEXICAN CUSTOMS
FLEXIBILITY - Matamoros

HOTEL OCCUPANCY RATES DOWN 20% IN NUEVO LEON - Monterrey

AMB PROPERTY ANNOUNCES INVESTMENT IN NUEVO LEON -
Monterrey


TRANSPORTATION AND INFRASTRUCTURE:
----------------------------------

VIVAAEROBUS ANNOUNCES EXPANSION PLANS - Monterrey


ENERGY AND ENVIRONMENT:
-----------------------

DECREASE IN DEMAND HIGHLIGHTS EXPO ELECTRICA 2009 -
Monterrey

GOM TO PROPOSE SECOND ENERGY REFORM - Mexico City

MEXICO AND US ENHANCE COOPERATION ON WEATHER FORECASTING
- Mexico City

BISON RETURN TO MEXICO - Mexico City


-------------------
ECONOMY AND FINANCE
-------------------

3. (U) REMITTANCES DROP 35.8%: Remittances in October
stood at 1.69 billion dollars, a 35.8% drop from the
previous year (when the inflow reached an all-time high
of 2.64 billion dollars), according to the Bank of
Mexico. The total accumulated over the previous twelve
months stood at 21.65 billion dollars, the lowest level
since December 2005. The most likely cause is higher
unemployment among Mexicans working illegally in the
United States, especially in sectors such as
construction. Remittances are a main source of income
for many families in Mexico. An estimated 80-90% of
remittances received are spent on basic consumption such
as food and clothing. On average, each remittance
received during October totalled 299 USD, a significant
fall from the 395 USD average in October 2008. While
significant peso depreciation over the past year
partially compensated for lower remittances, the drop
still represents a major blow for many families. (Mexico
City)

--------------------

MEXICO 00003418 002 OF 004


TRADE AND INVESTMENT
---------------------

4. (U) MEXICO HOSTS CONGRESS ON COMBATING COUNTERFEITING
AND PIRACY: The Mexican Institute for Industrial
Property (IMPI) and INTERPOL co-hosted the 5th Global
Congress on Combating Counterfeiting and Piracy in Cancun
December 1-3. More than 800 international public and
private sector IP experts attended from over 30
countries. US speakers included senior officials from
CBP, USTR, FBI and PTO. Judge Ronald Lew, Senior U.S.
District Court Judge in the U.S. Central District Court
of California and a well known expert on IP cases, also
participated. The Global Congress allowed global IP
experts to present their views on what can and should be
done about the menace of counterfeiting and piracy during
the current economic crisis, and identify how to
collaborate to make target scarce resources where they
are most effective. Mexico used the opportunity to
showcase its efforts to protect and enforce intellectual
property. Following the conference, US Embassy Mexico
(ECON and USAID) invited Judge Lew to come to Mexico City
and meet with Mexican Supreme Court Justices, the
President of the National College of Judges and
Magistrates, and several other senior Mexican judges on
December 4. (Mexico City)

5. (U) SUCCESSFUL SHRIMP INDUSTRY ATTRACTS BIOFUEL
RESEARCH: Mexico is the 6th largest producer of farmed
shrimp in the world, and the state of Sonora cultivates
65 percent of the country's product. Last year Sonora
exported USD $400 million in farmed shrimp to the United
States. Despite the economic crisis and price decreases
of 15 percent last year, farms are expanding and industry
leaders are optimistic about the future. On November
9th, econoff toured a 2,300 acre shrimp farm during the
last week of the harvest. Farms are constructed on
desert coastland by dredging canals to feed seawater to
10 acre ponds. In these ponds, shrimp larva are grown
over six months to adulthood and harvested once a year.
Seventy-percent of the harvest is exported to U.S.
restaurants and households, and the remainder is for
domestic consumption. Unlike traditional farmers and
ranchers in the state, the government does not provide
subsidies to the industry. The large enterprise in
Sonora has attracted a unique biofuel project by Global
Seawater Inc. (GSI) to use the residual waters from these
farms as a fertilizer to adjacent Salicornia crops. This
plant thrives in saltwater, is a cheaper competitor to
corn ethanol and soy, and does not use freshwater
resources. The crop yields a clean oil that can be used
to produce jet fuel. In October, Airbus announced a USD
$10 million project partnering with GSI, GE, and Interjet
to develop the technology in hopes of using the fuel for
test flights starting in 2010. In addition to fuel, the
crop can also be used as feed for livestock.
(Hermosillo)

6. (SBU) COSMETIC PACKAGING FIRMS RELOCATE TO NORTHEAST
MEXICO: A majority of the top 12 players in the cosmetic
and personal care packaging industry will relocate to
northeast Mexico (in the Mexican state of Tamaulipas) in
the next 5 years according to Carlos Rubio, General
Manager of Alcan Packaging. Rubio says the industry is
shifting production from China back to North America to
be closer to their customers. The cost of labor in China
is not the bargain it once was, and the close proximity
of the U.S. and Mexico allows companies to keep inventory
levels low. Rubio notes the risk of shipping damage is
much lower and response time to market much faster than
the 6-8 week norm from China. HCP packaging announced
plans to open a 60,000-sq foot operation in Reynosa,
Mexico. HCP is a Chinese firm under Taiwanese ownership
with operations in China, the U.S., and now Mexico. The
company focuses on packaging design, development and
manufacture for the cosmetics, toiletries, skin care and
fragrance industries. The plant will be located close to
the soon to open Anzalduas International Bridge and will
focus on injection molding, injection blow molding, UV
lacquering, vacuum metalizing, as well as decoration and
assembly. HCP Reynosa should be fully operational during
the first quarter of 2010, and will employ approximately

MEXICO 00003418 003 OF 004


130 people. Contacts at the McAllen Economic Development
Corporation confirm a second packaging firm is in the
final stages of real estate negotiations in the area and
anticipate they will close negotiations before the end of
the year. (Matamoros)

7. (SBU) MATAMOROS MAQUILAS PRAISE MEXICAN CUSTOMS
FLEXIBILITY: The Matamoros maquila association's
director and president both praised local and national
customs authorities' flexibility in a recent conversation
with ECONOFF. They said authorities at both levels
understand the needs and concerns that local and national
maquila associations have brought to their attention,
such as requests for extended hours for call centers and
north bound port staffing. They feel Mexican customs is
more business oriented now than in the past. Our
interlocutors noted custom's extended service hours are
so valuable to their businesses that they offered to pay,
but Hacienda indicated that it was not legal under
current regulation. (Matamoros)

8. (U) HOTEL OCCUPANCY RATES DOWN 20% IN NUEVO LEON:
The Association of Nuevo Leon Hotels reported that
occupancy rates among its members fell 20% in 2009,
despite the numerous offers and incentives such as lower
room rates. The organization's president, Miguel Angel
Cantu Gonzalez blamed the bad year on the economic crisis
and the outbreak of H1N1 influenza, which he said had
made life "complicated" for the tourism industry
throughout the country. (Monterrey)

9. (U) AMB PROPERTY ANNOUNCES INVESTMENT IN NUEVO LEON:
Maryland-based AMB Property announced on December 1st
that it will begin construction of the AMB-Agua Fria
Industrial Park in the Monterrey suburb of Apodaca.
Although the company has not revealed the cost of the
project, the media reported that AMB will invest about
$110 million. The initial construction phase will
include three buildings with a total of 44,000 square
meters. Once completed, the park will have over 200,000
square meters of industrial space and cater to
manufacturing distributors. AMB has already signed lease
agreements with Raven Rubber, Energy Alloys, Ceva Freight
Management, Span de Mexico, Johnson Controls, and Arauco
for the new facility. (Monterrey)

---------------------------------
TRANSPORTATION AND INFRASTRUCTURE
---------------------------------

10. (U) VIVAAEROBUS ANNOUNCES EXPANSION PLANS: On its
third anniversary, Monterrey-based budget airline
VivaAerobus announced plans to add four aircraft to its
fleet and begin service on 12-15 new domestic and
international routes in 2010. The company's CEO Donal
Rogers said that, despite the economic crisis, his
airline had 1.6 million passengers in 2009, an increase
of 15% over 2008, with a load factor of 79%.
VivaAerobus, a joint venture between the Mexican bus
company IAMSA and the Ryan family (proprietors of
Ryanair), began operations in 2006 and operates a fleet
of seven Boeing 737 aircraft flying to 30 destinations in
Mexico and to Las Vegas. It suspended service between
Monterrey and Austin, TX, its other international route,
earlier this year. (Monterrey)

----------------------
ENERGY AND ENVIRONMENT
----------------------

11. (U) DECREASE IN DEMAND HIGHLIGHTS EXPO ELECTRICA
2009: Annual electricity demand nationwide had decreased
by 4% through November, the largest reduction recorded
since the founding of the Federal Electricity Commission
in 1937. Speaking at the November 25 - 27 Expo Electrica
2009 in Monterrey, Gabriel Garza Herrera, President of
the Mexican Chamber of Electrical Manufacturers,
attributed lower demand to the economic crisis and
increased conservation measures. He expected demand to
rise during December due to the Christmas holidays.
(Monterrey)


MEXICO 00003418 004 OF 004


12. (U) GOM TO PROPOSE SECOND ENERGY REFORM: The Energy
Secretariat is drafting a new energy reform, which will
include some of the issues that were cut excluded from
the first reform, including private investment in
downstream activities. According to Energy Secretary
Georgina Kessel, a second generation reform is aimed at
strengthening Mexico's public finances and significantly
reducing reliance on oil revenues. (In October,
budgetary and oil revenues fell 33.9% and 49.7%,
respectively, the deepest decline since 1990.) Kessel
said the Energy Secretariat also aims at transforming
Pemex to a public company similar to Statoil and
Petrobras, which were opened to private capital.
According to Kessel the reform will be submitted to the
Congress before the beginning of the congressional
sessions in February. (Mexico City)

13. (U) MEXICO AND US ENHANCE COOPERATION ON WEATHER
FORECASTING: Ambassador Pascual and Mexican Environment
Minister Juan Elvira Quesada on December 3 signed a
bilateral agreement between the U.S. National Weather
Service (NOAA) and the Mexican Water Commission (CONAGUA,
part of the Environment Ministry), renewing a 67-year-
long collaboration on weather forecasting and
hydrological (flooding) prediction. In his remarks,
Ambassador Pascual stressed the impact of climate change
on weather, and the importance that our respective
presidents place on responding to these climate change
impacts. The Director of the National Weather Service
for the southern region of the United States and the
Director of the Weather Service's Office of International
Affairs attended the signing as well. (Mexico City)

14. (U) BISON RETURN TO MEXICO: As a part of a
collaborative effort between Mexico and the US to restore
bison to their historical range in Mexico, twenty-three
bison from South Dakota's Wind Cave National Park were
released into Mexico's high desert on November 27. The
bison were released in the 44,000 acre Rancho El Uno
reserve in Chihuahua. The ceremony was attended by
Secretary of Environment Juan Elvira as part of the
celebration of Mexico's National Conservation Day.
(Mexico City)

PASCUAL

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