Weekly Report 71 by PRODENSA

GENERAL SITUATION IN MEXICO

Weekly Review # 71 I September 8, 2021

MANUFACTURING INDUSTRY MEXICO TO CO-PRODUCE SEMICONDUCTORS WITH THE U.S. Mexico will co-produce semiconductors with the United States and, to this end, the Secretary of Economy, Tatiana Clouthier, will with several interested companies in Washington, DC. In this regard, the Mexican government has discussed with its U.S. counterpart the production in Mexico of “an important part” of the semiconductors and software in the same industry. At the same time, both governments are holding talks on how much Regional Content Value would be assigned to Mexico in these projects in order to comply with the rules of origin in the Mexico-U.S.-Canada Agreement (USMCA). The boost in investment in this industry comes after the high demand for electronic equipment and network connectivity worldwide caused by the Covid-19 pandemic led, in turn, to a shortage of semiconductor chips for the automotive industry. In parallel, the U.S. government changed the rules to restrict Huawei’s ability to source semiconductor chips from overseas facilities using U.S. technology. “What have we put forward? Two things: to make an important part and link it to the production chain in the United States and, on the other hand, the programming part; one part in Jalisco and another in Baja California,” said Clouthier this Monday in a forum organized by Expansión.

THE U.S. ALLOCATES $10 MILLION TO STRENGTHEN LABOR INSPECTION Labor inspection will be a fundamental axis in the enforcement of the labor reform once labor justice, the legitimization of collective bargaining agreements, and the elimination of subcontracting have been implemented in 8 states. Given this, the U.S. government, through the International Labor Affairs Bureau (ILAB), Department of Labor, announced the availability of 10 million dollars for technical assistance in the inspection. In that sense, it highlights that the overall objective is to improve compliance with labor laws in Mexico. The call highlights that the project is focused on strengthening labor management systems for compliance and inspection and will improve engagement with supply chain actors within the priority sectors of the United States-Mexico-Canada Agreement (USMCA) to reduce non-compliance with Mexican labor laws in Nuevo Leon, Sonora, and Baja California. As such, this project focuses on aligning labor practices with Mexico’s 2017 constitutional reform on labor justice and the 2019 labor law reform. The project-level outcomes are Improved enforcement of labor laws by labor inspectors in target states in USMCA priority sectors.

GOOD NEWS MEXICO IS THE LEADING TRADE PARTNER OF THE UNITED STATES SO FAR IN 2021

During the first seven months of the year, U.S. purchases to Mexico exceeded 218.3 billion dollars, while sales were for almost 157.2 billion dollars. In the first seven months of the year, Mexico exceeded powers such as China and Canada. It consolidated its position as the leading trading partner of the United States. Japan and Germany complete the top 5. From January to July, U.S. purchases to Mexico exceeded 218.3 billion dollars, while sales were for almost 157.2 billion dollars, representing a surplus in Mexico close to 61.16 billion dollars, according to figures from the Department of Commerce the Bureau of Economic Analysis (BEA). In July, Mexico exported over 31.9 billion dollars to the U.S. Its imports were for more than 23.66 billion dollars to mark a surplus of about 8.25 billion dollars. Canada was the leading trading partner of the United States in July, with Mexico in second place.

The U.S. reduces its trade deficit The U.S. trade deficit with the world narrowed more than expected in July, with a drop in imports revealing a slowdown in domestic demand linked to the fear of contagions by the delta variant of the coronavirus, said the Department of Commerce. The deficit reached 70.1 billion dollars, a 4.3% contraction in June. Imports fell .2% to $282.9 billion, <and exports rose 1.3% to $212.8 billion. Analysts were forecasting a deficit of 74 billion dollars.

SOURCE: EXPANSION

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference September 1-7, 2021 RETURN TO PRESENTIAL CLASSES The Secretary of Education, Delfina Gómez, reported that 135 thousand 230 schools were opened and 12 million 639 thousand 915 students and 1 million 200 thousand 245 education workers returned to classrooms. He highlighted that only 88 schools with cases of contagion had been reported, representing 0.06% of the universe of open schools. INVESTMENT IN MEXICO The President commented that the country is in the process of recovery and exit from the negative effects of the pandemic, noting that there will be a 5% annual growth until 2024; the indicators estimate an average growth of 6%. He pointed out that with the signing of the USMCA in Mexico, there are favorable conditions for productive investment since participation in the most important market in the world is guaranteed. He commented that the number of companies and foreign investment is growing, which will mainly benefit the central, Bajio, and northern regions of the country. RULES OF ORIGIN AUTOMOTIVE INDUSTRY IN THE USMCA The President acknowledged that there is a difference of interpretation with the US Government, specifying that the Secretaries of Economy and Foreign Relations are looking for a solution in the matter. The interest is to prevent the issue from reaching an international panel.

SOURCE: https://www.youtube.com/channel/UCxEgOKuI-n-WOJaNcisHvSg

MIGRANT CARAVAN The purpose of the Government is to contain the migratory influx and keep people in shelters in the south-southeast of the country. He urged the US government to continue seeking immediate solutions in the Central American region, suggesting expanding the “Sowing Life” immediately and “Youth Building the Future” programs to Guatemala, Honduras, and El Salvador. He also proposed that the beneficiaries of these programs be objects of temporary work visas in the United States. HEALTH PULSE The Secretary of Health, Dr. Jorge Alcocer, mentioned that an average of more than 500 thousand daily doses is maintained. By October 31, the entire adult population will have at least one dose of the vaccine. Until today, 87 million 750 thousand 381 doses have been applied, 61% have a complete vaccination, and 39% have only one dose. More than 104 million doses have been received, and more than a million more doses will be received this week. To an express question about the vaccination of minors, he expressed that they have detected that the judges lack all the necessary information, so an explanatory document will be developed on the causes, reasons, and risks that vaccination represents. He also pointed out that vaccinating a child or a teenager with a low level of risk means that someone older won’t have access to that vaccine, and that could represent a higher level of risk.

MEASURES TAKEN BY STATES IN MEXICO

BAJA CALIFORNIA The State of Baja California remains considered as medium-risk or yellow light. Official reports confirmed that are currently 923 active cases with hospital occupancy at 44.03%. The percentage of the population with a complete vaccination scheme increased to 79.15% in the past week. The vaccination plan continues this week by applying the complete vaccination scheme of Astra Zeneca and Pfizer to adult populations in Tijuana, Ensenada, and Mexicali.

SONORA The vast majority of Sonora’s municipalities remain considered high-risk tier or orange light, three municipalities in the maximum-risk tier or red light, three municipalities in the medium-risk tier or yellow light, and two municipalities out of 72 in the low-risk tier or green light. Official reports confirmed that are currently 3,079 active Covid-19 cases and 326 hospitalized patients. Seventy-three new confirmed cases were reported in the past 24 hours.

MEASURES TAKEN BY STATES IN MEXICO

COAHUILA After the increase in the demands for protection so that minors can be vaccinated against COVID-19, the authorities of Coahuila reported their plans to extend the vaccination day to this group. According to the State Government, once the application to those over 18 is concluded, vaccination will begin in minors. However, since there are no studies on the consequences of vaccination against COVID-19 in children, the responsibility will rely on the parents. TAMAULIPAS Tamaulipas changes to an orange traffic light due to Covid-19 after having remained red due to an upturn in cases presented during August.

NUEVO LEON The State Secretary of Health, Manuel de la O Cavazos, reported that this Friday, he will formally request the federal government to send vaccines against the SARS-CoV-2 virus to apply to the twelve to 17-year-old group. The official pointed out that it is convenient to reduce the age to apply the antigen once the immunization of the groups of 18 years and over is completed, as is already done in some countries. Once the studies are concluded, they would also be included in the National Vaccination Plan for minors from six to eleven years.

MEASURES TAKEN BY STATES IN MEXICO

QUERETARO According to information from state authorities, in the first week of back to school in Queretaro, an 8% increase of Covid-19 infections was reported in the 10 to 19-year-old age group in Queretaro. They specified that 275 confirmed cases of the disease were reported in this age group, representing 21 more cases than the week before the return to school. Meanwhile, in the age group from 0 to 9 years old, there was a decrease in infections with -5% of cases, since 62 were reported; and in the group from 20 to 29 years old, there were 884 infections, which is -2% compared to the previous week. Also, in the weekly metrics, they report the first case detected in an educational institution, which corresponds to a high school student in the State. Given this situation, authorities recommended the population reinforce the measures taken by parents and young people.

AGUASCALIENTES In Aguascalientes, the Mexican Social Security Institute (IMSS) announced that on September 1, 202 new workers were incorporated who will reinforce the care provided to serious or critical patients by COVID-19. The positions correspond to the categories of Auxiliary and General Nurse, General Physician, Inhalotherapist, Stretcher Attendant, Nutritionist, Chemical Laboratory Technician, and Social Worker, among others, who will be added to the various services provided by the institute to patients suspected or confirmed with the SARS-Cov-2 virus. The head of Medical Services of the IMSS in Aguascalientes, José de Jesús Chávez Martínez, explained that at the first level of care, through the Respiratory Modules, the new workers will strengthen the work of assessment of people with respiratory conditions, application of rapid tests and daily medical follow-up by telephone. In contrast, at the second level, the capacity for comprehensive care of serious and critical patients will be increased.

MEASURES TAKEN BY STATES IN MEXICO

GUANAJUATO The week in Guanajuato started with a decrease in coronavirus cases, with 145 new cases reported. According to the Ministry of Health of Guanajuato (SSG), these new cases were reported in 17 municipalities in the State, predominantly in the industrial corridor. The city of Leon registered 44 new positives, followed by the municipality of Irapuato with 30, Guanajuato capital with 17, and Celaya and Cueramaro with 16 more. With these new positives, the State has an accumulated total of 159,567. There are 5,272 active cases in the State with a probability of infection and 1,225 suspected cases pending to rule out or not the virus. In the last hours, the death of nine more people was registered. Only two reported having a dose of vaccine; the rest had none. The SSG recorded that seven of the victims, all over 40 years of age, had not been vaccinated against the virus. The victims were from Apaseo, Comonfort, Cortazar, Guanajuato, San Luis de La Paz, San Miguel de Allende, Silao and Uriangato. In the case of SMA, two victims have been reported.

JALISCO According to the Federal Health Secretariat, from September 6 to 19, the State will have a yellow traffic light. This means that Jalisco went from high to medium risk in the second week of back to school. Last week, Jalisco Health reported 12,554 new cases, up from 11,799 when the State was in red, maximum risk. On the other hand, there are 1,201 patients hospitalized due to complications with Covid-19 in public and private institutions. From August 9 to 22, when Jalisco was in a red traffic light, it had 54% occupancy in general beds, while now that it is in yellow, it has 47%. In beds with ventilators, for critically ill patients, it had 51%, but now in a yellow traffic light, it is higher with 57% occupancy. The return to classes will be a seesaw because some indicators will gain strength again with the reactivation of the academic sector, warned the Data Scientist, Carlos Ruiz.

MEASURES TAKEN BY STATES IN MEXICO

STATE OF MEXICO In the first week of on-site classes in the State of Mexico, 179 Covid-19 infections have been reported, of which 84 were among students and the rest among teaching and administrative staff, according to the Ministry of Education. So far, three schools in the state of Mexico have been temporarily closed after coronavirus infections were reported. CDMX According to the Ministry of Health, at the beginning of a new epidemiological week, the epidemic curve had a 26 percent reduction. This is the largest drop since the beginning of the current wave of cases. This curve has been declining for three weeks due to a sustained decrease in the rate of infections. After nine days without vaccination against Covid-19 in Mexico City, immunization was resumed this Tuesday with applying the second dose of AstraZeneca’s biologic for adults aged 40 to 49 years in Azcapotzalco, Benito Juarez, Iztapalapa, Iztacalco, Gustavo A. Madero, and Venustiano Carranza.

VACCINATION PROGRESS

According to the Ministry of Health, since the beginning of the National Vaccination Strategy and up to September 5th, 87 million 224 thousand 714 doses against COVID-19 have been applied. In total, 59 million 059 thousand 884 people over 18 years of age, representing 66 percent of the adult population, have been immunized, of which 35 million 813 thousand 552 have the complete immunization scheme, and 23 million 246 thousand 332 received the first dose. In 30 states, immunization progress is greater than 50 percent.

TOWARDS THE “NEW NORMAL”

DISTRIBUTION OF DEATHS PER STATE DUE TO THE PANDEMIC

INFORMATION UPDATED ON SEPTEMBER 6, 2021 AT 19:00 HRS LOCAL TIME.

NEW CASES REPORTED: 5,127

SOURCE: https://www.gob.mx/salud/

CONFIRMED CASES: 3,433,511

NEW DEATHS REPORTED: 330

CONFIRMED DEATHS: 263,470

INCREASE OF CONFIRMED CASES SINCE THE FIRST REPORT MAP WITH THE DISTRIBUTION OF THE INCIDENCE RATE OF ACCUMULATED CASES OF COVID-19 BY ENTITY OF RESIDENCE.

National rate 72.08

0 to 10.0 (0 states)

40.1 to 50 (2 states)

10.1 to 20 (1 states)

50.1 to 60 (5 states)

20.1 to 30 (3 states)

60.1 to 70 (3 states)

30.1 to 40 (4 states)

>70 (14 states)

Elaborated by Prodensa with information from the Health Ministry of Mexico

PANDEMIC’S SITUATION IN THE WORLD • As of September 6, 2021, globally there have been reported 220,563,227 confirmed cases (354,802 new cases) of COVID-19 and 4,565,483 deaths (6,527 new deaths*). Lethal rate: 2.1%. • In the last 14 days, the number of new cases accounts for 4% (8,649,885) of the total of accumulated cases.

SOURCE: https://www.gob.mx/salud/

TOWARDS THE “NEW NORMAL” INCIDENTS OF CONTAGIONS IN THE POPULATION BY REGION AS OF SEPTEMBER 6

DEATH INCIDENTS IN POPULATION BY REGION AS OF SEPTEMBER 6

SOURCE: https://www.gob.mx/salud/

EHS

RECOMMENDATIONS COVID-19 VACCINE BOOSTER SHOT

When can I get a COVID-19 vaccine booster? Not immediately. The goal is for people to start receiving a COVID-19 booster shot beginning in the fall, with individuals being eligible starting 8 months after they received their second dose of an mRNA vaccine (either Pfizer-BioNTech or Moderna). This is subject to authorization by the Mexico Ministry of Health and U.S. Food and Drug Administration and recommendation by CDC’s Advisory Committee on Immunization Practices (ACIP). FDA is conducting an independent evaluation to determine the safety and effectiveness of a booster dose of the mRNA vaccines. ACIP will decide whether to issue a booster dose recommendation based on a thorough review of the evidence. Who will be the first people to get a booster dose? If FDA and Mexican Health Ministry authorize and ACIP recommends a booster dose, the goal is for the first people eligible for a booster dose to be those who were the first to receive a COVID-19 vaccination (those who are most at risk). This includes healthcare providers, residents of long-term care facilities, and other older adults.

DAVID ANTUNEZ Environmental, Health, and Safety Director.

SOURCE: National Center for Immunization and Respiratory Diseases (NCIRD), Division of Viral Diseases

BASIC PROTECTIVE MEASURES AGAINST COVID-19

1 2 3 4 5 Wash your hands frequently with soap and water for 20 seconds.

When coughing or sneezing, cover your nose and mouth with a disposable tissue or use the inside corner of your arm.

Avoid shaking hands and kissing.

Keep your workspace clean and don't share personal items and utensils.

If you show symptoms of a cold or flu, go to a doctor. Do not self-medicate and inform your supervisor and Human Resources department.

WHY YOUR STORYTELLING IS ESSENTIAL TO CREATE CONNECTIONS

YOELLE ROJAS Public Affairs & Communications Director

PUBLIC AFFAIRS

During this “new normality” where many of us work in home office modality, others in a hybrid way, and others returned to their working centers. It is clear more than ever that we all need connections. We miss those morning coffee conversations we use to interact with our coworkers and during presential networking events. We are facing a new challenge. How can we keep our connections and our networks alive? Through the power of stories. Companies understand the power of stories to transform their online presence and build trust, and executives should do the same. Stories are a powerful tool in communication, we all have that colleague who tells the best stories, and we all enjoy having conversations. Be a storyteller and share your knowledge and experience through conversations and connect inside and outside the organization. Stories can influence our minds and emotions; when we hear a story, we can see the situations, evoking feelings. It is important to tell stories with a good presentation or visual support; narrative and visual aid help with engagement. If you add data, the story will build a connection that would persuade your audience.

LABOR

Stories connect people with other people, companies, brands, organizations, and institutions; everybody needs connections daily. If you want to improve your company’s narrative or learn more about storytelling in business, we will be glad to assist you.

DISRUPTED SUPPLY CHAINS: A CALL FOR HR ACTION. 2021 has brought unprecedented challenges to the sourcing and procurement areas of companies in North America: Shortages of materials, increases in freight costs, lack of containers, roadblocks, security and logistic challenges, new administrative procedures and bureaucracy, plus uncertain interpretations of foreign trade new rules (some of which are currently in international dispute) are among the main issues companies have faced. Team members of the materials and logistics areas have been in the eye of the hurricane throughout the year. The pressure that many of them have faced has been intense. Companies should take the time to make all internal adjustments, including the revision of org structures in the supply chain area, to ensure that our teams are prepared to continue facing the frequent challenges under a changing supply chain environment.

ALVARO GARCIA HR, Vice President