Minero, left: government doesn't understand business; AMLO: profits should be reasonable.
Profits made by companies in Mexico are not excessive, analysts said after President López Obrador urged moderation from the private sector.
“The private sector should, of course, do business, it’s their main role but at the same time seek reasonable profits, respect the legal framework and pay taxes, all that helps a lot,” López Obrador said on Thursday.
Data shows that company profits in Mexico are not excessive compared to those made in other countries in the region and beyond.
In the third quarter of 2019, the average profit margin of the 35 largest companies listed on the Mexican Stock Exchange was 7.19%, the newspaper El Financiero reported.
During the past decade, the average profit margin of the 35 companies included in the S&P/BMV index has been 7%.
Comparable indexes in Argentina, Brazil and China showed that third quarter profit margins were 17.3%, 9.3% and 7.5% respectively.
In Chile and Japan, profit margins were lower than Mexico between July and September but only slightly. Their profit margins were 6.6% and 6% respectively.
Jacobo Rodríguez, director of financial analysis at Black Wallstreet Capital, told El Financiero that the profits of large companies operating in the United States exceeded expectations in the latest reporting period and are greater than those made by companies in Mexico.
According to data from Bloomberg, the average profit margin of the companies listed on the S&P 500 index is 9.92%.
“The objective of any company is to be profitable so I don’t think that profits [in Mexico] are excessive,” Rodríguez said.
“In recent years, [companies] have tried to be more socially responsible but I don’t think that’s related to profit generation,” he added.
Juan Carlos Minero, chief investment officer at Black Wallstreet Capital, said the government is ignorant about how the private sector operates.
“The problem is that the government, mainly López Obrador, doesn’t understand finances, doesn’t understand profits, and that’s what business is,” he said.
The Colorado River-Tijuana aqueduct: not enough water.
Tijuana needs a desalination plant for its long-term survival, said a senior official with the Baja California Public Services Commission (Cespt).
Less than a week after being sworn in by new Governor Jaime Bonilla, Rigoberto Laborín Valdez told a press conference that desalination is the only solution to Tijuana’s water supply problem.
Strategies proposed in the past, such as improvements to the aqueduct from the Colorado River to Tijuana and recycling water, are not viable alternatives, said Tijuana’s new Cespt delegate.
The official said that even if work on the aqueduct boosts water flows from the Colorado River in Mexicali to between 185 and 190 million cubic meters per year, that quantity will only meet demand until 2024.
“What are we going to do [after that]? Does Tijuana come to an end? Do we tell people not to come? We have to seek viable alternatives. We have until 2024; a desalination plant takes three years to build . . .” Laborín said.
Such a plant, proposed previously by former governor Francisco Vega, is an “imminent necessity” and the only “viable alternative so that this city can survive,” he said.
The Cespt chief said the aim would be to build a plant that can provide 6.6 cubic meters of desalinated water per second, which he claimed could meet the needs of five million people, more than double Tijuana’s current population.
“We have to plan 50 years in advance. This vision is to solve a fundamental problem in the long term . . .” Laborín said.
If the project goes ahead, it will be the second desalination plant in the northwest part of Baja California.
Construction of a privately-funded plant began in March 2018 in Playas de Rosarito, 20 kilometers south of Tijuana. The project was expected to be completed by 2021.
Despite violence, economic uncertainty and stagnant growth, the world’s view of Mexico is very positive, says President López Obrador’s chief of staff.
Speaking at a business conference on Thursday, Alfonso Romo said that Mexico’s good image can be attributed to macroeconomic and political stability.
Romo said he met with officials from the United States Embassy on Wednesday and the issue of insecurity wasn’t even brought up. He also said there have been no announcements that investment will be canceled because of the high levels of violence in the country.
“Yes, [the acts of violence] are sad, we have to resolve [the situation] but we still don’t see [investor] concern,” Romo said.
Although investors already have confidence in Mexico, the chief of staff said that to attract even greater investment, the government needs to capitalize on the macroeconomic and political stability to generate more confidence and certainty.
While acknowledging Mexico’s stagnant growth in 2019, Romo said the foundations are being put in place for a better economic performance in the coming years.
“. . . I would say that we’ll grow [the economy] much better [in 2020] than this year and by laying the groundwork, [it will be even] better in 2021 and 2022. The task of the government is to sow more confidence and certainty . . . We’re doing what’s necessary to lay the groundwork to be able to grow by 4% at the end of the president’s six-year term.”
The weakness of Mexico’s security and justice institutions has led the country into a crisis, says the departing chief of the National Human Rights Commission (CNDH).
In an interview with the newspaper Milenio just days before he steps down as commission president, Luis Raúl González Pérez said he is concerned and unhappy with the violence and insecurity in Mexico but especially worried about the lack of knowledge the nation’s institutions have demonstrated in their response to the crisis.
González said he will end his five-year term as CNDH president with a range of specific concerns.
Among them: 40,000 people are missing across Mexico, the case of the 43 students who disappeared in Guerrero in 2014 hasn’t been solved and violence against women and journalists remains high.
On the case of the disappearance of the Ayotzinapa Rural Teachers College students, González said that the CNDH provided the government with an “exhaustive line of investigation” to pursue but claimed it has been ignored.
The rights commission head said the nature of the crisis Mexico is going through can be broken down into four pairs of contributing factors: inequality and poverty; violence and insecurity; corruption and impunity; and weakness of the rule of law and weakness of institutions.
The fourth pair has become more pronounced in recent months, González said.
“Since 2006 [the beginning of the so-called war on drugs] security policies haven’t been comprehensive, they haven’t attacked the phenomenon [of violence] in a comprehensive way . . .”
González said the current government has outlined a plan to attend to the causes of violence such as poverty and inequality but needs to implement a broader public security policy.
A good starting point, he said, would be to ensure that all 33 of Mexico’s attorney general’s offices (the federal office and those in the 31 states and Mexico City) are autonomous.
González also said the federal government needs to improve coordination with state governments to ensure that policies on paper are carried out on the ground.
The CNDH chief said that the use of force – which the government is aiming to avoid wherever possible – is permissible as long as it is used in a legitimate, rational and proportional way when the lives of security personnel are at risk.
González added that Mexico should accept the offer from the United States to bolster security collaboration but ensure that it includes measures to curb arms trafficking from the U.S. He said he hoped the United States would not impose a security strategy on Mexico as he claimed it did on migration.
(The government agreed to deploy the National Guard to ramp up enforcement and accept the return of migrants as they await the outcome of their asylum claims in order to stave off President Donald Trump’s threat to impose blanket tariffs on Mexican imports.)
Upon leaving the CNDH, González said he will return to teaching at the National Autonomous University.
On Thursday afternoon, the Senate chose Rosario Piedra Ibarra as the new head of the commission, though without the support of the opposition.
National Action Party senators charged that the commission’s autonomy would be lost under its new chief, claiming she would be acting under the orders of President López Obrador, who has been highly critical of the commission and its departing chief.
Piedra is the daughter of a longtime human rights activist and founder of Comité ¡Eureka!, an organization formed to defend the rights of political activists in the 1970s.
The NASA competition winners, center, from Hidalgo.
Two aeronautical engineering students from the Metropolitan Polytechnic University of Hidalgo (UPMH) won first prize at the International Air and Space Program held by NASA and the binational aerospace company AEXA.
Rafael Legorreta Castañeda and Andrés Romero Badillo were part of a 16-student group that attended the conference and competition at NASA’s U.S. Space and Rocket Center in Huntsville, Alabama.
A prototype of the material they created will be sent to the International Space Station (ISS) in 2020.
AEXA (Extraordinary Aerospace Applications) was founded in 2012 by engineers who created the program that led to the establishment of the Mexican Space Agency (AEM). Its U.S. branch of the same name is based in Houston, Texas.
AEXA focuses on technological innovation through its International Air and Space Program, which brings together bright middle school, high school and university students from around the world to develop new products and ideas for use in outer space.
This year’s educational program was held from October 27 to November 2.
Aeronautical engineering students from UPMH have attended the program since 2014. Since then, the university has stood out as a leader in innovation, with students taking home first-place trophies every year since 2016.
A celebration of flowers starts today in Mexico City.
Just when you thought the Day of the Dead festivities were over, the celebration continues in Mexico City with the historic center flower festival.
Streets and businesses downtown will be dressed up in the vivid yellows and oranges of marigolds and other colorful flowers from Thursday until Sunday.
Visitors can enjoy the floral decorations of around 100 installations and arrangements in over 45 commercial establishments.
There are also 11 giant installations that will highlight the historical importance of downtown Mexico City.
Known informally as “the street of the brides” for its high concentration of bridal shops, República de Chile street hosts a colossal catrina wearing a white wedding gown.
Outside the Templo Mayor, on the northeast side of the zócalo, there is a tzompantli, a pre-Hispanic altar consisting of a wall of skulls. In Mesoamerica, the heads of the sacrificed were placed on the altar while still bloody. But don’t worry, these skulls are decorative only.
The Plaza de Gante hosts a tribute to the seasonal snack pan de muerto (bread of the dead), and a life-size recreation of Diego Rivera’s mural Dream of a Sunday afternoon in the Alameda stands in front of the monument to Benito Juárez in Alameda Park.
There is still time to visit the mega-altars as well. In the zócalo, the Mexico City mega-altar represents Day of the Dead celebrations in four different regions in the country.
The altar created by the National Autonomous University (UNAM) pays homage to the Revolutionary War hero Emiliano Zapata on the 100th anniversary of his death. It is located in the Plaza de Santo Domingo, five blocks north of the zócalo.
Keep an eye out for the open-topped double-decker Turibús buses that roam the downtown district. During the flower festival they will offer free trips along the festival route beginning at 9:00am.
President López Obrador said Thursday he welcomes a new code of ethics being prepared by the private sector.
“I want to emphasize that there is a very positive attitude in the private sector of the country. I’ve even been informed . . . by the leaders of the country’s businesses that they are working on a code of business ethics,” he told reporters.
“It is necessary that what happened here in Mexico does not happen again: foreign companies bribing to get fat contracts with excessive profits, to the detriment of the public treasury.”
He condemned domestic and foreign companies that have profited at the country’s expense, mentioning Respsol Energy and OHL Construction of Spain, and the Brazilian engineering and construction conglomerate Odebrecht.
“Many companies got used to getting their tax debts forgiven. In any other country of the world, it would be a scandal to know that in Mexico big companies [and] banks didn’t pay their taxes, or they were returned to them, written off, causing low collection rates. The entire fiscal burden was carried by the lower and middle classes, the workers, of course,” he said.
The president mentioned that the private sector in the United States has changed its code of ethics, which now includes a commitment to reasonable profits, fair treatment of workers and respect for the environment.
He noted that his government is not opposed to the private sector because whoever earns reasonable profits, complies with their fiscal responsibility, makes investments and creates jobs deserves respect.
“We’re opposed to ill-gotten riches, to those who traffic in influence,” he said.
Members of the LeBarón family were victims of a barbarous killing on Monday.
Impunity, collusion between police and organized crime, immense cartel firepower and territorial control, poor distribution of government forces, inadequate police funding and dismal police salaries: are all factors that contribute to record levels of violence in Mexico.
The third factor – cartel strength and sway – has recently been on terrifying display: 13 state police killed in an ambush in Michoacán that was attributed to the Jalisco New Generation Cartel (CJNG); Culiacán residents terrorized by an unprecedented show of strength from Sinaloa Cartel gunmen during an operation to arrest a son of El Chapo; women and children murdered in broad daylight in a heinous attack near the Sonora-Chihuahua border.
All the while, President López Obrador has remained committed to the government’s non-confrontational security strategy.
“You can’t fight fire with fire,” he says, arguing that the way to combat violence is to address its root cause – poverty – through social programs and economic development that give people viable alternatives to a life of crime.
But the so-called “abrazos, no balazos” (hugs, not bullets) approach has not reduced violence during the government’s first year in office (2019 is on track to surpass 2018 as the most violent year in recent history) and, according to a prominent security analyst, the failure to respond forcefully to acts of extreme aggression, such as Monday’s attack on the LeBarón family, generates an environment that is conducive to yet more violence.
Writing in the newspaper El Universal (linked page in Spanish), Alejandro Hope attempted to make sense of the situation that led to the barbarous killing of three women and six children, including twin babies.
“How do you interpret an atrocity of this class? . . . I don’t know completely but it occurs to me that these kinds of incidents happen because nothing happens [in response]. The Mexican state has not drawn lines in the sand. It appears that there is no act, as cruel as it may be, that is capable of triggering an extraordinary reaction by the institutions of security and justice,” he said.
Such a reaction, Hope contended, would go beyond pursuing the “direct perpetrators” of a violent crime.
Rather it would entail an “explicit commitment” on the part of the government to dismantle the structure of the criminal group that is responsible as well as its “political and police protection networks.”
However, responding to violent crime in that way “is not on anyone’s agenda,” Hope wrote.
Therefore, criminals can continue to commit crimes with the brutality to which they are accustomed and “sow terror in entire regions” in the process, he wrote.
Cartel terror in Culiacán.
“If it doesn’t matter if you murder one person or nine, if there’s no additional risk for burning babies [to death], the murderers will continue to do it. It’s as simple, and as awful, as that,” Hope said.
The security analyst said the situation is made even worse because it is “fully proven” that the state is incapable of controlling “enormous swathes of territory.”
As an example, Hope cited the version of events presented by the government on Tuesday about what happened on Monday after the LeBarón family was attacked.
At about 1:20pm – less than 20 minutes after the ambush – Julian LeBarón was already asking for help from authorities, he said.
However, the army, National Guard, state police and municipal forces from Agua Prieta, Janos, Moctezuma and Zaragoza didn’t reach the crime scene until 5:00pm simply because they had to travel large distances to get there.
In Bavispe, Sonora – where the attack took place – government data shows that there are no more than two police, Hope wrote, while in the neighboring municipalities of Bacerac and Huachinera, officer numbers are no greater than seven.
In that context, the analyst was highly critical of the way in which the National Guard has been deployed, pointing out that there are just over 4,000 guardsmen in Sonora and Chihuahua, which together represent 21% of national territory, while there are just under 4,000 in Mexico City.
“That, to put it mildly, is an absurdity,” Hope wrote.
The role of a force like the National Guard should not be to replace police in urban areas but to control territory, give the state a presence where the deployment of police is almost impossible, combat criminal groups in isolated parts of the country and prevent tragedies such as that in Bavispe, he said.
The government has also faced criticism for using the new security force to ramp up enforcement against migrants rather than fight crime. More recently it came to light that the Guard has been given a new mission: cracking down on the ride-hailing service Uber at the nation’s airports.
The events in Culiacán served as another example of the challenge the government faces to effectively control parts of Mexico.
With gunmen carrying out attacks across the city and setting up fiery blockades, the government’s security cabinet decided to release Ovidio Guzmán in an attempt to halt the violence, effectively conceding defeat to the Sinaloa Cartel.
Hugs from AMLO: the official response to violent crime.
“What we saw in Culiacán was the parallel state showing itself,” Edgardo Buscaglia, an expert on organized crime at Columbia University, told The Guardian.
He said that fighting poverty on its own will not be enough to put an end to violence, arguing that the government needs to implement a coordinated strategy to dismantle political and business interests that profit from and protect organized crime.
“What López Obrador needs is not a security strategy. What he needs is an anti-mafia strategy,” Buscaglia said.
The government says it is already focusing on attacking the financial structures that allow cartels to operate – Security Secretary Alfonso Durazo said in late October that bank accounts containing more than 5 billion pesos US $261.5 million) have been frozen – but their operational strength does not appear to have been weakened.
The government has also said that strengthening state and municipal police is a priority but scant progress has been made so far.
More than 600 municipalities have no police officers and around 2,000 municipalities have fewer than 50, he said in a speech to the lower house of Congress.
Cota told members of the Public Security Commission that there is an urgent need to provide municipalities with greater resources for police.
State police also lack funds to purchase essential equipment. According to a report in The Guardian, a Michoacán policeman complained that officers have to buy their own bullets and are provided with cheap and flimsy helmets.
“We don’t have the means to defend ourselves,” he said. “We don’t have the support we need to take on any criminal group.”
But even if forces successfully arrest criminal suspects, the consequences are minimal.
López Obrador has pledged to eliminate not only corruption but also impunity. But a study published in September showed there had been negligible improvement in prosecution rates over the past year.
Security analyst Hope: these incidents happen because nothing happens in response.
While combating rampant impunity is no doubt a key ingredient to reducing violence, any chance that prosecution rates will improve quickly appears unlikely.
In the short term, Hope, the security analyst, and many others, believes that Mexico has to rethink its security strategy in the wake of the recent string of violent acts, none of which shocked the nation more than the attack on the LeBarón family.
“What happened on Monday should lead to a review of security policy. When these things happen, the trajectory of the homicides curve becomes irrelevant. If it is possible to kill babies, hunt children and destroy families without triggering a reaction of unusual vigor on the part of the authorities, there is only one conclusion: there is no limit to violence other than the imagination of the murderers,” Hope wrote.
“We have to begin to draw lines in the sand – without delay, before the next tragedy surprises us.”
Workers found 13 bags of human remains while preparing a plot of land for farming in Celaya, Guanajuato, on Wednesday.
A preliminary analysis of the bags suggests that they contained the remains of five people who had been dismembered.
Neighbors in the area said that two-meter-tall dry grass hid the clandestine grave in which the bags were found. Three workers cutting the grass found the bodies and alerted authorities.
Guanajuato has been seeing extremely high rates of violence this year and usually leads the country in monthly homicide numbers.
Wednesday’s discovery bring to 26 the number of bags of human remains found in the municipalities of Celaya, Salamanca and Apaseo el Grande on Tuesday and Wednesday alone.
Prosecutors said that two severed heads were found in a bag in Celaya on Tuesday, one male and one female. A card with a message on it was found as well, but the message has not been made public.
Seven bags containing the remains of another man and woman were found in downtown Celaya.
Police in San Miguel de Allende, 50 kilometers to the north, responded to reports of bags containing human remains, but it turned out to be a false alarm. Teenagers playing a prank had left a dismembered mannequin in a bag.
The automotive industry recorded its biggest ever annual production decline in October mainly because Ford didn’t make a single vehicle in Mexico last month.
The statistics agency Inegi, which has recorded automotive sector data since 1988, reported on Wednesday that 311,150 vehicles were made in Mexico in October, a 16.3% decline compared to October 2018. The figure is the lowest for a single month since 2013.
Ford told the newspaper El Financiero that it didn’t make any cars in Mexico in October because it was in the process of changing equipment at its plants. Its monthly output is normally between 20,000 and 30,000.
But the Detroit-based automaker wasn’t completely to blame for the record production decline.
General Motors’ Mexico production was 30% lower than October 2018 due to work stoppages at its plants in Silao, Guanajuato, and Ramos Arizpe, Coahuila, due to a shortage of parts precipitated by a strike in the United States.
Production at Volkswagen, Kia, Nissan and Mazda declined by 22.3%, 13.2%, 13.1% and 11.8% respectively.
In contrast, Honda, Toyota and Audi all made more cars in their Mexico plants in October compared to the same month a year earlier. Honda’s production increased by a whopping 330%.
In the first 10 months of the year, just over 3.24 million cars were made in Mexico, 2.6% fewer than the same period of 2018. It is the first decline in the period since 2009.
Auto exports were also way down in October. Inegi said that 252,292 vehicles were shipped out of the country, a 19.5% decline compared to October 2018.
The year-over-year export downturn is the biggest since 1992, while the number of vehicles exported is the lowest in four years.
Ford’s exports fell 94% while Mazda sent 52.3% fewer vehicles abroad compared to October 2018.
Exports by Volkswagen, General Motors, Kia and Nissan declined by 33%, 31.7%, 19% and 8.8% respectively. Only two automakers increased their export volumes: Honda by 280% and Audi by 119%.
A total of 2.83 million vehicles were shipped abroad from Mexico between January and October, a 1.7% decline compared to the same period last year. It is the first export decline in the 10-month period since 2016.
