Upcoming Vacant Seats in Mexico’s Supreme Court of Justice

The anticipation related to the upcoming vacant seats in Mexico’s Supreme Court of Justice reflects the critical importance of Mexico’s highest court. [This article was based on an opinion piece by Dr. Mario Melgar-Adalid.]

Mexico’s Supreme Court of Justice has become a powerful arbiter of political, economic and social life in Mexico. The Court’s powers include declaring the unconstitutionality of a law and adjudication of conflicts among federal, state, federal district and/or municipal governments. Unlike the U.S., where the President selects the Chief Justice of the Supreme Court, in Mexico the Chief Justice is appointed by the court justices every four years. Thus, the designation of the two new justices is of particular significance.

Outgoing justices, Genaro Góngora, (considered a liberal and well liked by Mexico’s left) and Mariano Azuela (considered a conservative and ideologically to the right) frequently clashed while deliberating Supreme Court cases for nearly 15 years. Both left a notable mark on the country – and their replacements will invariably have a lasting impact on Mexico's future.

Cemex Reaches Refinance Agreement

After five months of negotiations, Cemex, the world’s third largest cement producer, has reached a refinance agreement that extends due dates for the company’s $15 billion debt, scheduled to expire within the next 18 months. With this new agreement, Cemex has five additional years to navigate the current economic issues, improve its cash flow, and pay down debt requirements.

“We’re pleased with the results of the refinancing. which will allow us to complete our objectives. The new debt profile gives us better flexibility and a capacity to diversify our sources of financing,” stated Lorenxo Zambrano, Cemex Director General.

Cemex’s current financial challenges have resulted from: 1) the acquisition of the Australian company Rinker Group, which created $14 billion in debt for the company, and 2) a significant reduction in demand for cement and other construction materials, due to the worldwide recession. The company has experienced declining demand in the U.S., Mexico and Spain – the three countries that account for 75% of Cemex’s sales. Recently, the company received a grade of “B” from the credit rating firm, Fitch, while S&P has given Cemex’s debt a “B-“ rating.

Wal-mart Opens Mas Club Stores

The Mas Club, Wal-mart’s new “membership warehouse club” targeting the U.S. Latino market, opened its doors on August 6th In Houston, Texas. The Mas Club is a new concept similar to Sam’s Club and is part of the company’s strategy to offer the Latin population an expanded selection of specialty products imported from their countries. According to industry experts, Wal-Mart faces strong competition from smaller warehouse and supermarket chains, such as Fiesta Mart of Texas; however, Wal-mart is also testing new supermarkets targeting the Latin market, called “Supermercado de Walmart.”

Chrysler to Produce Fiat 500 in Mexico

Under the direction of Fiat SpA, Chrylser plans to produce the Fiat 500 subcompact at its plant in Toluca, Mexico. Chrysler was saved from collapse earlier this year when the federal government provided $15 billion in emergency loans and brokered a rescue plan that gave Fiat management control of the company.

Production of the Fiat 500 in Toluca could be an early test of relations between Chrysler's new management, the U.S. government and the United Auto Workers (UAW) union. Workers at the plant are represented by a Mexican union, not the UAW. An anonymous UAW official said the union was not aware of the plans for assembling the Fiat 500.

"In this kind of environment, there’s going to be political fall-out regarding anything related to jobs," said David Cole, Chairman of the Center for Automotive Research in Ann Arbor, Michigan. "It would be a mistake to make these decisions based on emotion rather than solid business judgment.”

“When a difficult decision has to be made on matters such as where to open a new plant or what type of new car to make, the new Chrysler, not the U.S. government, will make that decision," said an administration official. "It's quite consistent with our plan from the start."

VW Halts Production at Puebla Factory

After three years of negotiating, Volkswagen and its workers have broken off negotiations, resulting in a strike at the company’s plant in Puebla, Mexico. With the closure of this facility, which employs 10,000 workers, the company has halted the production of more than 1,520 cars per day.

The Sindicato Independiente de Trabajadores de la Industria Automotriz Similares y Conexos Volkswagen de Mexico (SITIAVW) announced that 9,270 workers have signed a resolution stating their demands. “The company has rejected our reasonable offer that consists simply of a 3% increase in wages with a one-time payment of 5,500 pesos, payable with 2,750 pesos in cash and 2,750 in other benefits,” stated a SITIAVW representative. This wage increase proposal was reduced from the union’s original demand of 8.25%.

With declining Mexican sales and production, Volkswagen stated that it is impossible to meet such demands. However, the company recognizes the economic environment has affected workers and is willing to make a one-time payment of 5,500 pesos per worker, plus a 1% increase in wages.

Illegal Petroleum Trafficking

The U.S. and Mexican governments are investigating the transportation of petroleum products from PEMEX, the state-owned Mexican petroleum company, across the U.S./ Mexico border for illegal use by various U.S. companies. This ongoing investigation is focused on criminal activity backed by the Gulf Cartel, one of Mexico’s most powerful drug cartels. While petroleum theft has been a long-term problem, previous incidents did not reach the current magnitude or involve U.S. companies.

According to John Morton, the sub-secretary in charge of Immigration and Customs enforcement (ICE), the agency is currently analyzing certain U.S. refineries to determine if they had prior knowledge that the products were in fact contraband. The investigation has resulted in the arrest of Trammo Petroleum’s president, Donald Schroeder, who was found guilty in Houston and is awaiting sentencing. Recently, two dozen PEMEX security officials suspected of involvement in the theft have been detained.

Mexican Congressional Candidate Miguel Angel Almaraz Maldonado is suspected of spearheading the sell of contraband petroleum products on the black market. Mexican authorities stated that Almaraz was working under the protection of Los Zetas, the strong arm of the Gulf Cartel.

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Sources of Information: In preparing this document, the following sources of information, among others, have been utilized: Sentido Comun, CNN Mexico Report, Banco de Mexico, and Bolsa Mexicana De Valores.

September 2009
Building Potential