06/03/09 - Franklin - News from Human Resources Mexico

Méxican job gains

(Frith commentary based on April 15, 2009 - CNN Spanish)

Mexico lost over 500,000 jobs from Sept 2008 to February 2009 while the USA lost millions of jobs during the same period.

However, México gained over 13,000 new jobs while the USA is still losing hundreds of thousands of jobs per month.

It is my belief that the JOB GAIN in México (and it is anticipated to continue this trend) is due to the fact that US companies are downsizing or closing operations in the USA and opening / expanding their job base in México.

China, Japan, Germany and other countries are also increasing their presence in México due to the logistics and the opportunities in the Latin American markets.

The Crisis Came. Mexico Didn't Fail. Surprised?

MEXICO CITY - Just for argument's sake, let's compare Mexico's management of the swine flu epidemic that broke out here last month with China's handling of SARS in 2002. The Chinese initially tried to deny there was an outbreak, were slow to combat its spread and resisted cooperation with foreign investigators. By the time SARS was brought under control, more than 700 people had died.

(read full NEW YORK TIMES article here)

Outsourcing to Mexico Is Gaining Momentum

By Guillaume Corpart Muller & Enrique Orellana (Kroll-InfoAmericas)

When Tata Consulting, one of the world's biggest outsourcing firms, announced in June 2007 that it would ship 500 jobs from its home base of India to its new Guadalajara facility, Mexico turned a corner. Since then, others have followed Tata's lead. MindTree, a global IT and R&D consultancy; NoShore Group, an IT maintenance services firm; Indra, a leading Spanish IT multinational; and Genpact, another giant Indian outsourcing firm, are all either setting up new Mexican outsourcing operations or expanding existing ones.

(if you are interested in México / Latin America - this information source is a MUST - Latin American Law & Finance Executive)

Recent Developments in Mexican Rulings and Administrative Decisions

Exerpt from September/October 2008 Issue of Practical Mexican Tax Strategies by Terri Grosselin and Santiago Chacon (Ernst & Young)

Recent actions by the Mexican Ministry of Economy and the tax administration indicate a change in policy with respect to companies operating under the popular Maquiladora regime. Although the tax benefits for companies operating in the regime are being carried forward, it appears compliance with the terms of the program will be more strictly monitored.

In 2006, Mexico's Maquiladora program was combined with other export regimes as part of the Decree for the Promotion of the Manufacturing, Maquiladora and Export Services Industries ("IMMEX Decree"). The Ministry of Economy is the Mexican agency in charge of granting and monitoring permits to IMMEX companies. So far during 2008, this agency, in close cooperation with the Mexican tax authorities, published a list of a total of 1,342 companies with an IMMEX program that were not compliant with one or more of the requirements to operate under the IMMEX regime for 2006 and 2007. The implication for entities included in this publication, is the possible suspension of certain rights granted under the program with the risk that the IMMEX permit will be cancelled altogether, unless the companies rectify identified deficiencies in a short time frame.

The most significant impact of the cancelation of an IMMEX program is that companies may have their importers license suspended or even cancelled. Consequently, affected companies would be unable to import goods into Mexico and may be potentially forced to return any temporarily imported assets out of Mexico.

This represents a change in the policy followed until now by the Mexican government towards IMMEX companies. Compliance obligations have not been scrutinized in the past, as it appears they will be on a going forward basis. As part of the IMMEX program, companies are required to report, among other information, the level of production exported each year.

The Mexican customs authorities began the compliance review by monitoring compliance with the obligation to file an annual report providing information about the sales and exports of each IMMEX company for the prior year. This report is due by the end of May each year. So far, the authorities have reviewed compliance with years 2006 and 2007 and a portion of the companies under review have already complied with the requirements.