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January 05, 2017 01:00 AM

Gasoline price hike protests hit Mexico maquiladoras

Stephen Downer
Correspondent
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    Index Nacional
    Federico Serrano Bañuelos talks about the impact of higher gasoline prices on Mexico's maquiladora industry.

    Mexico City — Protests against steep gasoline price rises are costing Mexico's maquiladora industry billions of dollars a day, the industry's leader says.

    The government increased gasoline prices by as much as 20 percent on Jan. 1, sparking demonstrations across the country that have blocked dozens of highways for hours on end.

    In a Jan. 4 news release, Federico Serrano Bañuelos, president of the national council of the maquiladora and export manufacturing industry, known as Index, called for a national dialogue between the manufacturing sector and government.

    Formed in 1983, Mexico City-based Index represents 1,200 exporting companies that employ 2.2 million workers. It estimates that 45 percent of its associates have injection molding operations.

    Serrano described the increases in gasoline prices as “precipitous” and said in Spanish: “A national dialogue is required to bring about change in the fiscal criteria that will allow for a reduction in the price of gasoline and enable a continuation of economic growth.”

    Without such a dialogue, inflation will rise and cause “even more national discontent, resulting in even [more] interruptions to production,” he said.

    In the heavily industrialized northern state of Chihuahua alone, the situation cost export manufactures $12.6 billion in the first three days of the year, Serrano added.

    Mexico's national plastics industry association Anipac (Asociación Nacional de Industrias del Plástico AC) did not immediately respond to a request for comment on the price hike, known colloquially in Mexico as a “gasolinazo.”

    Serrano, who complained that maquiladoras have also seen the price of electricity increase by up to 4.5 percent since December, said taxation accounts for 40 percent of the price of gasoline in Mexico.

    Mexico's finance ministry announced the price increase on Dec. 27. It added in a news release that on Feb. 1 “prices will start to adjust on a daily basis.” According to Bloomberg, the hike is part of the Mexican government's plan to loosen its control of the gasoline market.

    The state monopolized Mexico's energy sector for eight decades after expropriating the oil industry in 1938. But reforms, introduced by President Enrique Peña Nieto — in office since December 2012 — have opened up the sector, including gasoline retailing, to private investment.

    The gasoline protests are an added headache for the Peña Nieto administration, which suffered the disappointment on Jan. 3 of Ford Motor Co. canceling a $1.6 billion small-car assembly plant already under construction in San Luis Potosí.

    Concern about US relations

    In a separate Jan. 5 bulletin, Serrano praised the appointment of Luis Videgaray Caso as Mexico's foreign relations minister.

    He has arrived “at a crucial time and we're sure that he will make progress on the issues of competitive manufacturing and immigration that have caused so much anxiety in Mexico, especially in relation to the United States,” Serrano said.

    Formerly Mexico's finance minister, Videgaray stood down in September in the face of a public outcry over President Enrique Peña Nieto's decision to invite Donald Trump to the official presidential residence in Mexico City.

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