Mexico: State of Puebla goes against Federal Government advice and puts the brake on restarting the automobile industry

In contrast with a recent Federal government protocol that has authorized the gradual resumption of business for ‘essential’ economic activities, since 18 May, both the automobile and constructions sectors have officially been put ‘on hold’. In a decree published on 22 May, the governor of the State of Puebla, Luis Miguel Barbosa (Morena, Presidential Party), believes that business resumption in the automobile and construction industries which employ almost 160,000 people, would entail “an exponential risk of contagion and deaths that would overwhelm the hospital system,” and that “the sanitary conditions are not in place to allow the resumption of activities in the automotive and construction industries”, which should stay on hold until “sanitary conditions allow the resumption of activity.” On 25 May, German auto giant Volkswagen, which has two sites in Puebla, said it was ready to take legal action to restart its plants, while the Mexican Automotive Industry Association (AMIA) has called for the withdrawal of this controversial State decree, so as not to hinder industry’s business resumption. Together the automobile and construction sectors along with sub-contractors account for 9.4% the State of Puebla’s GDP. The auto sector is key to the Mexican economy, and the new North American free trade agreement (the USMCA agreement/ NAFTA 2.0) is due to come into force on 01 July. (Official decree: http://periodicooficial.puebla.gob.mx/media/k2/attachments/T_4_22052020_C.pdf)