Some machinery, tooling and material suppliers are worried that the declining value of the peso will hurt efforts to expand and modernize Mexico's plastics industry. ``The problem with plastic molders is, instead of buying new machinery, they're going to buy used machines,'' said Ed-uardo Barberena, general manager of EB Heise SA de CV in Mexico City, which makes blow molds. His family also runs blow molding, injection and compression molding facilities.
Mexican processors should pick up more business as their products become much cheaper compared with those from other countries, thanks to the sharply devalued peso.
``People are going to buy cheaper machines, but they may buy more machines,'' Barberena said.
But Don Poston, who has sold used machines to Mexico for 20 years, thinks even used-machine sales will suffer. His company, Intercontinental Equipment Co. Inc., formerly Houston Plastics Machinery Inc. of South Houston, Texas, is getting just a handful of inquiries a week from Mexico-down from 25-30 before the devaluation.
Mexican processors typically postpone buying machines about nine months before and nine months after a presidential election, Poston said.
Now, Poston, who was an optimist before the peso's plunge, thinks they will hold off longer-until 1996.
Because Mexico does not have a significant domestic machinery industry, Mexican processors looking for machines will have no choice but to continue buying from the United States, Canada, and other countries.
The devaluation's timing-coming as Mexican processors are eager to modernize their plants to compete after passage of the North American Free Trade Agreement-could hurt the progress of Mexico's plastics industry, officials said.
Officials at several U.S. machinery companies were taking a wait-and-see attitude.
``It's kind of early at this point to assess what the total impact is going to be,'' said Chuck Webb of Battenfeld Gloucester Engineering, which makes film production equipment in Gloucester, Mass.
``We've been doing a lot of business with Mexico. There may be a period of adjustment,'' he said.
Webb experienced an earlier peso devaluation, in 1982. Then, the currency swung up and down in a ``yo-yo effect'' before stabilizing to a normal level, he said.
This time, he thinks Mexico will undergo a ``major slowdown.'' How long it lasts depends on Mexico's political response, he said.
Used machines are not major in the blown film machinery market, according to Webb. Still, he said, the peso's fall will hurt big-ticket purchases of imported goods.
``Mexico needs to modernize its productive base. They have gone too long without making investments,'' Webb said.
Officials of Japanese injection press maker Mitsubishi Heavy Industries Ltd. are studying the peso's plunge closely. This year, Mitsubishi is planning to assemble presses in the United States for the first time, and the company is considering buying machine bases and some cast metal parts made in North America.
The peso's decline will make Mexican-made parts much cheaper.
``But quality is also very important,'' noted Minoru Shibata, general manager of MC Machinery Systems Inc. in Wood Dale, Ill., Mitsubishi's U.S. arm.
Mitsubishi officials have not made a final decision on suppliers, he said.
Jim Meinert, director of national and international marketing for Snider Mold Co. Inc. in Mequon, Wis., said the devaluation is good news for the Mexican people because they import more than they export.
``Indirectly, it will help me because as my customers export more they'll need more tooling to produce goods,'' Meinert said.
He foresees some short-term problems in obtaining loans but doesn't see a major switch in philosophy in dealing with Mexican companies.
``Ultimately, I think we're dealing in dollars anyway. There will be some adjustments, depending on how U.S. companies are positioned there, but overall I think everyone will win.''
Meinert said he hopes that the changes in Mexico will not cause U.S. companies to ``pull in their heads like turtles'' and shy away from doing business there. ``Mexico is still a darn good source to help the United States compete in a world market.''
Richard Stewart, president of Brown Machine Co., a Beaverton, Mich., maker of vacuum forming machinery, said the Mexican economic crisis will affect companies that do business strictly within Mexico's borders more than those that ship products in or out.
``The longer term impact of the crisis has not been felt yet, and a lot depends on the [Mexican President Ernesto] Zedillo reaction. We have done about $1 million worth of business per year in Mexico for the last several years, and right now we only know of one order which has been dropped. That customer is one which makes products for consumption within the country.''
Terry Haines, president of A. Schulman Inc. of Akron, said it was too soon to gauge the effects of Mexico's economic crisis, but he added he is grateful that the crisis happened now instead of a year from today. Haines spoke by telephone from Detroit, where he was visiting his company's customers.
Schulman, a supplier of a wide variety of compounded resins, is investing $15 million in a compounding facility in San Luis Potosi, Mexico, to supply the automotive, appliance, packaging and consumer markets. Schulman's facility will be completed in about eight months.
``Our current dealings in Mexico have been in U.S. dollars, so we haven't felt the effects of the crisis with the Mexican peso,'' Haines said.
Schulman adopted the practice of dealing in U.S. dollars in Mexico some time ago, he said. When its Mexican operation is completed, Schulman will deal in local currency. In the meantime, the company is taking a wait-and-see position.
M.A. Hanna Co., a Cleveland-based compounder and distribution company, plans to stick to its plan and ride out the current economic crisis in Mexico, a spokesman said. In 1993, the company acquired a Mexican-owned resin distribution company, Plasticos Polisol, which operates three facilities in the country. And, in September, Hanna opened a new colorant plant in Toluca, near Mexico City.
Staff reporters Bill Bregar, Tom Ford, Bruce Vernyi and John Couretas and Phoenix correspondent Clare Goldsberry, contributed to this story.
