Two years ago, Custom Form Manufacturing Inc. of Elkhart, Ind., had high hopes the North American Free Trade Agreement would greatly enhance the firm's opportunity to sell its products into Mexico. But the thermoformer of truck bed liners has since lost confidence in the Mexican market, at least for the short term.
Custom Form's export business, which represents the majority of the firm's Mexican sales, is down about 50 percent since Mexico's financial crisis began last year.
Although Mexico was a big growth market for the firm, it does not represent a large portion of its sales.
``Long term, we're still bullish on Mexico,'' said President Jack Barben. ``We feel the things that [the Mexican government has] put in place to convert that economy there are still viable in the long term.''
The devaluation of the peso has roughly doubled the cost of products imported into Mexico. Since Custom Form makes products for light trucks, a decrease in new truck sales in Mexico has caused a decline in sales.
The company also makes truck bed liners in a captive arrangement with a Mexican thermoformer, which are sold in that market under the Custom Form name.
Barben said the tax increase the government recently levied on foreign-owned businesses is of ``great concern because of the uncertainty as to what level the taxing will stop.''
The company makes other light truck accessories such as soft vinyl tonneau covers. Within the past year, Custom Form began injection molding hood shields and window visors made out of polycarbonate.
Barben said Custom Form plans to maintain its presence in Mexico, despite the fact that it is a ``painful'' situation.
``It will take some financial sacrifices on the part of foreign investors, especially in the markets we're in.
``This is not a situation to run from, but one in which to proceed, but proceed very cautiously,'' Barben added. ``We'll bide our time until our confidence [in Mexico's financial stabilization] is re-established.''