Despite the current economic crisis in Mexico, A. Schulman Inc. is sticking with plans to open a new compounding plant in Mexico this summer. Not only is the company forging ahead, but it considers the timing for starting a new busi-ness in Mexico to be ``terrific'' right now, according to Stuart A. Cameron, director general of A. Schulman de Mexico SA de CV.
``Most Mexican customers are confident this business is going to return strong or stronger by the end of the year,'' he said in an April 13 interview in Akron, Ohio, where the U.S. company is based.
Cameron's sentiments were echoed the same day by Terry Haines, Schulman's president and chief executive officer, in announcing the company's record financial results for the first half of its fiscal year.
``While there continues to be a great deal of economic uncertainty in Mexico due to the devaluation of the peso and a number of other factors, we believe Mexico will provide many opportunities for long-term growth,'' he said.
If anything, the country's economic woes added a sense of urgency at Schulman to open the new plant because Mexican processors are extremely eager to find more suppliers of resin thatdeal in pesos, Cameron said.
The plant also will supply Schulman's U.S. customers operating in Mexico, and will export resin to Latin America and possibly Asia, he said.
Many Mexican processors, particularly those requiring engineering resins, must purchase raw materials from U.S. producers and pay in dollars. But with a domestic market in deep recession, and a peso which has lost upward of 40 percent of its purchasing power, some Mexican companies simply do not have the money to buy U.S.-made resin. Schulman's business in Mexico is now down more than 40 percent.
``The big problem right now is cash flow,'' Cameron said. ``They have to get things in balance again.''
In 1993, Mexico purchased $125 million in polypropylene and $119 million in polyethylene from foreign sources. The resins topped the list of petrochemical imports that year. Of the $600 million in petrochemical products imported to Mexico in 1993, the most recent year for which figures are available, 79 percent of the value came from the United States, according to Inegi, the country's census and statistical bureau.
By midsummer, Schulman will start production at the $15 million compounding operation in Mexico to supply about 30 million pounds of resin and color concentrates annually.
The new plant is located in San Luis Potos, in the central part of the country and roughly midway between the industrial centers of Mexico City and Monterrey.
The plant, initially employing 50, will supply resin mainly to the flexible packaging, auto-motive and small appliance markets. The firm now supplies its Mexican customers from plants in the United States and Europe.
Cameron also said Schulman may represent other foreign resin and compound suppliers in Mexico. He did not give details.
Cameron also is keen on Schulman's new laboratory and testing facility that will be housed in the San Luis Potos¡ plant. He described the department as ``state of the industry'' and capable of developing new products for customers in Mexico. Cameron described the lab as ``the most important thing we're investing in, more important than the compounding facilities.''
Schulman also is building, adjacent to the plant, headquarters offices for its Mexico business.