SANTA CRUZ DE LAS FLORES, MEXICO - Faced with the devastating impact of Mexico's devaluation crisis, at least one young, Guadalajara-area extruding firm is exporting its way out of trouble. Polyethylene T-shirt bag maker Pl sticos Solca SA de CV, of Santa Cruz de las Flores, formed in 1989, is cashing in on the lower-valued peso and boosting sales to the United States. It not only supplies the Builders Square hardware store chain, but also is selling through a U.S. bag maker to grocery outlets.
With a promising domestic market rapidly drying up, sudden losses created by the devaluation crisis and mounting import dollar debts, Solca partners Armando Gonzalez and Ernesto Sol saw disaster ahead. So, at an emergency meeting in January, they resolved to take the one viable option left - exporting.
``We decided that as we have 55 percent of our [product] cost from the U.S. [in dollars], we need to export more than 60 percent of production to pay for raw material from the states,'' said Gonzalez, a former IBM engineer turned processor.
As a result, Solca has seen its percentage of products exported grow from a meager 14 percent in 1994 to 30 percent in January, 45 percent in February and more than 75 percent in March.
The firm now supplies 80 instead of 20 U.S. hardware stores and has benefited from improved prices for bags sold through T-shirt bag manufacturer Advance Polybag Inc., of Metairie, La.
Solca, which has raised its overall sales from $483,000 in 1990 to $1.9 million last year, has six Taiwanese Queens extrusion and bag lines, two color printing presses and a repelletizing extruder. The company produces about 286,000 pounds of film per month.
Gonzalez said that the firm prefers to continue serving its Mexican customers but the dollar exchange rate remains far too unstable. Exporting is much more profitable now, and Solca would have to invest in new capacity to serve both markets.