MEXICO CITY - Two leading U.S. closure producers are setting up a joint venture in Mexico to supply a range of plastic closures to local industries including pharmaceutical, personal health-care and household chemicals. Poly-Seal Corp. of Baltimore, a supplier of plastic injection and compression molded, threaded closures, joined with top international beverage cap and closure maker Zapata International Corp. of Coconut Grove, Fla., to form Tapas Innovativas - Poly-Seal SA de CV.
The joint venture is considering whether to set up a greenfield injection molding unit or acquire a Mexican custom molding plant, said Ray Torres, Zapata chief operating officer. The move to Mexico represents a new market for Poly-Seal, and is part of Zapata's ongoing effort to expand its plastics molding operations.
The new company, in Mexico City, is a 60-40 partnership, majority-owned by Zapata, which is owned by Mexico's powerful Zapata business family. The deal was clinched last month. A general manager will be appointed soon.
``We hope to be able to start something in the latter part of the first quarter of next year. We may be able to offer closures before then, but that would probably be optimistic,'' Torres said.
The partners soon will decide the specific markets on which the new firm will focus. TIPS aims to achieve a 20-25 percent share in whichever markets it chooses to supply. Poly-Seal and Zapata see a major opportunity in Mexico.
``Multinational customers are insisting on an international level of quality and testing technology, and right now they feel that is not available,'' Torres said.
Today, there is a ``fragmented supply'' in Mexico of a limited range of closures not matching the needs of new end products coming on the market, he said.
Torres said TIPS may acquire a small processor already offering a combination of ``injection capacity, manufacturing quality and ... a customer base.'' The partners would expect to invest at least US$5 million.
The two companies have begun talks with several local injection molders that may make closures for the venture.
The partners say the firms' productlines are complementary. Poly-Seal offers 100 closures, including child-resistant varieties. Zapata brings tamper evidence and other technologies, its overseas recognition and its knowledge of the Mexican market.
``We recognize that much of the business [in Mexico] is dependent on having good relationships and knowing the lay of the land there,'' said Randall F. House, Poly-Seal's marketing vice president.
Zapata, which conducted the joint venture through its Mexican subsidiary Industrias Clazago SA de CV, last year opened a tamper-evident plastic closure plant in Guadalajara, Mexico.
The Tapas Innovatives Internacional SA de CV unit, which chiefly serves Mexico's huge soft drink market, will have annual closure capacity of 1.1 billion units by the end of this year. It claims to hold almost 25 percent of the tamper-evident soft drink closure market.
The new venture will not serve the Mexican soft drinks industry but a range of new markets, said John Kennedy, Zapata's marketing director. How-ever, Zapata's Guadalajara plant could act as a local custom molder for TIPS.
Zapata, which claims to be the world's second-largest producer of steel caps for the beverage industry, also makes aluminum closures, closure manufacturing systems, cap lining machines and lining compounds and tapes. Its business is focused on the liquor, beverage and motor oil industries.
Zapata has manufacturing firms in the United States, Canada, France, Spain, Colombia and Venezuela. Metal closures remain its core business, but officials expect plastics to represent half of the business within three to five years, Torres said.
Poly-Seal, with sales last year of US$65 million, tied for 55th in Plastics News' ranking of North American injection molders.