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March 04, 1996 01:00 AM

PLASTICS INDUSTRY BUSINESS BOOMS ON MEXICAN BORDER

John Couretas
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    EL PASO, TEXAS - The plastics industry along the U.S.-Mexico border, spurred by the North American Free Trade Agreement and the peso devaluation, is booming. The current plan by precision injection molder Epic Components Co. of New Boston, Mich., to build a $10 million-plus auto parts plant in El Paso is just the latest in a series of significant new, border-area investments.

    What's more, processors are finding customers there demanding an ever-higher range of services, including local design and engineering of products.

    The maquiladora system, which involves the assembly of goods in Mexico with parts made in the United States and other countries, has evolved from simple cut-and-sew or shoot-and-ship operations to include world-class manufacturing of consumer electronics, computers and automotive components.

    ``The maquila industry has taken a step up and it's become more sophisticated than it was 10 years ago,'' said Ted Edmunds, president of Foster Mold Inc. in El Paso. ``It's not just cheap labor.''

    There are nearly 3,000 maquiladoras registered in Mexico, with most of the plants located along the 2,100-mile U.S.-Mexico border. The area of El Paso and Ciudad Ju rez, Mexico, twin border cities with a combined population of 1.4 million, is one of the hottest growth regions for plastics.

    Foster Mold is a good example of this growth. Since late 1994, the tooling and molding company has invested $4 million in new capital equipment at its El Paso plant. The new machinery includes metal-cutting equipment for its tooling shop and another 12 injection presses, bringing its total to 21 molding machines. This year, the firm also is adding a 6,000-square-foot clean room molding department and an extrusion machine.

    In the past decade, the local molding industry has grown from a few small firms to more than 60 processors.

    The economic development division of the Greater El Paso Chamber of Commerce estimates there now are about 950 injection molding machines in the El Paso/Ju rez area. The local industry consumes about $40 million in resin annually and buys another $20 million in new molds, the chamber said.

    A survey conducted last year by Solunet, an El Paso-based company that provides information on the maquiladora industry, showed an increase of 2 million square feet of new manu-facturing space in Ciudad Ju rez over a 10-month period. Several of these new plants directly involve plastics processing.

    The situation in El Paso mirrors what is occurring in Ciudad Ju rez. During the past decade, El Paso's industrial real-estate market has absorbed an annual average of 2 million square feet of new space, largely because of the growth in cross-border production sharing.

    ``This development has been led by the plastics industry,'' said Bob Cook, senior vice president for the chamber's economic development division.

    Several late-January interviews with El Paso processors, original equipment manufacturers and local government officials, shed light on the area's trend toward more full-service molding suppliers. Some pointed to the new Delphi Automotive Systems technical center in Ciudad Ju rez as a sign of things to come.

    Delphi, the parts manufacturing division of General Motors Corp., opened its Mexico Technical Center in July to do product and process design and equipment testing. The firm expects to employ 900 at the $13 million center, most of them Mexican nationals.

    Meanwhile, other firms - such as Epic Components - are moving to El Paso because that's where their customers want them to be. Epic's new plant will produce parts for seat belt and antilock braking systems made by AlliedSignal Automotive. Epic, a unit of AlcoaFujikura Ltd., plans to be in operation at the new plant, its second, by June.

    ``This is really customer-driven,'' said Epic Vice President Ken Batterbee.

    By the end of this year, Epic expects to have about 50 molding machines, with clamping forces of 85-450 tons, operating in El Paso in an 80,000-square-foot space.

    In the next year or two, the company plans to add more space and another 25 machines in El Paso. Epic, which uses mostly Engel machines, is looking at both Engel and Cincinnati Milacron Inc. for presses.

    Batterbee also hopes that Epic's El Paso location, in the heart of a major concentration of automotive manufacturing, will bring new business.

    ``It's going to open the door a bit,'' he said.

    While the December 1994 peso devaluation has made manufacturing in Mexico more attractive for foreign firms, most of the current growth in El Paso and Ciudad Ju rez would have happened anyway, according to Karl Popielarczyk, quality manager for Eveready Battery Co. Inc. in El Paso. Eveready assembles nickel-cadmium batteries in plastic cases at a plant in Ciudad Ju rez that employs about 1,000.

    ``People are realizing that the work force in Mexico is capable of producing a high-quality product at low cost,'' Popielarczyk said. ``I think there's going to be tremendous growth in the plastics industry here.''

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