MEXICO CITY — Pass the word, Mexico is back!
If the activity and enthusiasm at the record-setting Plastimagen '99 trade show held Feb. 9-12 in Mexico City were any indication, then better times are ahead for many who are active in the Mexican plastics market.
Some seasoned analysts caution against getting too heady, particularly since presidential elections, set for next year, traditionally trigger an economic slump and peso devaluation, but few plastics industry officials allowed such clouds to darken their outlooks.
``This was the best show we've ever had in Mexico, in quality and quantity both,'' said Jim Meinert, director of national and international marketing at Mequon, Wis.-based mold maker Snider Mold Co. Inc. He has been doing business in Mexico for 30 years and started exhibiting there in the early 1980s.
``We've had interest from all over Mexico, from the border to Chiapas, and even from Peru and [elsewhere in] South America,'' said Meinert, who was at the show partly to try to secure sales representatives in Monterrey and Guadalajara.
``This was the best show ever [in Mexico], without a doubt,'' said David Felix, director of injection molding machinery sales for Milacron Mexico. ``Let's hope it translates into business!''
Hector Sosa, president of Miami-based machinery representative Plastec U.S.A. Inc., said in a brief interview at the Milacron booth, between greeting customers and scribbling orders: ``Last week we estimated $20 million in sales for Mexico in 1999; I'm revising that [upward].'' He said his family-run firm, which serves as a Latin American agent for many big-name equipment suppliers, including Milacron, Maguire Products, Killion, Thermal Care, Motan, and Polymer Systems, posted sales of $37 million last year, and is shooting for $50 million in 1999.
``We've sold a whole bunch this week — mostly auxiliary equipment, and we have a bunch of good leads,'' Sosa said.
Plastec, which has three offices in Mexico, is adding an eighth technician, now stocks spare-parts inventory in Mexico City, and plans to begin stocking small-tonnage injection presses there by year's end, he said.
Someone else who is busy is fledgling Mexican injection mold maker Ditemsa SA de CV, from Saltillo.
On Friday at the show, marketing manager Ignacio Ortiz de Elguera said, ``We have to prepare 50 quotes for new customers on Monday.'' Ditemsa began operations in summer 1998, and now says it has more than 40 clients.
``The PET business in Mexico is hot — much hotter than in the U.S.,'' said John Fortenbach, sales manager of East Berlin, Conn.-based blow mold manufacturer Heise Industries Inc.
His firm, which has been active in Mexico for five years via its 49 percent stake in Mexico City-based EB y Heise SA de CV, has seen its Mexican sales grow 15-20 percent per year.
Fortenbach described the PET sector in Mexico as being ``at the crest of a wave. Just look at the size of the booths here for Krupp Corpoplast, Sidel and Husky,'' he said, referring to major suppliers of machinery for making bottles and injection molded PET preforms.
Eduardo Alvarez, a 15-year plastics industry veteran, sees the market as maturing but still dynamic. ``It's a very exciting time. Things are happening at a very fast pace.''
Alvarez is general manager of Hanna Polimeros SA de CV's plant in Toluca, near Mexico City. Hanna, a major supplier of resins, compounds and colorants, began operating in Mexico in late 1993, trebled its business during the 1995's post-devaluation crisis, and continues to grow there.
``The automakers used to just assemble cars in Mexico. Now, they're building little cities of suppliers around them — that's new here.'' Alvarez said he believes the auto industry and its suppliers are responsible for bringing advanced plastics technology to Mexico, noting, ``I hope it spreads to other industries.''
He sees the Mexican plastics industry increasingly dividing into two camps — world-class manufacturers that ``can give anyone in the world a run for their money,'' and undercapitalized, lower-quality players that Alvarez sees becoming more marginalized. While the latter group will have trouble competing, he predicts the former group of firms ``will be recession-proof.''
Kurt Fenske, vice president of sales and marketing for injection press maker Engel Machinery Inc., said his firm should do about $10 million in sales in Mexico this year, and added that, ``Some Mexican customers now are buying fully servo robots, tiebarless machines — they're buying technology.''
``This is our third Plastimagen, and it's come a long way,'' said Fenske. Electricity problems meant Engel was unable to have an operating press at its first show in Mexico, in early 1996, but the booth was in full operation this time.
``The Mexican plastics market is very strong,'' said Peter Kramer, general manager of Mexico City's 36-year-old Avance Industrial SA, sales agent for many machinery brands, including Demag and Van Dorn injection presses.
Demand for 400- to 1,000-ton machines ``has never been stronger,'' said Kramer, who noted that demand for larger machines (2,500 tons and up) is increasing rapidly, driven by the automotive industry. Avance also is selling Mexican firms presses to do sophisticated multicomponent molding and gas-assisted injection molding, he said.
Just prior to show, thermoforming equipment manufacturer G.N. Plastics Co. Ltd. of Chester, Nova Scotia, sold the machine that it displayed at Plastimagen. ``There is very good potential in Mexico,'' said marketing manager Jerome Romkey.
A local distributor for another Canadian company, however, was not so bullish.
Jaime Ramos Loza, general director of Mexico City's Grupo Plastico Nova SA de CV, represents resin producer Nova Chemicals Ltd.
Ramos said the ``past two years have been very difficult.'' Despite support from the Calgary, Alberta-based Nova, Ramos said the underlying Mexican economy was to blame.
``Unfortunately, 25 percent of Mexicans are poor, and many people do not have money in their pockets, and so cannot buy buckets, or shampoos or whatever. The economy is not running as we expected,'' he said.
Plastics machinery importer Sergio Sosa of Distribuidora Lube SA de CV, echoed concern about the economy, but said sales have been holding up.
``We had thought business would drop off in December, or at the beginning of the year,'' he said, adding that since November, Mexican firms are buying ``more than the economic situation leads one to believe.'' He speculated that firms ``are only buying before another devaluation hits,'' perhaps in 2000 after the new government takes office.
Rafael Blanco, president of the privately held consulting and training group Instituto Mexico del Plastico Industrial SC, underscored the fragility of the Mexican plastics processing sector. In a Feb. 8 interview in his Mexico City office, Blanco said that although Mexican processors boosted their output in 1998 by 18 percent to some 6.4 billion pounds, they still used just 58 percent of their installed production capacity of 11 billion pounds. He also noted that Mexico's imports of plastic products, in volume terms, doubled from 1997 to 1998.
George Antebi, president of the Mexico City-based Vektor International, consultants to the plastics and petrochemicals industries, urges caution.
As a result of the bottlenecks presented by the petrochemicals complexes operated by the state-owned energy giant Petroleos Mexicanos, ``the Mexican plastics industry is heavily dependent on imports and so highly vulnerable to currency fluctuations,'' he argued. Indeed, ``any major devaluation of the peso would be disastrous,'' he added.
Major devaluations have come at the end, or just after, each of the last four Mexican administrations.
In any case, within the six-year cycle of Mexican politics, the fourth year — 1998 in this case — traditionally is the peak of business activity and optimism. True to form, official government figures for 1998 published Feb. 16 showed that the manufacturing sector, to which plastics belongs, grew by a remarkable 7.4 percent compared with 1997.
Jonathan Heath, a widely respected independent analyst, notes that President Ernesto Zedillo is ``obsessed'' with avoiding the pitfalls that beset his predecessors.
Zedillo has proposed free-market reforms for the electricity sector that have been highly praised by leaders of the plastics industry and others.
Moreover, the timetable of change means that not Zedillo, but his successor, will reap the benefits.
``This is proof,'' Energy Secretary Luis Tellez said recently, ``that our president is doing all he can to ensure a smooth transition that will avoid the end-of-term crises that hit the last four administrations.''
Perhaps Hanna's Alvarez best summed up the uncertainties of working in Mexico: ``You can avoid being hurt by a crisis if you work very hard. But then again, the people on the Titanic thought they were very safe.''
Correspondents Joann D. McKinlay and Ronald Buchanan contributed to this report.