Because we are so involved in plastics processing in Mexico we read the story ``Mexico falling further behind in technology'' from your Aug. 19 issue with much interest. While your writer and her sources have a great deal of knowledge on the subject, we feel there is more to the story, and it is worth pointing out.
The article, and possibly the majority of members of Anipac, applies to the segment of small to medium-size processors, and we agree they are in a problem area. This segment is largely family-owned, short on cash, focused on local markets, and not able to compete with world-class cost structures. We think many of these firms will be consolidated, and only a few successful ones will flourish.
There are two other segments of plastics in Mexico today that play a more important role, and have a brighter future than your article would portend.
The maquiladora industry encompasses some sophisticated molding shops in Mexico that are world-class. They are suppliers to the North American market, the world's largest and best market. Many of these firms have found capital assistance from both the U.S. and Mexican governments.
A third class of processor is the world-class plastics processor in Mexico as part of a global enterprise, serving local markets and also exporting. There are first-rate companies committed with capital and resources to compete in the global environment, and they do so successfully even in these tough economic times.
We believe Mexico is a great place to do business, particularly for U.S. companies. The best regional market in the world, with the greatest profit potential is still the North American Free Trade Agreement region, and we believe it will remain that way.
Capital is available for U.S. partners and companies that want to sell machinery, equipment and technology for expansions in Mexico. Sources like the Export-Import Bank, the Overseas Private Investment Corp., NAFINSA and the InterAmerican Development Bank offer financial instruments to help companies expand in countries like Mexico. There are other sources of capital as well.
At the Mu¤oz Investment Banking Group, we don't believe companies chasing lower labor costs will succeed. We believe firms do not need to change countries, they just need to re-examine their strategies for how to get the most benefit from emerging markets and emerging technologies.
MuÃ±oz Investment Banking Group LLC