Plastics processing in Mexico could be heating up in 2004, as business picks up to reflect an improving U.S. economy and as a result of new investment.
Experts predict plastics consumption in Mexico will grow 6-7 percent in 2004, which is 3-4 percentage points above gross domestic product forecasts.
Growth was slower in 2003 - about 3 percent - as local processors had not benefited yet from a resurgence in the U.S. economy. About 80 percent of Mexico's exports go to the United States.
Further, it was apparent that midterm congressional elections held in July failed to deliver fiscal and electrical reforms essential for Mexico to achieve faster growth. Consequently, Mexicans were pessimistic at year-end and the GDP annual growth rate declined from 1.43 percent in November to 1.16 percent in December, and inflation rose from 3.78 percent to 3.96 percent in the same period.
Plastics markets in Mexico usually perform better than the rest of the economy. Plastics consumption is expected to reach about 11 billion pounds this year.
Analyst Eduardo de la Tijera with consulting firm Grupo Texne said Dec. 2 that local resin supply will improve slightly this year. Pemex, Mexico's state-owned oil and petrochemical giant, will restart some high density polyethylene operations and will commission a vinyl chloride monomer expansion, and private producers will increase their resin capacity in PET and styrenics.
He also said plastics machinery and tooling imports are expected to reach $1.1 billion in 2004 as new processing capacity is built in Mexico's major plastics-producing regions: Mexico City, Monterrey in the north and Guadalajara in the west.
Mexico's National Association for Plastics Industries, known by its acronym as Anipac, is working to help local processors by commissioning a long-term strategy for local industry. The plan aims to bring the plastics industry back to times of 10-12 percent annual growth through the diversification of its target markets.
The study analyzed the Mexican plastics sector's weaknesses and growth prospects, and has offered a plan for attacking the country's severe plastics trade deficit, managing its changing maquiladora situation and identifying key future markets.
The plan includes building additional petrochemical capacity, encouraging assembly of machinery, equipment and tooling, and promoting plastics exports. Anipac also wants to develop markets for plastics in construction and agriculture. The agency hopes to carry out the plan, with help from the government, between 2004 and 2006.
Processors in the Gruaajuato state and Bajío area in the central highlands also need help, according to Gustavo Guraieb, president of Plastics Industrialists of the Bajío. The region has about 400 plastic companies with 10,000 employees.
After trade missions to the southern United States, Cuba and El Salvador, the group started work on its plan in mid-2003 and will continue until 2010. The plan includes training at the university level and crucial help to diversify business for manufacturers of polyurethane shoe soles.
Mexico currently has about 4,000 plastics companies, which employ about 175,000 people.
De la Tijera pointed out that, as a general trend, Mexico expects an increase in the export of manufactured goods.
``The maquiladoras consume about $4.6 billion of plastics, almost all imported, and they want Mexican processors to supply their needs locally. An agreement with the maquiladora associations to develop local suppliers will be the cornerstone for this effort and its benefits will be seen in 2004,'' he said.