In the past three years, the U.S.-Chile free-trade agreement has boosted trade between the two countries by 90 percent.
Now the fall in the value of the dollar is spurring even more interest among Chilean processors in U.S. machinery and materials, according to Carlos Capurro, senior plastics and resins industry specialist at the U.S. Commercial Service in Santiago, the Chilean capital.
``The weak dollar is highly advantageous for Chileans. Buying the same piece of equipment in the U.S. is now 30 percent cheaper than in Europe,'' he said in a recent telephone interview.
With that in mind, there will be a spring in Capurro's step as he leads a delegation of Chilean plastics industry representatives to NPE 2006. He expects about 120 in the group, compared with the 98 he took to the Chicago show in 2003. Capurro is optimistic about the volume of deals that will be done.
What the delegates hope to get out of the show will depend on the size of the companies they represent. In Capurro's words, ``The big companies are all looking for high-tech production methods because it is the only way they can be competitive on the international market.''
Small and medium-size companies employing 10-50 workers will be looking for new products, new trends in the market, Capurro said. ``Attending an exhibition like this gives them exposure to manufacturers from all over the world.
``They are all plastics processors, engaged in some extrusion, some blow molding. The smallest companies may be interested in looking for a U.S. supplier of used equipment that would be competitive with new Chinese equipment. They will be interested in training programs,'' he said.
``Chileans realize that, if they invest in Chinese products, they won't have the quality or the reliability. They are conscious of that. But that does not mean there are not companies willing to cut costs [and buy Chinese brands],'' Capurro said.
Some delegates will be seeking replacement parts for extrusion or injection molding equipment as well as slightly used small and medium-size processing plants.
``Small companies tend to go to the U.S. to look for used molds. The larger ones will have them made in the U.S.,'' he said.
There also will be one-on-one meetings with U.S. companies that are interested in how to do business in Chile, he said.
For U.S. companies looking to do business in Chile or with Chilean companies, Capurro has some reassuring words: ``Foreign investors are treated in the same way as national investors,'' he said, explaining that Chile passed its foreign investment law in 1974.
``Chile has the largest number of free-trade agreements in the world,'' he said, explaining that deals already have been done with the U.S., Canada, Mexico, the European Union, China and Singapore. The government is working on others with Japan, India, Australia and New Zealand.
``It has been an open market for 30 years,'' Capurro said. ``Thirty years ago Chile made a decision to make the global market its domestic market. It has been focusing all its efforts on the world as a whole ever since.
``The business code and work ethic are pretty much the same as in any Anglo-Saxon country, such as the U.S. Most Chilean executives are trained in the U.S. and Europe and so have a grasp of how to do business. All U.S. exports to Chile are machinery and resin, and there is strong property-rights protection in Chile.''
Capurro is one of six commercial specialists at the U.S. Embassy in Santiago. He specializes in mining, energy, construction and the chemical industry.
``We assist U.S. companies and provide them with intelligence about local markets. We can arrange a visit for an executive who is looking for a representative in this [Chilean] market, for example,'' Capurro said.
``What we offer Chilean companies is help in the U.S. market in identifying raw materials, machines, software services and so on. They bring us a laundry list, and we assist them.
``I would invite anyone interested to talk to us to avoid making mistakes. We know where to put the right word in the right ear. We speak the local language. Just go to the closest export assistance centers in the U.S., of which there are 109.
``They will open up the world for you. We may be asked whether or not there is a market for a particular company or service. If we don't know, we can investigate. We can provide background checks on companies of interest to a particular American company. We recruit Chilean companies to go to the U.S. and U.S. companies to attend local [Chilean] shows.''
Among the larger projects in Chile of possible interest to U.S. investors is a plan by Petroquim SA, the only producer of polypropylene in Chile, to double its production capacity of 132 million pounds of PP per year. Chile imports 110 million pounds of PP annually, according to Capurro. Petroquim is seeking a co-investor for the $100 million project, which is expected to begin operating in 2010.
Capurro said that dealing with the U.S. Commercial Service, a division of the U.S. Department of Commerce, is ``the cheapest way to learn about a foreign market.''
He expects to have a full agenda at NPE 2006. The first three days of the show from 8 a.m. to noon already are scheduled, he said.
Since the free-trade agreement took effect in January 2004, U.S. exports of plastic resins and other materials to Chile have tripled, Capurro said. Chile imported an estimated $500 million worth of those products in 2003, the most recent year for which statistics are available.
And with annual exports worth $70 million, the U.S. has become the South American nation's largest resins supplier, Capurro said. It was fourth in 2002, with 11.5 percent of the market, behind Brazil (21.4 percent), South Korea (14.4 percent) and Argentina (14.1 percent), according to U.S. Commercial Service data.
Capurro said the $2 billion-per-year Chilean plastics industry has been growing 10 percent a year in the past few years.
``The business environment couldn't be better, and U.S.-Chile trade relations are at their peak. The way the Chilean economy has grown in the past 10 years has turned the country into a beacon for the region. [Newly elected Peruvian president] Alan Garc¡a says his goal is to be as successful as Chile.''
But as far as the U.S. is concerned, there is still much work to be done on the equipment and machinery supply side. Statistics from the Chilean Customs Service show that in 2002, European companies supplied 72 percent of the Chilean sector's imports, which totaled $40 million in 2003. U.S. companies accounted for $5 million of the total and have aimed to increase the value of exports by 20 percent a year since 2004. New figures will be released soon.
About 500 plastics processing companies of different sizes operate in Chile, with about 80 percent of them in Santiago, according to Capurro, a Chilean citizen who has studied in the United States. About 400 of the firms have fewer than 100 workers. The industry employs a total of 5,000.
Packaging and film wrapping are among the sector's major products. Chile is a large exporter of agricultural products and the world's second-largest breeder of salmon.
Among the industry's new operations is a plant in Santiago that was recently opened by Sigdopack SA to make PP film. Sigdopack now is adding a nylon film plant, with an investment of about $25 million.
Agricultural producers and salmon breeders buy more than 52 percent of the range of plastics goods produced in the Andean nation, while industrial goods and the construction industry account for about 30 percent.
Although Chile imports all its cars and trucks, an automotive aftermarket is growing, and some plastic auto parts are being manufactured in the country, Capurro said.