Eduardo de la Tijera Coeto is entering the final three months of his two-year stint as president of Mexico's National Association of Plastics Industries (Anipac).
In an interview with Plastics News, he expressed his concerns about the plastics industry's future in Mexico, especially where raw-material supplies and energy costs are concerned.
``The plastics chain [in Mexico] needs a far better integration of raw materials to sustain its position in domestic markets and exports,'' he said.
But he adds: ``At the same time, I can say that President [Felipe] CalderÃ³n's government is now sensitive to these issues and we should expect some changes.''
Q: How serious is the government's unwillingness to increase petrochemical production in Mexico?
De la Tijera: I would not say the Mexican government is not willing to promote more investment and to allow more production in petrochemicals. It is a matter of conflicting issues that have not been resolved.
First, Pemex [PetrÃ³leos Mexicanos, the state-owned oil company] needs very large amounts of money to invest in downstream activities that leave few or no dollars at all for continued investment in petrochemicals at [chemical unit] Pemex Petroquímica.
Second, the energy sector reform that many people talk about is necessary for some portions of the Mexican energy industry but not for all parts of the petrochemical chain.
We in Mexico could do a lot [more] in petrochemicals if some pricing policies and managerial practices were changed slightly. For instance, petrochemical production would increase greatly if natural gas and natural gasoline were priced at truly competitive levels for petrochemical production.
Nowadays, natural-gas pricing for ethane is affected by fuel pricing formulae, ignoring the fact that there are differences in chemical and fuel prices.
Natural gasoline is exported at spot prices, ship by ship, and a long-term commitment by a large-volume buyer, such as a petrochemical complex, that would consume 85 percent of all production, deserves a different price, already given to the Pemex Refining subsidiary that consumes around 15 percent of it.
The price of electricity for industry in Mexico is too high. Plastic processors need a break. Energy purchases are the plastics industry's second major variable cost after raw materials and they are now larger than packaging, maintenance and freight costs. It is a question of allowing plastic processors to compete with processors in the U.S., who enjoy energy rates that are about half of those in Mexico.
Q: How does this affect plastics processors in Mexico?
De la Tijera: A lot. Anipac's analyses have proved that an increase in resin imports leads to an increase in plastic goods imports. The reason is easy to understand. Our competitors in the U.S., who account for 86 percent of the plastics trade in Mexico, have a better raw materials position, being supplied locally with about 85 percent of their resin, which is more easily available from nearby suppliers and whose pricing is more stable.
Mexicans are struggling with the decline in U.S. polyethylene and polypropylene surpluses [available] for export. Many consultants ... insist that the U.S. and Canada will become net importers of polyolefins in the near future.
Therefore, Mexican processors will have to go elsewhere to get their raw material, which will obviously result in increased freight costs, longer lead times for delivery, dependency on irregular surpluses, and competition with China.
Q: Are you worried that nobody has so far put his or her name forward to succeed you as Anipac president when your term ends in April?
De la Tijera: Not at all. The time for renewing Anipac's executive committee has not yet come. I'm sure there are enough members willing to join the executive committee for 2008-09. My duty as Anipac's president is to give all members the necessary support and information so they can make up their own minds about this. For the moment there are no names, no numbers.
Q: I know you have worked very hard as president. How difficult a job is it and how time consuming is it?
De la Tijera: Aside from the time consumed, it is a wonderful experience. All presidents have to work hard, none more that others, each according to his way of doing things. When I decided to run for Anipac president I knew very well it would mean less sleep, more energy, more attention to everything.
I'm glad I made the right decision. It has been the most challenging and fruitful experience of my professional life.
My work as a consultant has continued but I have had to focus more on consulting assignments that demand less of my time. Grupo Texne [his Mexico City-based consultancy firm] was formed in 1985. We are a network of consultants covering industries from Mexico to New Brunswick and to Buenos Aires, Sao Paulo and several other cities.
Fortunately, I have always had splendid partners and collaborators. My next challenge is to go back to consulting almost full-time. I will continue working for Anipac, if the new president decides I'm valuable to him and the association. I'd even go to Siberia, if he wanted.
Q: What are the major challenges Anipac's new president will face in the coming years?
De la Tijera: Anipac's main challenge is to continue leading the Mexican plastics industry, to be an association where most companies want to be, to be the counter-argument in the dialogue with the government and a means for closer and more intense collaboration with other plastics and chemical associations and chambers in Mexico and abroad.
I'm sure Anipac will continue to be this and more. The plastics industry development program being put together now with the ministry of the economy is a great opportunity for all to make it happen, all organizations and Anipac together.