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June 23, 2008 02:00 AM

U.S. automakers revving up Mexico molders

Stephen Downer
Correspondent
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    Mexican plastic processors suddenly find themselves with a myriad of business opportunities, thanks to a combination of circumstances, both planned and unforeseen.

    They include Ford Motor Co.'s decision - and that of some of its largest suppliers - to invest $3 billion in three new assembly projects, from passenger cars to engines and transmissions, in the country over two years.

    And General Motors Corp., having spent $1.3 billion at its Ramos Arizpe manufacturing complex in northern Mexico in the past year, this summer will open a vehicle assembly plant in San Luis Potosí, Mexico.

    ``There are many components, including bumpers, that Mexican companies are more than capable of producing,'' said Alfredo López Machorro, managing director of Mexico's National Plastic Industries Association, known as Anipac.

    In addition, Mexican industrial engineer Raziel Latz believes soaring global fuel costs and a strong euro are two more indicators that the business pendulum has swung Mexico's way.

    ``For U.S. companies looking at China there are problems, including time zones and now freight costs,'' Latz said.

    ``With the strong euro, Mexico is very attractive to European companies,'' he said, explaining that the Mexican peso is pegged to the U.S. currency at 10 pesos per dollar.

    ``So this is an opportunity for Mexican companies. To get a good price from Chinese companies you have to import in big volumes. My company can do short runs and we are more flexible in the quantity and diversity of the products we manufacture.''

    Latz, 51, is a co-owner of Compartec SA de CV, a 25-year-old injection molding company with 12 longstanding customers, nine of which are multinationals.

    Asked whether Compartec has a chance of winning Ford business at the Cuautitlan complex near Mexico City, where Ford will invest an estimated $1 billion to build the new Ford Fiesta for North America in 2010, Latz replied:

    ``Yes but [it would have to be] in a strategic alliance with a company from within the [automotive] industry. Most of the deals are done with big corporations. It's difficult for a company like ours to go in alone.''

    The remainder of Ford's $3 billion investment and that of its suppliers, announced in late May, will be spent on extending an engine plant in Chihuahua and on building a new transmissions plant in Irapuato, Mexico, with German transmissions giant Getrag Corporate Group.

    Compartec, based in Tlalnepantla, has worked for the automotive industry before, producing, among other components, door handles for Nissan Motor Co. Ltd., which in 2003 presented it with a ``zero defects'' award.

    The company serves the electronics, small domestic appliances, cosmetics, personal care, housewares and telecommunications sectors. It makes bottle caps, tooth brushes and internet adapters.

    Its 120 employees, mainly machine operators and assemblers, work three shifts.

    Latz formed Compartec in 1983 with Roberto David Fringuelli, a mechanical engineer. David Fringuelli , 54, is Compartec's operations director.

    Having started with two small injection molding machines, Compartec now has 21, all made in Asia and ranging in size from 20-450 tons. The partners process about 300,000 pounds of plastic per month.

    Located in Tlalnepantla, the 3-year-old plant spans across 32,000 square feet of covered floor space. Illuminated to a large degree by daylight, it is extremely bright and clean.

    It has a tool shop, where the approximately 200 molds Compartec handles every year are maintained and repaired. Most of the molds the company uses are made outside Mexico and supplied by customers.

    The company offers added value such as hot stamping, pad printing, sonic welding, assembly and packaging.

    ``We don't have big sales and administration overheads,'' Latz said. ``We're very focused on manufacturing.

    According to the executive, the company has been growing for 20 years and is in the process of replacing old machines with new equipment.

    ``Last year we acquired three new machines of 250 tons, and two 300-ton machines, replacing smaller machines with new ones with greater capacity,'' said Latz.

    ``You will find a lot of small, family-owned businesses in Mexico with three or four machines and then you will find the big American companies that mostly supply the automotive industry. We are in a small segment somewhere in the middle.

    Compartec adheres to ISO procedures. ``Reliability is one of our priorities,'' Latz said. ``We try to be as good as the big companies but with the flexibility and the response of a small company. We respond very fast.''

    Between 60 and 65 percent of Compartec's work is for local consumption and the rest is exported by the company's customers, he said.

    Asked about the future of the plastics processing industry in Mexico, Latz replied: ``There are opportunities for efficient companies with high quality, flexibility and reliability.

    ``The price of raw materials is going up all the time and it's very difficult to pass on the increases to our customers at Compartec. So we have to absorb them by being more efficient.''

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