Mexico's auto parts sector, including suppliers of plastic components, is heading for a 20-30 percent contraction in 2009.
Following unprecedented sales of $28.7 billion in 2007, the sector shrank by about 5 percent last year.
The closure, either temporary or permanent, of 60 vehicle assembly plants in North America in January severely affected suppliers in Mexico, said Agustín Ríos, president of Industria Nacional de Autopartes AC. INA is Mexico's automotive suppliers association.
The parts sector is likely to contract by 20-30 percent in 2009, Ríos added. He noted that between 12 and 15 percent of an average automobile's content is made of plastic.
There's no sign of a recovery, he said in a recent interview. Last year we lost 25,000 jobs in the sector.
According to Monterrey, Mexico-based Samuel Ordaz, president of trade show organizer Giprex México, many of the 400 or so injection molders in Monterrey supply the auto industry.
A lot of companies are reducing staff or cutting back their shifts. Instead of working the whole week, they are working three or four days. I've been involved in the plastics industry for 11 years, and this is the first time I've seen a situation like this.
INA is among the five most important industry groups for automotive and commercial vehicles in Mexico. All have expressed concerns about the industry's future, and together they have taken to the streets to demand government help.
Their first demonstration, a low-key affair outside of the Mexican Congress on Feb. 19, was aimed at stopping the import of used vehicles colloquially called chocolates from the United States. Association leaders claim 4.3 million chocolates have entered Mexico during the past four years and that unidentified crime rings are involved in that trade.
The vehicles' importation across Mexico's northern border threatens to wreck an industry that employs an estimated 820,000, according to associations representing car, truck and bus makers, dealers and parts suppliers. They expressed their fears at a news conference before leading the peaceful march of about 100. They had arranged to meet with Chamber of Deputies leader César Duarte, but he was out of the country. The chamber is the lower house of the bicameral Mexican Congress.
The trade groups accuse Duarte of trying to weaken used-vehicle import regulations already approved by President Felipe CalderÃ³n.
In line with North American Free Trade Agreement provisions, the president decreed in December that owners of all used vehicles brought into Mexico must prove that 62.5 percent of the car or truck's content has been made in the region. If such documentary proof is not forthcoming, the vehicle is subject to 10 percent tax.
Also worrying the industry's leaders is the fact that new-vehicle sales in Mexico have plunged to levels not seen since 2000. A predicted 25 percent drop in vehicle production this year has added to their frustration.
Mexico is a global top 10 vehicle assembler. It produced 2 million units in 2008, but output dropped 50.9 percent in January compared with the same month a year earlier.
Although Mexico usually exports about 80 percent of the vehicles it produces, shipments to other countries fell by 56.9 percent in January from the year before, according to the country's automotive manufacturing industry association, AMIA.