Thermoplastic injection molder Pyramid Plastics Inc. of Rockford, Ill., says sales by its sole manufacturing operation in Mexico increased from $2.5 million in 2007 to $3 million last year.
But when asked about the facility's business prospects in 2009, Kelly Schwenk, Pyramid's general manager, gave a guarded response and alluded to the drug-related violence that reportedly cost 6,000 lives on the Mexican side of the U.S.-Mexico border last year.
[I'm] optimistic in the long run, he wrote in an e-mail. However, it is incumbent on the [state and federal] governments to make it safe and economical for us to continue the growth.
Asked whether violence in Mexico worries U.S. companies like Pyramid, he responded: Yes, it is a concern whenever we send people into unstable situations.
One of the reasons we chose Monterrey is not only its proximity to our customers but it is away from the border towns.
The border seems to be an issue for businesses and, while this violence seems to be growing, it did not pop up overnight.
Last month, Moody's Investors Service of New York, described a U.S. Joint Forces Command statement that Mexico risks becoming a failed state as far-fetched.
But Moody's did say that escalating security problems in Mexico could impact investor sentiment, affecting the country's medium-term outlook.
Pyramid, a unit of Industrial Molds Inc., also of Rockford, employs 25 at the complex, in the municipality of Santa Catarina, operated by a joint venture called Pyramid Plastics de Mexico SA de CV.
The joint venture makes seating and other products for the automotive industry; handles, brackets and trays for the appliance sector; panels and circuit boards for the electronics industry; and industrial power-tool casings and machine parts.
The Mexican company's main customers are Textron Inc., Ingersoll Rand Co. Ltd., Mexican supermarket chain Soriana SAB de CV and Home Depot Inc., Schwenk said.
Pyramid began working in Mexico in 2003 and started looking for a joint venture partner in late 2004, with the help of the U.S. Department of Commerce and the U.S. Export Assistance Center in Rockford. The firm signed a joint venture agreement with proprietary injection molder Roi Plastics S de RL in 2005, prior to the venture's official startup in March 2006.
Roi contributed 12 Toshiba and Milacron presses, with clamping forces of 100-700 tons.
Since teaming up with Roi, Pyramid Plastics Inc. has invested $500,000 in Mexico, according to Schwenk.
New presses have been added, both from the United States and [those] purchased in Mexico, he wrote.
The Mexico complex comprises two buildings, one of them built by the joint venture. Each one covers 20,000 square feet.
Schwenk said Pyramid chose to invest in Mexico and not China, for instance, because, although we import tooling from China, our customers require our support in Mexico. Monterrey serves us well, being centrally located and away from the border.
He said Pyramid Plastics Inc., which also has a mold-making facility in Sweden, has no short-term expansion plans anywhere in the world.
Questioned about how Pyramid and Industrial Molds will ride out the global economic downturn, Schwenk replied that the company has purchase orders that will double the size of Pyramid this year.
Our potential for growth is very good, he said.