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September 23, 2015 02:00 AM

Distributors turn to Mexico for growth

Frank Esposito
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    M. Holland Co.
    Ed Holland

    The Mexican market has the attention of U.S.-based resin distributors.

    So far in 2015, two such firms have made deals to expand their presence in Mexico. In May, M. Holland Co. of Northbrook, Ill., formed a partnership with resin and chemical supplier Grupo Solquim of Mexico City. That partnership now operates as M. Holland Latinoamérica.

    Then in July, Osterman & Co. Inc. of Cheshire, Conn., formed a joint venture company with Industrial Mafra SA de CV, a distributor of polyethylene resin based in Morelos, Mexico. The JV will operate as Osterman Plastics de Mexico S de RL.

    M. Holland Latinoamérica has almost 500 customers and an infrastructure that includes commercial reach throughout Mexico. It's supported by warehousing, bagging lines, rail terminals, pulverizing equipment and a fleet of bulk and packaged delivery trucks.

    Grupo Solquim's primary supplier is state-owned Pemex Petroquímica SA de CV. Pemex resins now may be available to Holland customers in the United States as well. M. Holland Latinoamérica now will allow a good portion of M. Holland's portfolio of materials from more than 20 materials firms to be sold throughout Latin America. Previously, the firm's Latin American sales accounted for less than 10 percent of its total.

    “We plan to continue to grow our presence in Mexico and other parts of Latin America,” M. Holland President and CEO Ed Holland said in a recent interview with Plastics News.

    The Osterman deal is expected to help both firms grow their presence in the Mexican market. Industrial Mafra was founded in Morelos, Mexico, in 1991. The firm supplies high density, low density and linear low density PE for injection molding, blow molding and rotational molding uses.

    The formation of the JV is Osterman's third move into Latin America in the last six years. In 2009, the firm founded its Latin American Polymers unit, followed by its 2013 purchase of resin distributor Quimtec LP of San Jose, Costa Rica.

    “We're bullish about growth in Latin America,” Osterman CEO John Dwyer told PN. “With the exception of Brazil, sales there are up more than 10 percent. We're especially optimistic about Mexico.”

    Resin sales totals for the first seven months of the year from the American Chemistry Council seem to bear out that optimism. Exports of linear low density polyethylene to Mexico from the U.S. and Canada were up almost 24 percent to 467 million pounds through July.

    U.S./Canadian exports of high density PE to Mexico were up 19 percent to 852 million pounds, while low density PE exports grew almost 6 percent to 226 million pounds. Sales of PP in Mexico — from U.S., Canadian and Mexican suppliers — jumped almost 12 percent to nearly 1.25 billion pounds in that seven-month period.

    Mexico is drawing interest from other resin distributors as well. Avon Lake, Ohio-based PolyOne Corp. recently opened a new warehousing location in central Mexico. “Our strategy is to follow global key accounts and to go where our largest customers want us to be,” said Mark Christ, vice president for distribution.

    Engineering resins distributor Chase Plastics of Clarkston, Mich., also has sellers in Mexico and is considering adding a warehouse there, President Kevin Chase said. The firm's sales there “are growing rapidly,” he added.

    Nexeo Solutions of The Woodlands, Texas, also is seeing good results in Mexico. “A big part of our growth there is the automotive footprint,” Senior Vice President of Plastics Shawn Willams said. “There's been a lot of reshoring.”

    But for other U.S.-based resin distributors, the Mexican market is old hat — or maybe old sombrero.

    “Mexico might be a new market for some of our competitors who haven't been there as much,” said Mike Pignataro, vice president of Bamberger Polymers in Jericho, N.Y. “But we've been there for 20 years.” Bamberger's Mexican operations now include 11 sales reps and additional support staff.

    Ravago Americas of Orlando, Fla., also has been in Mexico for 30 years, according to President James Duffy. “It's a pretty strong market there,” he said. “Historically, it's grown faster than the U.S. As it matures, it probably will continue to mirror the U.S. market.”

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