M. Holland last month further added to its Latin American holdings by purchasing a pair of resin distribution firms in Puerto Rico. Those businesses were Able International Corp. and Tril Export Corp. Both firms are based in San Juan and are owned by their founders, the Coifman family.
Able and Tril combined distribute about 50 million pounds of resin per year, with Able selling to customers in Puerto Rico and Tril supplying customers throughout the Caribbean and in Central and South America. Both firms distribute a variety of commodity and engineering resins.
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.
“This is an exciting move for us, because we hadn't done much in Mexico before,” Osterman executive vice president Jeff Elsen said in a recent phone interview. “We needed to have an entity focused on Mexico to get into Mexico. We needed a partner with market knowledge.”
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.
Chase's warehousing effort will be its first in Mexico, although the firm has been selling into that market for 15 years, regional manager Bill Guenveur said in a recent phone interview.
“More and more of our customers and suppliers have been asking us to be there, so it's the next logical step for us,” he added. “You really need to be located in Mexico to sell into the interior of the country.”
Both Ed Holland and Elsen are longtime resin industry veterans who say the Mexican plastics processing market has greatly improved in recent years.
“You couldn't envision the Mexico of 15 or 20 years ago,” he said. “Today, manufacturers have the best new plants and new equipment and new technology. The industry has really grown up in the last 20 to 30 years.”
“There's been a lot of capital expansions and a lot of spending on new equipment,” Elsen added.
The Mexican processing market seems to have more family-held, private businesses than the U.S., Ed Holland said, which requires a slightly different approach. “When you meet companies in Mexico, you're creating relationships, not just selling material,” he explained.
Channels to market for Mexican processors are very diverse, according to Elsen, with a large percent of the market — as much as 40 to 50 percent — buying their resin from distributors, he said.
Among Mexican end markets, Ed Holland said that the automotive sector is showing growth, with many companies now building infrastructure in Mexico. Osterman is targeting markets such as food packaging and pipe, Elsen said, and also is seeing growth in flexible packaging and injection molded pails and crates.
For Chase, automotive has been its largest Mexican sales market, followed by consumer electronics and appliances, according to controller Rich Smith. “Automotive is the driver,” he said. “There are a lot of long-term programs quoting out to 2018 or 2020.”
Sales trends for polyethylene and polypropylene resin also favored Mexico in 2015. U.S./Canadian exports of those materials to Mexico surged during the year, according to the American Chemistry Council. Exports of high density PE to Mexico posted the highest growth rate last year, increasing more than 19 percent to 1.58 billion pounds.
Exports of linear low density PE from the U.S. and Canada to Mexico were up almost 9 percent to 778.4 million pounds in 2015. U.S./Canadian exports of low density PE to Mexico were up 13 percent to 448.4 million pounds in the same comparison.
In the PP market, 2015 Mexican sales — from U.S., Canadian and Mexican suppliers — jumped almost 12 percent to 11.7 billion pounds.