Mexico City — As Asian multinational companies increase their manufacturing in Mexico, plastics suppliers from China, Japan, Taiwan and elsewhere in the region are stepping up their interest.
That's apparent in the halls of the Plastimagen show, with pavilions of exhibitors from Asia looking to increase their share of Mexico's market, which grew by an estimated 4.2 percent in plastics consumption in 2015.
“We think Mexico is a very good potential market,” said Alan Y.F. Ou, senior vice president of Zhejiang Boretech Environmental Engineering Co. Ltd., a PET recycling equipment supplier in Pinghu, China.
Not that the market has been easy lately: Ou said tougher economic conditions pushed two customers in Mexico in late 2015 to put on hold orders they'd already made.
Ou blamed the customer reversals on a combination of the sharp depreciation in the value of the peso, which raised the cost of imported equipment, and the drop in oil prices, which were hurting bottom lines of customers in the plastics recycling industry.
But in general, Asian companies like Boretech were looking to tap into growth in Mexico, both from local development and increasing multinational investment.
A 2014 report from the Boston Consulting Group, for example, said Asian companies like Sharp, Sony and Samsung accounted for one-third of the investment in Mexico's electronics manufacturing, up from 8 percent in 2004.
Taiwan's Foxconn Technology Group, a major contract manufacturing supplier to Apple with large factories near the U.S. border, was Mexico's second-largest exporter, trailing General Motors, BCG said.
Mexico's exports of electronics tripled from 2006 to 20143, to $78 billion, BCG said.
Asian car makers also are increasing their investment in Mexico and bringing along their supply base, said consulting firm Deloitte Touche Tohmatsu Ltd., in a 2015 report.
“A wave of Japanese parts suppliers also are investing in the region as the entire auto parts sector expands,” Deloitte said.
Japanese auxiliary equipment supplier Kawata believes the growth of Japanese automotive and electronics manufacturers in Mexico does help the plastics machinery firm, said Haijun Chen, a manager with the company's Kawata Mach. Mfg. (Shanghai) Co. Ltd. subsidiary in China.
But the company is also attracted to local growth in Mexico, he said.
Mexican consultant Eduardo de la Tijera Coeto said he believes reshoring of manufacturing back from China is helping Mexico's plastics industry. Automakers like South Korea's Kia and Japan's Nissan have built assembly plants in Mexico to supply the U.S. and Canadian market.
But in an interview at Plastimagen, De la Tijera Coeto said he thought Mexican plastics processors were not capturing very much of that growth. It was instead going to plastics processors from those countries and other developed markets.
“My feeling is that the Mexican [industry] is losing ground because they have not been capable to graft into the supply chains of the auto makers or the aerospace companies,” he said.
Taiwanese injection machine maker Jon Wai Machinery Works Co. Ltd. offered a version of that for equipment suppliers.
While it was exhibiting at Plastimagen, Jon Wai believes that in industries like automotive, U.S. companies were sticking with U.S. suppliers, limiting what's available to new suppliers, said Robin Pan, marketing director: “Their supply chains are already fixed.”
So Jon Wai is looking at more locally oriented markets like packaging, Pan said.