Anipac's Torres warns of slowdown in Mexico's plastics sector

Mexico City — Business activity in Mexico's plastics industry is slowing for the first time in a decade, according to Aldimir Torres, the president of industry association Anipac.

"In the past 10 years, the industry's growth has been significant, 4-5 percent a year on average," he told Plastics News on Jan. 31. "But January has been very difficult. ... We will be lucky to achieve 4 percent growth this year."

Torres, who was elected the body's president in September, blamed a 2 percent business contraction in January on several factors: crime/insecurity; energy costs, including those of electricity and gasoline; and excessive imports of finished products.

Other problems, such as nationwide gasoline shortages, a weeks-long blockade of railway tracks used to transport freight out of the Lázaro Cárdenas container port in the western state of Michoacan by dissident teachers, and strikes at several dozen maquiladora plants along Mexico's northern border, also conspired to frustrate manufacturers at the beginning of the year, Torres said.

On a more positive note, he said Anipac (Asociación Nacional de Industrias del Plástico AC) is working hard to keep faith with the Ellen MacArthur-inspired New Plastics Economy Global Commitment to eliminate plastic waste at the source by 2025. It signed on in the fall of 2018.

"In Mexico, there exist almost 70 legislative initiatives to ban plastic bags," Torres added. Querétaro, one of the country's fastest growing manufacturing centers and capital of the state of the same name, became the first large Mexican metropolis to ban bags at all commercial establishments in August, when it also started applying financial penalties.

The ban has since spread to smaller towns in the state. Other states, including Baja California Sur, Sonora, Durango, Nuevo León, Jalisco and Mexico City, have followed Querétaro's lead and passed legislation. But of the latter group only Baja California Sur has been as aggressive as Querétaro and penalized commercial bag use.

Asked how Anipac planned to combat anti-plastics sentiment and improve plastics' image, Torres replied: "Our first step in the fight is not against environmentalists but against ourselves. We need to be more competitive, to develop better packaging and better quality."

To that end, Anipac was "working towards a certification process for plastics products, which may be ready by the middle of the year," he said, without elaborating.

"We need to show that plastics are comfort in the bedroom, safety in the car, care in hospital, education at school. Plastics are everything."

Mexican President Andrés Manuel López Obrador's war on corruption began on Dec. 27, less than a month after he entered the National Palace in Mexico City at the start of his six-year term in office.

Initially, his focus has been on the numerous gangs that steal gasoline from pipelines operated by state oil company Petróleos Mexicanos (Pemex). Reportedly worth billions of dollars a year, the scam would collapse were it not for the alleged complicity of an unspecified number of Pemex officials that goes back years.

López Obrador has reduced the amounts of gasoline dispatched through the pipelines and increased the quantities being transported by road, a strategy that has led to shortages across the country. Long lines of motorists have formed at gasoline stations. Stories of people waiting for up to 16 hours for fuel have become the stuff of legend.

Panic has also been in evidence. One hundred and twenty-two villagers attempting to steal gasoline from a broken pipe in the state of Hidalgo died when the fuel exploded in mid-January. Many of the victims were carbonized on the spot in horrific scenes shown on television.

The tragedy prompted López Obrador to intensify his rhetoric against the criminals, known colloquially as huachicoleros, while death threats against him became more vociferous and sinister. For instance, a pickup truck packed with primed high explosives was left outside the Salamanca oil refinery in Guanajuato state, but not detonated.

The president's personal protection detail is sufficiently insignificant to be almost irrelevant but he continues to insist, controversially, that "the people" will protect him.

Anipac applauded the government's anti-corruption efforts, but said in a statement in January that it "must avoid confrontation and social conflict."

The theft and mishandling of volatile fuel is one of the security issues to which Torres referred. Another is extortion at company level. Companies have to pay criminals a fee "to be able to work," he said. Asked whether it was a common practice, he replied: "It's happening."

As for the dangers faced by logistics companies and their employees by modern day highwaymen, Torres said: "Some places in Mexico are not very safe, such as the states of Veracruz, Tamaulipas, the State of Mexico and Puebla. The number of attacks on trucks is high."

High prices for energy, including electricity, gas and gasoline, have been an industry bugbear in Mexico for years. Manufacturers pay at least 25 percent more for electricity than their counterparts in the United States and Canada, according to environment and sustainable energy specialists.

However, Torres added that prices went up 100 percent in some areas in the past 12-14 months.

On the subject of trade, Mexico, he said, pays import tariffs on plastics and raw materials only to find the market awash with cheap imported finished goods from a variety of regions of the world.

Meanwhile, the confederation of maquiladora associations (Index) criticized López Obrador for failing to support the industry in the face of a wave of labor disputes over pay in the north.

"The inaction of the federal government in the serious labor conflict at 45 export manufacturing companies in Matamoros, Tamaulipas, will trigger unemployment and force at least 15 companies in the town to leave," unless the government steps in to mediate, Index President Luis Aguirre Lang warned in a news release.

Index is the Consejo Nacional de la Industria Maquiladora y Manufacturera de Exportación. It is an umbrella for 21 regional associations representing 1,200 companies, many of which have plastic injection molding operations. About 5,000 maquiladoras do not belong to Index.

The strikers demanded a 20 percent wage hike and a once-only bonus of US$1,675. Rolando González Barrón, president of Index, Matamoros, claimed in a video posted on Facebook that several plastics processors had been involved in the dispute, a fact confirmed to Plastics News by a former Anipac president.

According to Reuters, Mexico's maquiladora industry, which totals 6,208 companies that supply, among others, the automotive, aerospace, electrical components, medical equipment and household appliances sectors, exported goods worth $280 billion and grew between 10-12 percent in 2018.

But the maquiladora sector's growth will slow to between 5-7 percent in 2019, Reuters quoted Aguirre Lang as saying.