Viking Plastics taps into Mexico with cross-border agreement

Injection molder Viking Plastics is expanding its reach in North America through a cross-border manufacturing agreement with Isgo Manufacturing SA de CV, a custom injection molder and blow molder based in Monterrey, Mexico.

Terms of the legal agreement were not disclosed.

Isgo Manufacturing has multiple facilities in Mexico and an engineering office in Wixom, Mich. It molds a variety of Class A, safety/functional and structural components for the automotive industry as well as parts for the appliance, electronics, cosmetic and packaging markets.

The company ranks No. 117 on Plastics News' annual ranking of North American blow molders, with estimated sales of $28 million in 2017.

The cross-border agreement enables Viking Plastics and Isgo Manufacturing to easily serve mutual customers, primarily in automotive, in the geographical markets those customers want to do business in. It also allows both companies to avoid additional transportation and shipping costs as well as any potential tariffs between the border.

"We think it's a win-win for our customers, and we believe it's a win-win for our partnership because we'll be able to service our customers much better and hopefully grow our business because of it," Kelly Goodsel, president and CEO of Viking Plastics, said in a June 3 phone interview.

Viking Plastics is headquartered in Corry, Pa., and primarily serves the automotive, industrial, appliance and heating, ventilation and air conditioning markets. It molds various under-the-hood and interior automotive parts as well as plastic housings, covers, brackets and other custom products.

Customers include automakers such as Ford Motor Co., General Motors Co., Toyota Motor Corp., Fiat Chrysler Automobiles NV and Nissan Motor Co. Ltd. as well as Tier 1 suppliers.

The partnership allows the company to tap into Mexico's market without having to build a brick-and-mortar facility or invest in new machinery, Goodsel said. It also provides Viking Plastics with access to Isgo Manufacturing's large-tonnage injecting molding machines, which go up to 1,500 tons.

"This allows us to enter the market with a proven management team, with facilities already existing, with machinery capacity and capability already in place," he said.

The two companies did not plan for new tariff threats at the U.S.-Mexico border, however.

President Donald Trump announced on Twitter May 30 that he will impose a 5 percent tariff on all goods from Mexico starting June 10. That rate will gradually increase to 25 percent if Mexico does not act to stop illegal immigration across the border.

"Quite frankly — without getting into the political fray — I don't think it's a great idea, but I'll leave that up to politicians to figure out," Goodsel said.

But it does demonstrate why the partnership between Viking Plastics and Isgo Manufacturing can be successful, he explained, as it reduces the risk associated with rising tensions at the U.S-Mexico border.

"As political environments change, as our customers change their buying patterns, it allows us to be in country and serve the Mexican market inside of Mexico, as opposed to today where we would have to ship from the U.S. or Isgo would have to ship from Mexico back into the United States," Goodsel said.

It enables both companies to make the product in the country that the customer wants it made in, he said.

Viking Plastics ranks No. 202 on PN's most recent listing of North American injection molders and had injection molding sales of $28 million in 2017. Partly due to its June 2018 acquisition of injection molder Genesis Plastics and Engineering LLC, Goodsel said sales for 2018 were north of $60 million.

The company employs more than 300 and has additional manufacturing operations in Kentucky and Indiana, plus ownership stakes in two injection molding companies located in China and Brazil.