A welcome mat south of the border.

Mexico needs U.S. processors' know-how and capital.

In a time of slower economic growth here at home, plastics processors might consider joining the boom taking place almost under our noses, in neighboring Mexico. One that did so recently is Textek Plastics of San Antonio, Texas, which formed a joint venture with a Mexican molder to bring "world-class" molding know-how and quality standards to an environment where they are currently scarce (see PT, Feb. '92, p. 66). Mexico needs a lot more of that sort of thing, according to a report on the country's plastics-processing needs provided to PLASTICS TECHNOLOGY by the Mexican Investment Board (MIB), a nonprofit venture of the government and nation's private financial institutions. MIB expects the country's Gross Domestic Product to increase by an amazing 50% in 1992 to '94. But with "unprecedented growth in demand for plastics products," the report says, has arisen "a dearth of suppliers to serve the market."

According to MIB, that market consumed some 2.138 billion lb of resins in 1989, almost half of that for containers and packaging. Only 50 million lb of engineering thermoplastics were consumed in 1991. Major growth opportunities for plastics, says MIB, are in automotive (seen growing 15-20%/yr through 1996), appliances, toys, electrical and communications systems.

MIB's report cites three main reasons why "many current suppliers in Mexico are unable to adequately serve the domestic market--the same reasons why this market needs the strength and capabilities of high-volume, high-technology plastics molders":

* Volume. MIB says there are 2950 Mexican plastics processors, employing 116,000 workers. But 62% of those firms have fewer than 20 employees. "The small business volume of domestic suppliers is perhaps the leading reason for their lack of capability. This has limited growth of investment in the industry, thus undermining suppliers' efforts to expand."

* Capital intensity. MIB says Mexican processors "generally have a limited ability to satisfy the total requirements of today's global OEM."

* Tooling and equipment. "Due to insufficient resources for mold design, moldmaking escalates end-product prices to uncompetitive levels. The unavailability of new technology, especially in lab equipment and secondary operations, have retarded the development of new plastics applications."

PLASTICS TECHNOLOGY thinks there's enough going on in Mexico to be worth taking a closer look. By this fall, we aim to have counted all the injection, blow molding, and extrusion plants, how much of what machinery they have, and how much of which resins they use. I'll let you know what we find.