Opportunities for Business in Mexico
U.S. moldmakers are the biggest resource for plastics companies in Mexico.
Sergio Sosa, vice president of the Plastics Industry Association of Mexico, has spent his entire life in plastics. His father was a pioneer in the plastics industry in Mexico, and today the family-owned Sosa Plastics Molding Company in Chihuahua, Mexico, is a major supplier to Maquiladora (twin plant) companies on the U.S./Mexican border, such as Honeywell, GE and the automotive companies. The company was started by Sosa's father in 1955. In 2002, the company moved into a new 22,500-square-meter facility with 22 injection molding machines.
Molds in Mexico
There are some 4,500 plastics companies in Mexico employing 170,000 workers with a market worth $20 billion U.S. The country suffers a critical trade deficit of plastics, as the country's per capita consumption is low—34/kg versus 154/kg in the U.S. Plastics companies in Mexico supply only 20 percent of the requirements of the Maquiladora plants.
Sosa says that the advantages of NAFTA include buying molds. When he buys molds from China, he pays a very high tax on them. "If I buy molds from a U.S. moldmaker, I don't pay any taxes," he said.
Jim Meinert says it makes him "crazy that U.S. moldmakers don't take advantage of this favorable situation." He added that he sees strong imports of molds into Mexico for the future. "[U.S. mold builders'] biggest resource is our people," he said. "There is a lack of skills here, which makes this a prime market for us."
Sosa commented that Mexico is working to improve the production of resins, because the country has a lot of oil—a 50 billion barrel surplus. "We want to grow in molding both for domestic products and for exports," he said. "We need molds!!"
Meinert noted that much of the manufacturing that has left Mexico for the cheaper labor regions of Asia, particularly China, is coming back. He cited one furniture company that got burned badly by moving to China. "Some companies are coming back to North America," he said. Sosa added that there is a $4.5 billion U.S. market for plastic imports in the Maquiladora region only.
In 2001, 52 percent of Mexico's molds came from the United States. That dropped to 42.9 percent by June of 2003. Jim Meinert said that lower volume molds that are more cost effective, such as MUD or Round Mate molds are in big demand in Mexico.
Small molds imported into the Maquila region totaled $10,103,344 U.S. according to figures compiled in October 2003. Large molds imported into the Maquila region represented $32,511,706 U.S. Sosa, who reps Negri Bossi injection molding machinery said he sells the machine cell complete with the mold because of two separate tariffs. The moldmaker invoices the machinery supplier, and then Sosa sells the machine and the mold as one unit.
"There is business in Mexico for U.S. moldmakers," Sosa said. "We don't have the culture for moldmaking, but we do have the culture for molding parts, so we concentrate on molding. We need machines and molds that we can't produce in Mexico."
Although Sosa Plastics Molding has in-house moldmaking, the company doesn't build all their own molds. They use suppliers in Portugal, Italy and China, depending on the needs. He currently has no U.S. suppliers. He tried to obtain some U.S. suppliers, and visited several mold shops in Minnesota and Ohio, but he "didn't see an international view to commerce from moldmakers in the U.S."
As for his family's molding company, "We saw that unless we built a global company, we would die as a company because we were very small."
Jim Meinert has been associated with Snider Mold Co. (Mequon, WI) since 1965, starting out in engineering, then president and eventually majority owner. Recently, Jim sold his interests in the company and continues to serve on the board of directors.
This article was reprinted with permission from the AMBA News & Views Spring Edition.
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