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Plastics manufacturing in Mexico is a key industrial center with numerous opportunities for growth. In addition to strategic advantages that make production in this country advantageous, domestic demand is also high.
As the world shifts to a regional model of competition, Mexico and the United States have formed a vibrant, mutually beneficial manufacturing dynamo to meet future challenges. Mexico excels in innovation, global trade access, and access to raw materials. For these and other reasons, Mexico is expected to continue being a leader in this vital market.
According to the numbers provided by the International Trade Administration, the plastics and resins industry is a “best prospect industry sector” for Mexico. Across numerous parameters, the Latin American country is a strong location for any producer in the space. With strong domestic demand for plastics and a thoroughly integrated value chain with the United States, Mexico’s numbers are impressive.
US producers of the various plastics products – from moldings to 3D printing to automotive parts – will find a robust ecosystem in which to thrive. The supplier network in Mexico is rich, infrastructure is state of the art, and energy costs are affordable.
Furthermore, Mexico has focused on creating manufacturing hubs around allied industries to reduce costs and make resources more available. Some of the manufacturing hubs plastics producers can easily plug into include automotive, aerospace, electronics, medical devices, and many more.
There is currently quite an opportunity for supply chain vendors in Mexico. Because Mexico leads the way in plastics innovation and is such a heavy hitter in related industries, the market is growing steady. Tier 2 suppliers are especially in demand for the automotive industry. And as new markets open up, plastics producers are all levels in the value chain will discover openings for their niche in Mexico’s diverse manufacturing landscape.
Some of the key areas for strategic advancement in the plastics industry are already thriving sub sectors. Others are new and innovative applications only recently established in Mexico. Some of the primary sectors representing a unique or well-established opportunity for foreign plastics manufacturers include:
A broad assortment of secondary and tertiary plastic materials is produced in Mexico. These materials include PP film, PVC, acrylic materials, and more. The Bajio region in central Mexico is a key opportunity for its dense automotive clusters. However, other regions like the Baja California also offer extensive factory and supplier networks.
New foreign companies in the automotive space are establishing plants in Mexico, and this increasing demand for sophisticated, high-tolerance plastic automotive components represents an important opportunity.
Mexico’s economic numbers for 2019 show they imported nearly half a billion USD worth of capital equipment for processing plastics and related parts. Among Germany, Japan, and others, the United States was a primary trading partner in this sector. The main imports in this sector from the US include injection machinery, blow molding equipment, as well as parts for extrusion and thermoforming.
Manufacturers tend to prefer US extrusion machinery technology, opening up vast opportunity for US plastics suppliers in this particular niche – especially auxiliary equipment for plastics processing, extruders, processing automation solutions, blenders, etc.
Mexican production of plastics resins typically exceeds 4 million tons – primarily, but certainly not limited to PET, PVC, and HDPE. However, this does not meet current demand. Mexico must aggressively import primary plastic resins to keep pace with current demand in this sector. Over two thirds of these imports come from US suppliers, but the country also imports resins from Canada, Belgium, Portugal, and others.
US suppliers of plastic resins have a strong opportunity to supply OEMs in Mexico. Small US companies can find potential clients in the numerous small and medium sized manufacturers throughout Mexico’s industrial areas.
At approximately 58%, Mexico’s ratio of recycling plastic waste is higher than any other country in Latin America. Mexico’s exports of recycled PET and other resins are primarily manufactured by smaller recyclers. Larger companies typically ensure compliance with environmental and recycling standards by only producing for their own consumption. There will be greater demand in coming years for higher-purity and more advanced recycling technologies.
Mexico is leading the charge for a more circular economy. The country signed the National Agreement for the New Plastics Economy in 2019. And recent numbers show a high level of success in implementing its goals.
In spite of global market disruptions and changing consumption patterns in 2020, plastics manufacturing in Mexico seems poised to tackle these changing times and grow. The market proved itself resilient when, during an overall market downturn, plastics actually grew by 3%.
Due to an increased demand for packaging, sanitary, and other products that came of the recent health crisis, Mexico’s demand for plastics products is growing. However, in light of recent demand for more sustainable products and an increasingly negative stigma surrounding plastics, Mexico has responded with greater innovation and sustainability research.
Plastics manufacturing in Mexico is poised to lead the way for more sustainable technologies and improved recycling systems, thus providing a brighter future of the plastics industry. The numbers show a rich and diverse landscape for plastic-industry manufacturers who want to improve profitability and secure their place in this future growth.