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Business Opportunities in Mexico: Plastics Industry Diana Ramos - DIT Officer June 2017
Business Opportunities in Mexico:
Plastics Industry
Diana Ramos - DIT Officer
June 2017
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Key geo-strategic position
· To the north, 53 border
crossings to the USA
· To the south, Mexico borders
Central and South America -
emerging markets with which
it maintains growing trade
links
· Roughly the same size as
Western Europe
Mexico: Overview
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•11th largest economy
- GDP US$ 2,194,431 million
(2015 World Bank GDP ranking)
One of the world's top 7 economies by 2050
• Largest trading nation in Latin America:
Trades more than Brazil and Argentina
combined - 33% of the region´s trade and
60% of the region´s manufacturing sector
exports.
• 12 Free Trade Agreements covering 45
countries.
• Population over 127M, average age 26
• Mexico is the second largest economy in
Latin America.
Sources: Worl Bank, Goldman Sachs, OECD, ProMexico
Mexico: Overview
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• Overall Mexico ranks 38 out of 189 countries for
ease of doing business, making it the highest
ranked country in Latin America by some way
(Chile is next highest at 48)
BUT……….
• World Bank estimates that by reducing
corruption, GDP could increase by up to 8%
• Experts consider that improving rule of law will
encourage investment and growth
Attractive Business Environment
Sources: OECD, World Bank, Alix Partners
Mexico: Overview
Oil & Gas:
• UK Accessible value of £23bn
• Mexico’s deepwater fields started to be auctioned in late 2015.
• The liberalisation of energy is set to open up vast opportunities in Mexico’s
downstream petrochemicals segment. This will provide vital feedstock for
downstream producers of plastics and polymers.
• The Mexican petrochemical industry has been overdue for investment and has
had to rely heavily on raw material imports to meet its need for local production of
many chemicals.
• Mexico has an annual deficit of $18bn-20bn in the petrochemical sector. There is
still a deficit in ammonia, PVC, polypropylene, benzene and many smaller
derivatives. Those are the big opportunities for the future.
• BP and Shell are well placed to win licenses. Opportunities for UK plc across the
supply chain
• DIT organises several Oil & Gas trade missions throughout the year
Source: Oxford Business Group https://www.oxfordbusinessgroup.com/analysis/staying-power-new-downstream-capacity-can-help-
reduce-petrochemical-imports
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Mexico: High Value Opportunities
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Mexico: High Value Opportunities
•Airports
•Defence and Security
•Financial Services
•Education
•Healthcare
•Mining
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Automotive
• Mexico is the 7th largest exporter of light vehicles worldwide (3.6
million vehicles) and the 5th largest global producer and exporter
of heavy vehicles (191,000 vehicles)
• 21 of the major vehicle manufacturers: Light Vehicle Plants, and
Heavy Vehicle Plants have presence in Mexico
• +400 Tier 1 Plants, and +1000 Tier 2 Companies.
Autoparts:
• Mexico has more than 2,500 companies engaged in
manufacturing auto parts located in 19 states. There are 84 of the
top 100 autoparts companies in the world.
• In 2015, the production value of Autoparts was USD $81.4 billion
• Mexico is the primary supplier of auto parts to the United States
with a 33% market share.
Mexico: Key Sectors
Source: Promexico: Automotive Industry report 2016 http://www.promexico.mx/documentos/biblioteca/the-mexican-automotive-industry.pdf
and http://www.promexico.gob.mx/documentos/revista-negocios/pdf/abr-2015.pdf
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• 1st producer of soft drinks, and concentrated juice of citrus fruit in the world
(2015)
• 8th food processing country worldwide. In 2015, Mexico's processed food
industry produced USD $121,610 billion
• Dominant sub-sectors include baked goods and tortillas and meat products,
followed by dairy processing
• In 2015, Mexico received large investments in processed foods, specially
chocolate companies : Mars Group (to supply for the Latin American region) and
Mondelez International. Other large investments included Nestle Purina (pet
food) and Cargill.
Food Processing
Key Sectors
Source: Promexico http://www.promexico.gob.mx/documentos/revista-negocios/pdf/nov-dic-2016.pdf
Plastics Industry
in Mexico
Today, Mexico provides 2% of the world’s plastic production
and produces 5.3 million tons annually for a wide variety of
industries (2016).
The plastic industry is one of the most dynamic of the
Mexican economy, in 2015 it represented 2.5% of the GDP
and recorded a growth rate of 4.4%
84% of the total plastic production in Mexico is exported to
the U.S.
Mexico's PE, PP, PVC, consumption is 30kg per capita per
year, in comparison to 26kg in Brazil, or 8Kg in India.
Many foreign firms see Mexico as an attractive market but see
limits due to the lack of raw materials for plastics and
petrochemicals
Information retrieved from: https://www.export.gov/article?id=Mexico-Plastic-Materials-Resins
and https://www.gob.mx/cms/uploads/attachment/file/123808/Sector_Industria_Hule.pdf
Plastic materials/Resins
Almost 50%of plastic resins currently used by Mexico’s manufacturing sector is imported.
Mexico’s existing production capabilities are unable to satisfy current national demand.
Therefore, consuming sectors continue to rely on imports to meet their needs.
Two major players dominate Mexico’s plastic industry. First, the petrochemical industry,
which has two major resin manufacturers: one in Tampico (capabilities for PTA, PET, PE
fibers, PP, EPS and CPL) and another newer facility in Veracruz (manufacturing BPA free
LDPE and HDPE).
The 2016 commissioning of the Etileno XXI petrochemicals complex in Veracruz state, a
$5.2bn joint venture between Brazil’s Braskem (75%) and Mexico’s Grupo Idesa (25%), was a
crucial milestone for the much-delayed expansion of the industry.
The commissioning of Etileno XXI in Veracruz, represents the end of the monopoly of state-
owned Petróleos Mexicano (Pemex) over the Mexican petrochemicals industry.
The automotive and aerospace industries are attracting investments in newer plastic
technologies, like the recent FDI made in Salinas Victoria, Nuevo Leon, by a Japanese
manufacturer to increase Mexico’s ability to produce SKC polyurethanes.
Information retrieved from: https://www.export.gov/article?id=Mexico-Plastic-Materials-Resins
Plastic materials/Resins
Largest consumer segments for plastics
Industry Consum
ption
Food and
Beverages
48%
Consumer
goods industry
24%
Construction 12%
Aerospace,
automotive and
autoparts
6%
Electronics 6%
Agriculture 2%
Medical 1%
Other 1%
Source: https://plastico.com.mx/ Centro Empresarial del Plastico & PROMEXICO
Automot
ive &
Aerospa
ce
Industry
Recycling and shoes &
textiles, Agriculture industry
Medical &
Aerospace
Cluster
United States
Gulf of Mexico
Pacific Ocean
Guatemala
Belize
Packaging and
consumer goods
Automotive &
Manufacturing
Mexico: Consumer goods industry
• Mexico is 6th largest producer of appliances worldwide
• Mexico is one of the world's leading suppliers of household appliances.
• In 2015, exports were USD$12 billion, ranking the country as 5th globally
• Production includes: Refrigerators with freezers; Air conditioning
systems; Washing machines; gas stoves; vacuum cleaners; fans and
ventilators.
• In 2015, Mexico ranked as the 8th largest producer of electronics in the
world and 1st in Latin America.
• Local production includes: flatscreens televisions; microphones,
headphones and speakers; computers; and smartphones
13 Source: Promexico http://mim.promexico.gob.mx/swb/mim/Perfil_del_sector_electrodomesticos
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Largest consumer segments
Mexican Plastic Industry
Information retrieved from Centro Empresarial del Plastico 2015: https://plastico.com.mx/category/el-plastico/
Opportunities in the plastic market
• More high tech machinery is required as Mexico’s plastic manufacturers increase productivity
and there is an increse of per capita consumption.
• Most imports in Mexico in 2015 were in the areas of machinery and injection moulds.
• Mexico also imports over 50% of its needs in plastic raw materials (plastic resins)
• Low recycle rate for plastic: It is estimated that Mexico recycled only about 15% of total
production in 2015. Only 1.2 million tons were recycled from their total production of almost
5.3 million tons in that year.
Information retrieved from: https://www.export.gov/article?id=Mexico-Plastic-Materials-Resins
Other opportunity areas:
High-Tech Packaging. In the last several years, the Mexican plastic sector has seen an increase in
demand for of high-tech equipment used for processing and packaging products in the food and
beverage sector as well as for storage and supply of plastic resins.
Recycling. Almost 65% of Mexico’s recycled PET is sent to China where it is then transformed and sent
back to Mexico as synthetic fibers. This is a clear indication of Mexico’s need for recycling
technologies.
Mold-making and Tooling Materials. A growing number of international mold-making companies have
established operations in Mexico to supply their Mexican clients. However, there are still large imports
of materials and machinery.
Bioplastics. A key component of the new packaging trend in the Mexican food and beverage industry is
bioplastics. It will soon become a standard.
3D Printing. Estimates are that 3D printing will be the largest segment in the plastic industry by 2020.
Though few Mexican companies currently use this technology, its applications in the automotive,
healthcare, aerospace and defense will increase demand for their base component of polyamide
resins.
Information retrieved from: https://www.export.gov/article?id=Mexico-Plastic-Materials-Resins
Doing Business in Mexico
Challenges doing business in Mexico:
•open and competitive market, so be sure of your products unique selling points (USPs)
•takes time to build and maintain relationships with clients and distributors
•language barriers mean that interpreters may be required
•legal requirement to label products in Spanish
• VAT, known as IVA in Mexico, is levied on most EU goods at 16%, payable by the importer and can
be carried forward.
• Importation tariffs vary depending on origin of product and whether there is an applicable FTA.
Customs:
•Goods may only pass to and from Mexico at authorised locations. Goods must be presented to the
customs authorities together with the relevant documentation.
•There is a 0.8% customs processing fee charged by Mexican customs. This is based on the cost,
insurance and freight (CIF) value of the goods.
•If you need to ship goods over the value of USD 1,000, you need to use a customs broker to clear the
merchandise through customs.
•Mexico’s labelling requirements are often different from the EU’s. Special labels may need to be attached
to products going to Mexico even if the products are already labelled in Spanish.
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UK & Mexico
UK and Mexico trade:
British products have a significant presence in Mexico, although the UK’s
market share in goods imports into Mexico has decreased overall in recent
years.
Latest data for 2015 shows UK exports of goods and services to Mexico
totalled GBP1.96 billion
UK top exports to Mexico include:
•power generating machinery and equipment
•road vehicles
•medicinal and pharmaceutical products
•beverages
•essential oils and perfume materials
•organic chemicals
•industrial and scientific machinery
•insurance and pension services
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Policy and Prosperity work
Focus on:
•Regulatory and legislative reform
•Drafting Public Works and Energy Reform legislation
•Shaping Economic Competition and
Telecommunications reform
•Building capacity and introducing UK best practices
•Establishing detailed protocols and guidelines to
encourage transparency, due process, and local
competence
•Energy
•Financial Services,
•Good Governance/Rule of Law
•Smart Cities
Significant soft diplomacy campaign underpinned by
GREAT campaign in Mexico
This year the GREAT Campaign will focus on Innovation
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HUGE
COUNTRY
Cultural
Richness
A Hinge
State
With FTAs with countries ranging from
the US and Canada to the EU and
Japan, Mexico is one of the countries
more open to foreign trade in the World
Openness
A country of tradition and cultural
richness, Mexico mixes cultural traits of
European and Amerindian descent
Mexico is a bridge between two regions:
North America and the huge cultural
continuum that is LatAm.
It reunites characteristics
of both of them
Mexico’s almost 2 million square km.
grant the country access to numerous
natural resources as well as a 9,330 km
border with the US
Useful information
PROMEXICO - http://www.promexico.mx/
National Association of the Plastic Industry: www.anipac.com
Manufactura Magazine: www.manufactura.mx/industria
Ingenieria Plastica (online magazine): www.ingenieriaplastica.com
Centro Empresarial del Plastico https://plastico.com.mx/
PLASTIMAGEN MÉXICO® 2017 http://www.plastimagen.com.mx/2017/en/
Doing Business in Mexico:
https://www.gov.uk/government/publications/exporting-to-
mexico/exporting-to-mexico
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The British Plastics Federation is organising the British
Pavilion at Plastimagen with DIT grants of £2,500
