Cultural ties, commerce, and a common border inextricably link the U.S. and Mexico, but while the most recent slowdown in the states was felt within the Mexican plastics manufacturing sector, the overall impact of the 2008-2009 slowdown was less acute, suggesting a decoupling of sorts is underway.

"I think Mexico is now in a very different position than in the past in many ways," explained Rafael Villaseñor, manager of project engineering and sales at China Plastic Machinery SA de CV. Villaseñor, whose company represents the Chinese injection molding machine manufacturer Haitian in Mexico, said his country still depends on the U.S., but "in the past, if the U.S. was down, it would push Mexico into the floor." Villaseñor and others shared their views on the Mexican market with PlasticsToday during the recently completed Plastimagen (Oct. 4-7; Mexico City).

Plastimagen 2011

Alexander Kramer, technical manager at Avance Industrial SA, the Mexican sales and service representative for Sumitomo Demag, Frigel, and Motan-Colortronic, noted the symbiotic relationship between the U.S. and Mexico, historically driven by the fact that a huge proportion of Mexico's exports end up with their neighbor to the north, but added that domestic consumption is growing into a counterweight to the American consumer.

"The Mexican market is very influenced by the U.S. market," Kramer acknowledged. "We're directly affected if the U.S. slows down, and 2009 was very difficult, but fortunately, the consumer market inside Mexico wasn't that bad." The automotive and electronics markets, with manufacturing mostly in the Northern maquiladora region, were more impacted during that time period, Kramer said.

KraussMaffei, which has a long-running presence in Mexico, catering to the higher end of the local injection molding, extrusion, and polyurethane machinery sectors, has seen a similar increase in the average Mexican's buying power, according to Hector Moreno, KM's director general in the country, but there's still a long way to go.

"Our economy is linked to the states," Moreno said, "but I think that the local economy is growing. That is the challenge the government faces; we have to have less poor people."

Mexican mom-and-pop molders

While the automotive, electronics, appliance, and technical molding markets dominate northern Mexico, with multinational OEMs setting up production, the southern half of the country is a burgeoning supplier to the everyday needs of the country's 110 million people. Noting that Mexico has the highest per capita consumption of Coca-Cola in the world, Avance's Kramer said the local market for preforms, caps and closures is huge, adding that the "consumer goods market is also interesting."

That large consumer market is drawing investment from all around, including Europe and Asia, according to Villaseñor, but it's also creating opportunities for Mexican entrepreneurs, with mom-and-pop-sized shops sprouting up in the country in the same manner they did in the U.S. in the '50s, '60s, and '70s.

"I have a friend who wants to buy a machine because it's reachable," Villaseñor said, noting that suppliers like Haitian that offer a lower price point than many North American and European counterparts have a distinct advantage. "I think Haitian is in a very good moment in Mexico." Very good indeed: in 2010, Haitian sold 122 injection molding machines in Mexico. At Plastimagen, the company was already above 150 sold with the entire fourth quarter in front of it.

NAFTA nearly 20 years on

Since the implementation of the North American Free Trade Agreement (NAFTA) in 1994, Mexico's share of U.S. imports has nearly doubled from 7% to 12%, while its share of Canadian imports has doubled to 5%. In 2009, the country's gross domestic product (GDP) contracted 6.5%, according to the CIA World Factbook, as demand for exports dropped, asset prices fell, and overseas remittances and investment declined. The Factbook noted that GDP rebounded in 2010, growing 5%, with exports, particularly to the U.S., leading the way, while in its view domestic consumption and investment lagged. In 2010, the country's top trading partners were the U.S. (60.6%), China (6.6%), and South Korea (5.2%).