Mexico's PU industry has strong ties to its northern neighbours as Simon Robinson found out at the recent UTECH Las Americas meeting in Mexico City.
With its commercial fortunes tied to the mighty US market for polyurethane products, Mexico leverages the added value its increasingly skilled workforce can bring to the products processed at its factories.
The nation is the third-largest producer of polyurethane components in the whole of the Americas after the US and Brazil, according to IAL Consultants, which makes it the second-largest in the USMCA trade block that also includes the US and Canada. And that is what counts. Baumer Area Sales Manager Pedro Osuna summed it up in a conversation at the the recent UTECH Las Americas event in Mexico City: ‘Mexico is a competitive location, because unlike [the larger PU consuming country] Brazil, it is outward-looking with good trade links to the US and Canada,’ he said.
Speaking to exhibitors and visitors at the show, it quickly became apparent that there is far more to the Mexican industry than a simple screwdriver operation where low-skill, low-cost employees perform basic operations.
Complex automotive parts, for example, will pass back and forth over the border several times during production, tying the countries more closely together. But for more simple products, such as mattresses, refrigerators and footwear, the fact remains that the US purchases a great deal of these products from Mexico, which, in some sectors, now is a bigger exporter than China.
Speaking at the sidelines of the show, Heberto Moreno, director of engineering plastics and polyurethanes for BASF in Mexico, said: ‘Mexico has become a global hub for refrigerator manufacturing. Its position will grow stronger over the coming years as manufacturing know-how increases and logistics improve.’
He said that about 80% of the country’s refrigerator production is exported to the US and Canada. ‘This is true in terms of both volume and value,’ he said, adding that US and Canadian consumers prefer much larger refrigerators to those in Mexico, with many Mexicans still shopping daily. ‘Frozen food is not in the culture yet, except possibly in the highest-income groups,’ he said.
Refrigerators are just one example. ‘There is a very tightly integrated infrastructure of companies which operate across the border with America,’ Moreno said. ‘Mexico may buy its polyurethane raw materials from US producers with large petrochemical complexes across the Gulf in Texas and Louisiana, but the products made with them may cross and recross between countries as semifinished products.’
‘Mexico is benefiting from deglobalisation, particularly in automotive,’ according to Alberto Melle, global segment leader for PU slabstock at Momentive. ‘It will be a long process to make products more locally and buy them from more local producers, but it will be like the JIT revolution in the later 1990s in manufacturing,’ he said.
Daniel Torres, general sales manager at cutting machinery company Fecken-Kirfel, said that Mexico is a direct beneficiary of US tariffs on goods from countries like China. ‘Mexico is attractive for businesses which have faced tariffs on Asian production,’ he said. ‘As well as this, it is becoming more attractive to produce more locally for the US.’
Saip’s local agent Antony Meroni described the Mexican market as a good one for the company. ‘We expect to supply more machines in the coming years because of exports to the US.’ One of the company’s recent highlights has been supplying a refrigerator line to Isocindu, a continuous panel manufacturer. ‘It was a very modern, very large line for the Mexican market,’ he said. Legislation for greater levels of insulation in Mexican buildings is driving growth in the rigid board sector, Moreno added.
Davide Bertinat, who works in sales for Cannon, said: ‘Wages are low, and taxes are favourable. Mexico is a good place to manufacture for the US, and we see new Asian companies moving in.’ The company employs about 20 people in Mexico and holds stocks of spares locally.
Bertinat said that his company’s main area of business in Mexico is in refrigeration, for international brands such as Whirlpool and Electrolux.
The market for refrigeration in Central and South America is growing, with a lot of products made in Mexico. The automotive market in Mexico is also growing, he said, and there are opportunities for new slabstock machinery. ‘It is excellent news that Mexico has gained inward investment following the pandemic,’ said BASF’s Moreno. ‘Supply chains are shorter from Mexico to the US than they are from Asia. Mexicans work hard, innovate and are good employees.’
Baumer’s Osuna said that the market for cutting machinery was good during the pandemic, and there was a boom in sales during the lockdowns. ‘Since then, performance has generally been good,’ he said. ‘People want to be comfortable at home, as well as in the office.’ He added that there are new players in the Mexican market, notably bed-in-a-box mattresses. ‘[This sector] came into existence in Mexico a couple of years ago and has been growing at 100% a year for several years,’ he said. ‘It is a challenge to traditional mattress makers.’
Melle from Momentive also believes this growing market provides a great opportunity for the polyurethane flexible foam industry, as this material offers a greater range of properties and flexibility in bedding application than steel springs.
‘PU foam can be compressed and rolled and, using the proper foam density and additives package, the final bed will fully recover,’ he said. ‘Additives and particularly silicone stabilisers play an important part in this recovery mechanism and that is why we have created a new portfolio of additives, called GeoCell, which are tailor-made for mattress-in-a-box applications.’ You can read more about these additives on page 27.
Lars Baumann, sales manager for the slabstock market at Hennecke, said that his company is now selling a wide range of machinery into the Mexican market, from small to large plants. ‘There is also a strong market in slab stock and mattress and furniture,’ he said. ‘Because of coronavirus, people stayed at home, and people bought new furniture.
The foam business grew, and our sales grew with it. There are new plants in north and south Mexico, and there are companies looking at high-tech foam with machinery to make it.’
Fecken-Kirfel’s Torres said that his company’s Mexican business is largely with local foamers. ‘We have seen all the comfort companies and those selling online doing very well over the past couple of years,’ he said.