Region/Countries: Mexico, North America Industry: Manufacturing, Other Date: February 2017

Why this is important to Wisconsin businesses: With declining domestic production of inputs, the growing industry relies on imports.

Due to the versatility of its products, the plastics industry is a far-reaching industry with many applications. This adaptability results in sustainable growth despite the recent economic uncertainty. According to the National Institute of Statistics, Geography and Informatics (INEGI), the plastics industry represented 2.5 percent of the manufacturing GDP by 2015. The National Association of Plastic Industrialists (ANIPAC) has estimated Mexican consumption of plastics at 5.5 million metric tons for the same year.

According to ANIPAC, the plastics sector invested an estimated $1.8 billion during 2016. Industry leaders are not concerned about the recent decline in oil and petrochemicals production in Mexico, since most inputs and consumables for plastics production in Mexico are imported, largely from the U.S. The challenge facing the industry now is how to replace those imports with domestic production. In fact, an economic factor affecting the industry more than the decline of domestic production of oil and petrochemicals is the sharp currency devaluation in the last two years, estimated at 25 percent.

With regard to international trade, the U.S. is Mexico’s most important partner, with 85 percent of U.S. plastics exports (estimated at $5.7 billion) going to Mexico and up to 64 percent of Mexico’s total plastics imports ($12.5 billion) coming from the U.S.

In Mexico, the plastics industry has two major components. One is the oil and petrochemical industry, manufacturing resins for raw plastic production; the other is the industry that produces and forms plastics products. In Mexico, oil and petrochemical companies manufacturing basic resins are fewer than 20, among them the large state oil company Pemex (currently restructuring and privatizing) and other firms such as BASF, Mexichem, Indelpro and Dynapro. Production of these resins and petrochemicals is largely focused on the states of Tamaulipas and Veracruz.

On the other hand, companies molding and forming plastics products are plentiful in Mexico (estimated at 2,700, most of them small and midsize companies). These companies are spread far more evenly across the country: the states of Nuevo León, Jalisco, Querétaro, Coahuila, Baja California, Puebla, Sonora and the Mexico City metro area are increasing their demand for plastics products. These are also the states that harbor manufacturing plants of plastic-related industries: automotive, electronics, aerospace, food and beverage processing, etc. Notably, it is estimated that around 50 percent of total companies making plastics products are in the Mexico City metropolitan area.

As mentioned, Mexico consumes an estimated 5.5 million metric tons of plastic products per year. The industry sectors with the greatest demand for plastic products are packaging (around 48 percent of total consumption), construction and building materials (12 percent), the automotive industry (7 percent), the electrical industry (6 percent), agriculture (2 percent) and medical-related industries (1 percent).

According to the INEGI, the total number of people employed in the manufacturing of plastics products reached 157,200 people in 2015, an increase of 6 percent over the previous five years, representing 4.6 percent of all manufacturing employment. The largest subsectors are the manufacturing of automotive components (21.4 percent) and the production of plastic bags for multiple uses (14.2 percent). Also according to INEGI, production of plastics industry manufactured goods rose 31 percent during the five-year period leading up to 2015. The subsectors that accounted for the largest shares were, again, the production of plastic automotive components (26 percent) and the manufacturing of plastic bags for multiple uses (20 percent).

The fact that, despite plastics used in the automotive industry accounting for only 7 percent of the total consumption volume, this subsector accounts for 26 percent of total production monetary value and employs 21 percent of the workforce signals that plastics for the automotive industry are high value-added products and integral to the current boom in Mexico’s plastics products industry.