Where is Evonik seeing potential growth in Mexico?

We continue focusing and further developing our specialty chemicals business, which is crucial for us as we engage across 15 active business lines in the Mexican market. We aim to meet clients' needs predominantly in the manufacturing and production sectors. In this context, we are witnessing significant growth driven by the expansion of our clients here, alongside a wave of new companies investing and expanding under the framework of nearshoring. 

How does EV development impact Evonik's market strategy within the Mexican automotive sector?

Mexico is set to become the world's third-largest producer of automotive parts sooner than expected. In terms of production, Mexico is currently producing approximately 4 million units annually. Additionally, Mexico is emerging as a key player in the automotive sector's transition to electric vehicles (EVs). This extends to the production of automotive parts and to becoming a producer of EVs, and the specialty chemicals segment can provide solutions for this transition as a natural vehicle to secure this transition in the industry. Many companies in Mexico are repurposing their production assets to meet the needs of EVs, alongside new investments and expansions by existing companies.

Probably between 20% and 30% of our total sales are directed toward the automotive industry, but what is particularly noteworthy is the focus within Evonik on developing new products and technologies for EV transition. This includes advancements in paints, inks, coatings, high-performance polymers, polyurethanes, and their respective additives, which are crucial, for example, for insulation due to the temperature considerations arising from battery use.  

What is Evonik's Next Generation's focus on sustainability and new talent acquisition?

Next Generation focuses on new technology products, whether existing or co-developed, to meet our clients' needs and address specific challenges in their production processes or final products. From a sustainability perspective, we approach this through two concepts: "footprint" and "handprint. "Footprint” represents our classic approach to developing more sustainable products within Evonik's operations. "Handprint" refers to the positive impact our products and technologies have when applied, supporting our clients' sustainability agenda. 

From an internal perspective, we also need to be more attractive to younger generations as we compete with other industries where topics like digitalization and new technologies align with their aspirations. Our goal is to conduct a holistic analysis to incorporate new advancements and leverage them to attract and enhance the sustainability and efficiency of our products while we drive talent development and innovation within the chemical industry. 

What are the main challenges in making non-fossil-based products more competitive?

One of the main questions is, "Who will take the bill for all of this?"  I believe that we need to shift our mindset away from focusing solely on the lowest cost to considering the best overall costs. Historically, our sector lacked collaboration among different stakeholders across the value chain. However, today, under a serious sustainability agenda, the more stakeholders understand the impacts of our actions and how we conduct business, the better we can develop and market solutions aligned with the end consumer's needs.

What is your market analysis for the upcoming months?

The North American market has proven to be more resilient than anticipated. Recession concerns did not materialize. Mexico continues to drive a robust export and business development agenda in manufacturing, personal and home care products, and appliances, among many other sectors. 

Looking ahead, the second half of 2024 will present significant logistical challenges in terms of cost and efficiency. We are facing unprecedented simultaneous disruptions affecting this segment, such as conflicts in Ukraine and the Middle East and climatic challenges in the Panama Canal. These situations underscore the importance of our relationship with service providers to improve efficiency regarding economic KPIs and how we can collaborate effectively with our customers.

2024 was an election year for Mexico, something we welcome with optimism since they view the chemical industry as a crucial and indispensable vehicle for the country's development. The upcoming US elections also form part of our closely monitored political agenda. This political landscape is expected to positively impact the solid North American bloc comprised of the US, Canada, and Mexico, which operates like a closely integrated entity where economic and industrial policy initiatives in any of these countries positively impact others.