"Although demand has been incredible and we are in a seller’s market, there have been also many challenges such as scarcity of materials and logistics deficits, which have impacted prices.”
PromaPlast celebrates its 25th anniversary in 2021. How has this landmark year been for the company?
Business has been extremely good for PromaPlast over the past months, and 2021 has been a great success, with a lot of tailwind from 2020. Although demand has been incredible and we are in a seller’s market, there have been also many challenges such as scarcity of materials and logistics deficits, which have impacted prices and therefore the possibility of doing business. Downstream, for our customers, this market has not been easy as they have been impacted by price increases which they have had difficulties passing on to their supply chains. PromaPlast is celebrating its 25th anniversary in 2021, and we are pleased to do so while having a record year in sales.
A high percentage of all PromaPlast’s sales go into the footwear and automotive sectors. To what extent have these industries rebounded in 2021, and which industries have shown strong demand?
Both the footwear and automotive industries have rebounded, but have not yet recovered to pre-pandemic levels yet. The Mexican Automotive Industry Association (AMIA) recently published figures which showed that vehicle sales and production in Mexico for September 2021 were down against sales and manufacturing figures of August 2021 and September 2020, demonstrating that the automotive industry is still struggling, partly due to a lack of raw materials such as semiconductors.
On the other hand we have seen great demand coming from the packaging industry. We have also broadened our focus in compounding areas, and we are starting to focus more on wire & cable. All these diversification efforts have brought positive results.
What are Mexico’s main advantages for chemical companies?
Mexico’s population is still very young and the internal market continues to grow. We have not been able to take the market to the potential it could and should have, but despite everything, the internal market continues to offer business opportunities. Mexico’s geographical location is an advantage, and the country is a great platform to supply to the ever-growing US markets. Although there are many things that still can be done to make Mexico more reliable and attractive to investment, and sometimes political rhetoric does not help this, it is notable the government has respected every free trade agreement.
Why do you think there are many chemical distributors in the Mexican market?
The reason why there has not been consolidation in Mexico is because end-users, transformers and consumers are still very much atomized. To serve these small companies, you need a number of small distributors. Distribution also continues to be a very important channel for large producers serving the Mexican market. To stay ahead of competition, PromaPlast focuses on being close to customers and meeting their requirements. We play a key role in relaying market demand and needs to producers.
How have you seen the topic of sustainability grow in relevance in recent years, and how has this influenced PromaPlast’s product portfolio?
We have seen significant pressure from society in general against plastics, despite increased demand. Sustainability is a focus for PromaPlast, and by listening to market demands we have reinforced our portfolio of solutions to be biodegradable and facilitate the recycling possibilities of our customers.
Mexico’s National Association of the Plastics Industries (ANIPAC) has made great advancements in moving the plastics industry in Mexico towards becoming a circular economic sector. The Association has also done a tremendous job in educating the market through media presence and is making it visible that the plastics industry has a focus on sustainability and preserving our planet for generations to come.
PromaPlast has ambitious targets in the next three years. Where do you see the best avenues for growth?
PromaPlast will continue to grow its existing product lines organically as there is still a significant amount of cross-functional product growth that we can exploit. There is still potential for geographical growth in Mexico, and we also want to expand our presence within the US. The company would also like to expand its specialties product portfolio which will assist us in meeting targets, due to interesting margins in this area.