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Mexico Has Unique Opportunity to Maximizing Nearshoring Potential

Martín Toscano - Evonik Industries de México


Rodrigo Andrade By Rodrigo Andrade | Journalist & Industry Analyst - Wed, 02/22/2023 - 12:48

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Q: The company motto is “leading beyond chemistry.” How does Evonik strive to play a leadership role in Mexico?
A: We may not manufacture tires, mattresses, medications, or animal feeds, but Evonik is part of all of those products and many more. While we often contribute only small amounts of material, those contributions are precisely what make the difference. That is because Evonik products make tires fuel-efficient, mattresses more elastic, medications more effective, and animal feeds healthier. That is what specialty chemicals are all about. So, Evonik specializes in creating a better life for everyone through 15 business lines active in Mexico. Our products are used across multiple market segments, including food, pharmaceuticals, personal care, construction, automotive, aerospace, construction and oil and gas. We strive to positively impact people’s everyday lives through a strong focus on sustainability, reducing our carbon footprint while providing sustainable solutions to our customers through our products and technologies.

Q: What are the key factors that Mexico must address to maximize its nearshoring potential?
A: Demand remains strong in Mexico because the chemical industry is a key player in every manufacturing sector in the country. There is no secret that automotive, aerospace, agriculture and food, appliances, and other industries can only develop with a robust chemical industry behind. However, the lack of raw material supply from petrochemicals, the energy prices, the much needed investments in infrastructure i.e. for natural gas transportation and supply chains, the challenges to increase funds for RD&I to co-create more value along the chemical industry and the lack of the right legal frame and a more business friendly environment, are motivating significant uncertainty and additional challenges to the industry.

We need to reimagine the chemical industry in Mexico to support an existing market with enormous growth potential due to manufacturing, to benefit from the geographical position of the country, the eventual access to competitive raw materials, abundant renewable resources and competitive and well educated local talent pipeline.

Mexico is an open country with numerous free trade agreements, including a direct free trade agreement with the EU. For example, Germany is Mexico’s largest trading partner in the EU and Mexico is Germany’s largest business partner in Latin America. This openness, combined with the access to transportation through the Pacific, makes the country extremely attractive to businesses seeking access to global markets, such as Asia and Central and South America.

Q: Why should Evonik Mexico be the partner of choice for companies seeking to relocate their operations to Mexico?
A: Our facilities in Mexico are part of the North American platform, which is the largest for the company outside of Germany. Thanks to this platform, we have built a strong relationship with our clients and created greater added value by selling solutions rather than just products. This relationship with our customers gives us the opportunity to closely participate in the value chain, including in innovation, R&D and applied technology.

We are also taking advantage of the increase in innovation and R&D activities in Mexico. Thanks to our catalog of products and services, we can secure our participation in the development of new products, technology and applications. Our presence across the different stages of the supply chain allows us to be involved at an early stage in the innovation process through diverse industries.

Q: What is the role of the company in enhancing sustainability in Mexico’s automotive industry?
A: Providing high performance plastics and special chemistry, the global automotive industry is one of Evonik’s major markets. Our products can be found in every automotive application area: in paintwork and lightweight composites for the body, friction reducing plastics and lubricants in the powertrain, components for 'green tires' in the chassis and in the interior, you can feel the benefits of Evonik’s solutions in the seats, steering wheel or dashboard. In Mexico, we collaborate in the automotive industry through multiple business lines, including high-performance polymers, silica, silanes, crosslinkers and coatings, among others. We have a multisectoral approach to the automotive industry, since we work with OEMs, Tier 2 and Tier 1 companies. This approach grants us better understanding of our role along the value chain, allowing us to co-create with customers in a more efficient and positive way.

Q: How can specialty chemicals help improve road safety and which roadblocks should be removed to capitalize on their full potential?
A: Road safety is essential to the Mexican automotive industry and specialty chemicals will play a critical role in this regard. High-performance polymers, flooring solutions,  concrete repair and restoration, epoxy additives and polyurethane sealant systems, durability of concrete structures, among others, are just key elements in this sector. As the industry continually explores new and innovative ways to improve road safety, it is just a matter of time before the construction industry and government turn to chemicals.

But here, again, the lack of clear legislation and guidance from the authorities are among the main challenges. Other regions, such as the EU, have taken the lead in implementing sustainable solutions in various market segments, highlighting the need for clear guidelines and regulations to fully capitalize on the potential of specialty chemicals for road safety.

Q: How will you measure Evonik’s success at the end of 2023 and if you could achieve one specific goal, what would that be?
A: Our primary goal is to be a leading player in specialty chemicals and to continue running a safe, healthy and well-equipped organization in Mexico. This will secure the continued development of our business in a sustainable manner, which is also a priority for us. We aim to produce concrete and realistic solutions that address the new trends and requirements from the industry and society, particularly regarding sustainable products and services. The success of Evonik Mexico in 2023 will be measured by its ability to fulfill these goals while continuing to be the leading company in specialty chemicals.

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