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Insight

Rubber Compounds Soon to Compete with TPE Alternative

Mon, 09/01/2014 - 16:44

The potential of Mexico to act as a trade bridge, for all types of companies, is nicely typified by the reflection of HEXPOL Compounding, a leading global supplier of rubber and its derivatives. “HEXPOL Compounding has placed a big bet on Mexico. We are here to support the Mexican industry, but we are also looking ahead. The need for rubber will grow across Latin American markets, and Mexico is the perfect platform to support domestic growth as well as to supply the US,” explains Saúl Reyes, Managing Director of HEXPOL Compounding.

“The product line in Mexico is focused on rubber pieces for almost the entire car,” explains Reyes, but he already envisions a future where the Mexican automotive sector begins to look at alternatives for rubber. Other materials like TPE compounds, for which HEXPOL Compounding already has a division in Europe, will soon be able to compete on an even keel with rubber. “Our TPEs are beginning to have a presence in the NAFTA region and we already have some distribution in Mexico. Eventually, as we grow and increase our market share, it might well make sense to start TPE manufacturing in the region,” explains Reyes. However, he adds that the development of new technologies like TPEs does not mean that rubber will begin to disappear. The company’s plant in Queretaro came about when HEXPOL Compounding bought a local rubber leader that had been in operation since 2000. Given this company’s market presence for rubber products, HEXPOL Compounding kept its brand name alive in some of its products. “Whenever a company becomes part of our family by bringing a brand that enjoys good reputation and value, we honor that and we do not try to replace the name,” states Reyes. “We only change the brand to our own when doing so can bring more added value.” That brand name recognition is the reason HEXPOL Compounding chooses not to carry out major marketing campaigns to attract customers among the OEMs, although it already works with several of them. It supplies them and other suppliers with a wide range of rubber applications, including engine and chassis vibration mounts, treading and retreading solutions for tires, fuel emission components, and hydraulic and radiator hoses. “We build a reputation upon the performance and quality of our products, which has given us important exposure to the automotive community in Mexico. Our systems are aligned to what the automotive industry is expecting from Tier 2 or even Tier 3 vendors. We choose to focus on the quality and consistency of our products, as that is what builds our reputation,” explains Reyes.

HEXPOL Compounding’s two production facilities in Aguascalientes and Queretaro make Mexico its second largest base of operations, jointly with China and behind the US. The location of its two plants in Aguascalientes and Queretaro is no coincidence. Their proximity to Mexico’s main automotive hubs makes it much easier to bring new technologies and products to the market. This geographical advantage combines with HEXPOL Compounding’s focus on internal R&D. “We know that in the automotive industry, R&D is essential for a company to survive. We are constantly investing in R&D and are working on new products to meet market expectations. Synergies with key companies in the sector guide our R&D, and based on interaction with OEMs, we can make products that adapt to specific applications the customers need,” states Reyes. Importantly, HEXPOL Compounding has actively begun R&D in Mexico itself, a process that is being supported from its labs in the US. A shared database exchanges key information between different sectors while symposiums allow HEXPOL Compounding to maintain its global technological vision while ensuring local tailoring for its products in each market.

The future for HEXPOL Compounding in Mexico is clear. Rather than focusing solely on expanding its client base, it also wants to develop stronger relationships with certain valued customers. “We do not just want to focus on big OEMs. Some of our customers started off buying a few kilograms per month and they are now big players in the market. They have become key links in the Mexican automotive supply chain and are strategic vendors for OEMs,” says Reyes. In this line, it has triggered a strong campaign to approach new investors and help them come to Mexico. Reyes has been in the US and Europe giving presentations about Mexico, not only to sell the HEXPOL Compounding brand but also to attract investors. “A lot of foreign companies are willing to invest in Mexico and this number will only grow. The business opportunities in Mexico over the next decade are going to justify the direct investment made here by companies like us,” states Reyes. Given this potential, HEXPOL Compounding is betting on three mainstays of the Mexican economy: automotive, oil and gas, and mining, as well as keeping its eyes set on Central and South America. For the moment, however, Reyes says the priority is preparing for new launches in the Mexican market.