Support for Local Manufactures Will Boost Industry GrowthBy Alessa Flores | Thu, 07/02/2020 - 15:00
Mexican companies working in plastic or metal mold injection should look for ways to create differentiating solutions and services if they are to break into a market that is dominated by imports, says Jorge Ayala, Director General of Evolución en Moldes. “Approximately 95 percent of the molds are imported from China, the US and Portugal, while only 5 percent is provided by local manufacturers.” Ayala points out, adding that, “the molding industry in Mexico has been estimated to exceed US$8 billion and will continue to develop in the years to come."
Evolución en Moldes has 49 years of experience in plastic and metal mold injection. The company is also a founding member of the Mexican Association of Manufacture of Molds and Dies (AMMMT). In the last decade, nearly 50 percent of molds were imported from the US, but now the highest-quality molds come from other countries, such as Portugal and Canada. Today, Chinese and Korean molds, have 26 percent of the market, and their fundamental advantage is cost, where the price of the primary raw material, steel, is a significant variable, according to AMMMT.
"The large percentage of multinational players and the entry of Asian companies are increasing competition, as the latter offer inexpensive rates, while the former have brand recognition in the market. Nevertheless, there is broad room for growth and opportunities in the automotive supply chain for local manufacturers,” Ayala says. AMMMT expects local manufacturers will represent between 40 and 50 percent of the country’s supply chain by 2030.
Ayala believes that local manufacturers need external and internal support to grow their presence in the market. “Internally, companies need to improve their differentiating factors such as quality and delivery times, while externally, we need authorities and financial stakeholders to develop more economic arrangements that assist local manufacturers in embracing 4.0 technologies," he says. Evolución en Moldes’ strategy has been to purchase new technologies over time. The company has also adapted to the market's requirements, which are larger molds, by increasing its processing capacity.
However, local companies cannot do it alone; they require help to grow. “Strategic alliances are important for companies that are looking to grow their capacity and increase their competitiveness against multinationals. Partners can make a significant difference when companies are trying to grow, expand or enter a new market,” Ayala says.
Evolución en Moldes’ own experience highlights the necessity of smartly searching for key partnerships. Choosing the right partners has helped the company grow to a point where its client portfolio now includes SMR and Valeo Plastic Omnium. “When looking for partners, companies need to understand that the biggest players are not always the best option. The best partner has similar size and structure, as well as a similar vision for growth,” Ayala says.
Ayala believes that an important strategy to help local companies grow as providers to the industry is unity among key Mexican stakeholders. “The creation of the National Committee for the Production of Molds, Dies and Tooling is an example of how Mexican suppliers are coming together to grow and strengthen their presence in the automotive supply chain. The committee will help SMEs to develop talent, shorten the technology gap, foster cooperation, foster partnership and clusters and increase the promotion of local players. The faster local players can close the gap with the multinationals, the easier they will become important players in the automotive supply chain,” he says.
Ayala says the sum of local and organized efforts will translate into benefits for everyone. “If local players come together to improve their practices and strengths as an organized group, this will translate into a bigger chance to substitute imports of molds with locally produced alternatives,” he says. "It is going to take time but a group of companies can do much more than many individual players."