Background on the Industry and Key Players
Querétaro, Mexico – Amidst a fluctuating business environment, primarily due to the United States’ tariff policy, the local plastics industry has experienced a 15% to 20% decline in purchase orders, according to Arturo Nava Guerrero, president of the Plastics Cluster of Querétaro.
Impact on Tier 1 and Tier 2 Companies
This reduction in demand has affected Tier 1 companies during the first quarter, while Tier 2 businesses are feeling the pinch in the second quarter. The first phase of the year has been marked by ups and downs for the industry, attributed to changes in tariffs announced by neighboring countries.
Automotive Industry and its Ripple Effect
The automotive industry’s demand has dropped, subsequently impacting production orders. The contracting market further exacerbates the situation, affecting all those involved in non-metallic components within the automotive sector. However, the aerospace sector continues to thrive and grow.
T-MEC as a Protective Factor
Currently, the Mexico-United States-Canada Agreement (T-MEC) serves as a safeguard for the industry, allowing businesses to maintain operations according to their projected plans. Nava Guerrero expressed optimism about the free trade agreement, stating that it provides a “breath of fresh air” for the industry.
Encouraging Factors and Future Opportunities
Despite these challenges, several factors are driving growth in the sector. One such factor is the increasing interest in nearshoring, with more projects materializing. Nava Guerrero mentioned that companies are approaching the cluster for assistance in attracting partners to manufacture products, aiming to move from simply producing parts to creating finished products that can be sold directly.
The cluster is set to receive a delegation from the United States next week to tour partner facilities and identify viable product development opportunities. They also plan to explore collaboration prospects.
Targeting Manufacturing Contracts
Nava Guerrero sees potential in large companies seeking manufacturing contracts and working to identify suppliers within the Mexican territory. The industry’s challenge lies in becoming more agile and absorbing the rising costs due to increased freight expenses, as orders previously stalled in Asia are now being reactivated.
Key Questions and Answers
- What is causing the decline in demand for Querétaro’s plastic industry? The primary reason is the United States’ tariff policy, which has led to a 15% to 20% decrease in purchase orders.
- Which companies are being affected, and when? Tier 1 companies experienced the impact during the first quarter, while Tier 2 businesses felt it in the second quarter.
- How does the automotive industry’s demand drop affect the plastic sector? The decline in automotive demand has led to reduced production orders, affecting those involved in non-metallic components within the automotive sector. However, the aerospace sector remains robust.
- What role does T-MEC play in supporting the industry? The Mexico-United States-Canada Agreement (T-MEC) acts as a protective factor, allowing businesses to maintain operations according to their projected plans.
- What encouraging factors are driving growth in the sector? Factors include increasing interest in nearshoring, with more projects materializing. Companies are also focusing on manufacturing finished products rather than just components.
- What opportunities does the cluster see for future collaboration? The cluster anticipates growth through manufacturing contracts with large companies and aims to identify viable product development opportunities with partners in the Mexican territory.
