by Carolina Londoño Greater investment in the painting industry, is one of the aspects that stands out from the balance made by the president of the National Association of Manufacturers of Paints and Inks, A.C. of Mexico (Anafapyt) and general director of the Comercializadora Jasaquim S.A de. C.V, Arius Zúñiga. Although he recognizes that several national and international problems directly affect the competitiveness of the Mexican paint sector, Zúñiga is categorical in stating that, despite the headwinds, the industry will emerge stronger. Good news
The manufacture of 480 million liters only in paints and coatings and the growth of the production lines of architectural and automotive coatings are the good news with which Anafapyt closed the year 2007.
Maintaining macroeconomic stability, which among other reasons allowed Mexico to have a controlled inflation, made the painting industry of that nation grow above the GDP that was in the order of 3.3%. With these figures, the president of Anafapyt shows that "we are doing a successful job in covering the needs that the country requires in the face of any economic situation that it goes through."
In the order of production items, Anafapyt is satisfied. In 2007, the volume of growth reached 4%, equivalent to 18 million liters only in paints. The lines that supply the Mexican construction sector, which is currently in a continuous process of growth, they also had good balance sheets the previous year. Architectural coatings, such as latex paints, grew at a rate of 5.5%, and wood coatings, 6%. "We take this as a reward for everything we have invested in scientific, technological and technical research," said Engineer Zúñiga.
Another area that grew rapidly during the previous year is automotive, which is one of the most attractive production lines for foreign investors. "The original coatings grew by 4%, something very significant for us and for our industry. The balance presented by this production item is so positive that thanks to this many foreign companies have been interested in Mexico to make new businesses. For example, the Ford Motor Company plans to make multimillion-dollar investments in Mexico, more precisely in the capital and the north of the country. Definitely, the automotive sector is an engine for the Mexican industry."
Manufacturers in trouble
Applications for the manufacturing sector are the ones with the least development in the previous year. Due to strong competition from Chinese products and the U.S. recession, this production item grew by only 1.5%, as Asians compete with very low prices and customers stop buying Mexican products to buy finished materials.
Regarding the Chinese issue, Zúñiga adds that: "we believe that we do not have much influence on the decisions of our customers, we can only offer them what they require and make them notice the offer in other countries, the technologies they use and in this way help them in their competitive commercial and technical development so that they can compete not only with Chinese products. but with other products imported from other countries."
And it is that on the manufacturing issue had already referred the engineer Rogelio Raya of Vitracoat, who affirmed that this sector is lagging behind in manufacturing coating processes. With respect to these statements, Zúñiga agreed, but said "it cannot be generalized. That's because our customers are offered the latest technology, and they're not ready to apply it. The technology, costs and quality of the Mexican industry are top-notch. Our paint developments can be compared to those manufactured in the first world, but the production volumes in Mexico are not comparative with countries such as Asia, and also making investments is outside their considerations."
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Lack of regulation
"High oil prices affect us directly, both in the costs of solvents and in the costs of chemicals and resins. This has had a negative impact on us since last year and for now is the main factor preventing our development as an industry."
Another of the negative factors seen during 2007 was the increase in unregulated competition, since this affects an unfair competition for the paint manufacturers. "Mexican industrialists are not against competition, on the contrary, it is welcome, since it invites us to improve our processes, to change what is necessary to compete within a fair market. What we want is for competition to be regulated so that we can compete on the same standards."
The decline in purchasing power in the Mexican population is another negative factor that Mexican painters take into account when talking about their weaknesses last year, because this affects sooner or later the lines of coatings that go to the public. In addition, Zúñiga emphasizes that the lack of public investment by the government "caused us not to reach the budgets we thought."
Exports
During 2006, the Mexican painting industry maintained a percentage of exports between 8 and 9% of total production, a figure that did not change in 2007. For 2008, the painter's guild does not dare to make calculations in the movement of these figures, since with all the setbacks in the world economy, it is possible that the numbers will change.
The countries to which the Mexican industry reached with its products were: the United States (its main trading partner), Central American countries such as Guatemala, Honduras, Cuba and Costa Rica and South American nations such as Colombia and Venezuela and for Asia, India.
The classification is by tariff item, and they are grouped on the basis of water, solvent base and special products.
Energy is expensive
According to Zúñiga, last year the Mexican painting industry employed 100,000 people. This figure is expected to be the same during 2008, maintaining the existing workforce and avoiding staff cuts. However, no job growth is expected for this year in the painting industry.
As for per capita consumption, Zúñiga speaks of figures of 5.2 liters per inhabitant in the Mexican country: "which shows us that we have a lot of growth potential, since in the United States 13 and 17 liters per person are handled. The manufacturing and painting sectors have a lot to do."
In energy costs, the president of Anafapyt is concerned about the high prices that must be paid. In addition to the fact that energy in the Aztec country is expensive, it is above the expectations of the region.
With regard to labor, although it is low, it does not represent an important item for paint companies, so it does not affect competitiveness.
In terms of taxes, due to the government's needs to increase revenue, a tax reform was recently approved for which heavy taxes must be paid: "The government has had an erroneous policy, because when it needs to increase tax collection it does so by increasing taxes on captive perpetrators. We would hope that in the future the informal sectors of the economy can collaborate to reduce the tax burden in our country."
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Growth expectations
The figures for this year are uncertain for Anafapyt. At the beginning of 2008, GDP was forecast at 3.8%, 4% in the construction sector and 3.7% in manufacturing. But with the changes in the US economy, the percentages would change drastically: it is mentioned that GDP would fall one percentage point than expected and reach 2.8%, the construction sector would be between 3 and 3.5% and that of manufacturing between 2 and 2.3%.
However, Zúñiga expects the construction sector to be the bulwark in the coating industry, added to the fact that Anafapyt is prepared to meet any type of technical and commercial demand that the sectors require: "As for the market, the news is bad, times are tough. But many times Mexican industrialists have gone through stages of inflation, contraction or recession and we have always come out ahead. Now we have the threat of the increase in raw materials and the recession in international markets, but we are sure that we will know how to handle it from the technical and commercial point of view, to offer our customers in a timely manner the requirements demanded by the country and thus be able to fulfill our function of giving added value to those who have to do with the painting industry in Mexico. xico".
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