"We are observing a trend of reshoring manufacturing from China into Mexico. That trend has created new demand in the chemicals and plastics arena and we are seeing the benefit of that."
Nexeo Plastics recently became an independent entity after many years as part of Nexeo Solutions. How did this change come about and what are the benefits?
In 2018, Univar acquired Nexeo Solutions, combining companies to become Univar Solutions. Prior to the acquisition, Nexeo Solutions had three lines of business: plastics, chemicals and environmental services. The revenue of Nexeo Solutions was US$4 billion, with half of it coming from plastics. Soon after the completion of Univar/Nexeo Solutions deal, the plastics business was sold to One Rock Capital Partners, a private equity firm based in New York. Now, Nexeo Plastics is an independent, privately owned company with no further connections to Univar Solutions.
One of the advantages of this change is we now have a singular focus: to grow our plastics business. Everything we do today is aligned to our core strengths in plastic distribution. Compared to our previous corporate makeup where we shared resources with several business units, today, all investments, campaigns and training now focus on our core business. With the backing of new ownership and a fresh corporate perspective, we are making every effort to accelerate growth and gain market share.
Distribution in Mexico is a highly fragmented market space. There is a lot of room for consolidation in the industry and significant opportunity to continue to add value to supplier partners and for our highly fragmented customer base, which is mixed between multinational, heavily export oriented enterprises and family owned businesses that service the local market.
Are there specific opportunities that you are finding particularly promising?
We have learned a lot in the last few months since COVID-19 began. Mexico has a strong maquiladora industry that continues to grow and I believe the trade war between the US and China over the past 18 months is a big benefit to Mexico. In fact, we are observing a trend of reshoring manufacturing from China into Mexico. That trend has created new demand in the chemicals and plastics arena and we are seeing the benefit of that.
Our business was heavily impacted in the second quarter of 2020. Sales in Mexico were down because of an automotive industry downturn. This is a large part of our business and one that suffered during the height of the pandemic. Fortunately, we were able to offset that slowdown with growth in demand for plastics with healthcare applications. Another trend that has helped us continue to grow has been the increase in demand for packaging, as COVID-19 has driven an increase in single use disposables as well as e-commerce.
Within the packaging space, does Nexeo Plastics have a particular niche?
We certainly expect to see more infrastructure for packaging, but we also see demand for more specialized packaging—that is where Nexeo Plastics is best positioned. Since Nexeo Plastics Mexico started its operation in 2011, we decided to focus our efforts into specialties rather than commodities. We see a growing trend of more specialized products like nylons or copolyesters that go into multilayer films. We are also pursuing segments in flexible packaging and we are well positioned to participate in those markets.
What is your final message?
Products and materials is just the beginning with us. Our ability and expertise from a technical standpoint adds tremendous value to customers and suppliers alike. We have a robust technical group that understands customers’ goals and we help them innovate and launch projects. Additionally, we’re committed to unparalleled service at every point along the transaction. From sales to customer service to trucking and delivery, we’re leading the way in instilling confidence in plastics distribution.
As a global distributor, we’re available where you need us to be. Whether its China, Europe, the US, Canada or Mexico, our network and people are ready. As an example, our tech service in Mexico recently travelled with customers to Korea to approve a tool before kicking off the project and production in Mexico. We partner with our customers and invest in them in that way. We innovate together with our suppliers. There’s nothing better than being a part of your customer’s success story.