Martín Toscano, President & General Manager, Evonik • Interview
Which business segments would you like to have a stronger presence in?
We strive to become a greater partner for segments where we already participate. One is in agriculture, for which we have products and technology that we are already offering. Agriculture shows amazing potential in Mexico, along with the automotive sector. They are two fast-growing segments in Mexico, and we have a key role to play there. Personal care is also an interesting market with growing sales. There are also opportunities in the protein business and animal nutrition, since Mexico plays an important role globally in protein production. Another area of opportunity is in activities connected to sustainability in energy and waste treatment. We have multiple projects in the energy sector, and we are engaged in dealing with the topic of plastics and chemical recycling in support of the circular economy strategy. Biogas is another topic we are discussing here. We are continuing our work in wastewater treatment. Now, it is time to materialize the country’s goals and see how we can help. Thus far, we have been talking about potential and how important it is to see it in Mexico; however, it is time to take a more hands-on strategy. As a specialty chemical company, we play a leading role and have a moral and social obligation to drive the necessary changes for a more sustainable business in Mexico.
What factors are behind Mexico’s resilience in the export market?
It has an interesting combination of exports. There are certain industries with extremely strong ties to export markets, not just traditional ones. The automotive industry was in the “driver’s seat” for many years. We also see significant growth in the aerospace sector, as well as agriculture and other segments with increasing exports and thus a stronger role in the global economy. Additionally, there is a growing middle class in Mexico driving the economy and consumption. Many of our customers are connected to this middle-class growth in the local market.
Why is it important to establish closer ties between the chemical industry and the new administration?
It is important that the chemical industry, through the Chemical Industry National Association (ANIQ), wants to establish a closer relationship to the new administration and discuss opportunities in the sector and market that benefit the people of Mexico. The chemicals industry is growing in Mexico, though production has not caught up due to local constraints. That means we continue relying on imports. Although we have the capacity, it is not utilized, mainly because we lack access or supply to key elements and resources such as natural gas or raw materials from the downstream petrochemicals industry. But the industry is committed, and ANIQ wants to support local production and satisfy needs by producing locally; however, we need to align with the current administration further to find a way to team up and work together for a sustainable chemical industry in Mexico and create good impact on people’s well-being.
For Evonik, bringing new capacities and production to Mexico in specialty chemicals depends on the current raw materials supply and local infrastructure, which is still not there. For the time being, we will focus more on relying on imports that we bring from Europe, the US, and all other global assets from Evonik Industries, and eventually find ways to add value through local manufacturing or teaming up with local players for the production of products and technologies. There is capacity installed and an industry keen to support that growth and demand in Mexico; however, we rely and aim on consolidating a stronger relationship with the authorities, Pemex, and other suppliers in order to be able to run sustainable production and businesses in Mexico. At the end of the day, that will give us the necessary competitive advantage to motivate the private sector to continue investing and remain committed to Mexico. ✖
“The chemicals industry is growing in Mexico, though production has not caught up due to local constraints.”
What are the main reasons behind Dow’s success in Mexico?
Our 60-year story in Mexico is founded on transforming ourselves, because the markets are never stagnant. At Dow, continuous changes in infrastructure, automotive, construction, packaging, and sustainability challenges present great opportunities. Our expertise will put us at the forefront of these issues. The market is currently characterized by the growth of the middle class and its increased consumption. Based on this, the automotive and manufacturing industries, including oil and gas, have been the great pillars of Mexico during this period, and Dow’s current portfolio is aligned with them. The Mexican consumer needs Dow’s value chains. Another reason behind Dow’s success in Mexico has been the investment in technology and manufacturing. Our investments in North America have been an important catalyst, allowing us to make high-quality products available for the Mexican market. Investments were made in Texas and Louisiana, along with our Querétaro, Tlaxcala, and Toluca plants. Together, our local and US manufacturing networks allow us to be extremely competitive to meet demand. Some 25-30% of our business in Latin America is in Mexico. Our relevance in Latin America is evident: we have R&D laboratories in Mexico. It is not just about importing technology from other places and positioning them locally but also seeing what the Mexican market needs and can provide. Several members of our Toluca team created a patent developed in Mexico that we are marketing today globally. We actually bring in our global capabilities in order to create in Mexico.
What was the objective behind being the first to improve a road with recycled plastics?
The circular economy is one of our strategic sustainability goals, and plastic is one of the noblest materials that can have more than one useful life. Recently, there has been much news focused plastic waste. Based on this, we are working to spread clear information on plastics, its impact, and the huge benefit that its correct waste disposal can bring. We are creating products that are designed to be recycled starting from production. We will also continue working on packages that use less material. Finally, we are also developing projects that ensure social impact. The road is a part of this idea. There are over 400,000km of unpaved roads in Mexico, along with the problem of what to do with plastic waste. Hence, along with other allies, we managed to create an asphalt road with recycled plastic, increasing its durability. Furthermore, it is cost competitive for the public and private sector. It embodies an ecosystem-winning formula where plastic waste is reincorporated in a high-value application.
What are your priorities as president of National Association of the Chemical Industry (ANIQ)?
There are two big priorities. The first is the circular economy; in fact, our industry was one of the first to adopt its principles. We are working with public policy authorities to seek alternatives that will make the industry, customers, and consumers feel comfortable with a clear focus on sustainability. It is why we are working to advise rational, data-based public policies. The technology exists, but we need the rest of the value chain to have waste collection, segregation systems, collection centers, and so on. Public policies must be adequate for all of us to do our job. The second priority is keep growing our capacity and keep gaining relevance as a key industry. In the past six years, our industry had more than USD18 billion invested in productive assets. It has been a 5-6% annual growth of continuous demand for the industry; however, the access to raw material and energy has been a challenge. In 2018, the Mexican chemical industry accounted for 2.1% of GDP. Currently, things must be imported or supplies must be shipped great distances before they are delivered to the consumer. We need to keep working to assure the availability of gas and raw materials. We have to be specific in the steps to reactivate the availability of materials in Mexico. ✖
Mexican chemical industry accounted for of GDP in 2018
Dow Chemicals is in of value chains in Mexico