MARTÍN TOSCANO

Mexico 2020 | INDUSTRY | VIP INTERVIEW

TBY talks to Martín Toscano, President & General Manager of Evonik, on biogas, the resilience of the Mexican market, and increasing production.

What have been Evonik's biggest achievements of the year so far?

Our biggest achievement has been the fact that we were able to benefit from our existing, and now expended through the integration of acquisitions, product portfolio. The execution of the business' project in Mexico has been a major achievement in line with Evonik's strategy. We are in the implementation phase of our global strategy of becoming stronger in the specialty chemicals business. We are moving away from the more cyclical products in our portfolio and are working to become the partner of choice for our global key accounts active in Mexico, where we were able to materialize a large number of projects in Mexico with regional and global key accounts. Despite the current situation, we still see fairly positive developments for the manufacturing sector in Mexico, especially those connected to exports.

Which business segments would you like to have a stronger presence in?

We strive to become a great partner for segments where we already had some participation, though we want to bring the business to the next level. One is in agriculture, and we have extremely interesting products and technology that can be applied to that market and that we are already offering. Agriculture shows amazing potential in Mexico, along with the automotive sector, among others. They are two fast-growing segments in Mexico, and we have a key role to play there. That is why we are working to establish an industry team for agriculture in our local organization, aiming to become a more dynamic partner for that industry, since we see great opportunities there. Personal Care became also an interesting market where we see growing sales. There are also opportunities in the protein business & animal nutrition, since Mexico plays an important role globally in protein production. Another area of opportunity in Mexico is in activities connected to sustainability in energy and waste treatment. We have different projects we are working on there in the energy sector, and we are engaged in dealing with the topic of plastics and chemical recycling supporting the circular economy strategy. Biogas is another topic we are discussing in Mexico. We are continuing our work in wastewater treatment in Mexico and see many opportunities there. 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. We as specialty chemical company play a leading role and have a moral and social obligation to drive the necessary changes for a more sustainable business in Mexico and its impact on local communities.

What factors are behind Mexico's resilience in comparison to other markets around the world?

It is the same as before—an interesting combination of exports. There are certain industries that have extremely strong ties to export markets, and not just traditional ones. The automotive industry was in the “driver's seat” for many years, so to speak. We also see significant growth in the aerospace sector, as well as agriculture and many other segments where we see increasing exports and a more important role for Mexico to play in the world. Additionally, though there is still a great deal of work to do, there is a growing middle class in Mexico that is a driver for the economy and consumption. Many of our customers are connected to that growth in the local market because of the strong link between middle class income level and consumption. As soon as people start earning more money, they typically start spending and investing more. This is true in food, personal care, healthcare, and home care, as well as many other things. A large portion of our business is channelled through customers in that category.

What is your general perception of the new administration and the actions it has taken thus far?

One of the most important things here is that the chemical industry through the Chemical Industry National Association (ANIQ) is seeking to get closer to the new administration and discuss the opportunities in the sector and market for the benefit of people in Mexico. There is growth of the chemicals industry in Mexico, though production has not caught up due to local constrains. That means we continue relying on imports, and although there is capacity, it is not being utilized, mainly because key elements and resources that we need such as natural gas or raw materials from the downstream petrochemicals industry are not in good supply or access. These are essential ingredients that we need for production in Mexico. 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 its impact on people's well-being.

Will you be increasing imports to increase production?

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 today. The market continues to grow, and there is free capacity that is not being utilized. For the time being, we focus more on relying on imports that we bring from Europe, the US, and/or all other global assets from Evonik Industries, and eventually finding ways to add value by having local manufacturing or teaming up with local players for the production of products and technologies that we want to have in Mexico. 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 would give us the necessary competitive advantage to motivate the private sector to continue investing and remain committed to Mexico.