The Salvadoran plastic production industry remains buoyant in the face of adversity, achieving 3% growth in recent years, despite high oil prices and increased electricity rates, highlights the president of the Salvadoran Association of the Plastics Industry (Asiplastic), Ricardo Moran.
"Despite the crisis of high prices, companies in this industry have learned to live with a problem which affects them drastically, because oil is the main component of their cost structure of production and operations, forcing them to become increasingly competitive and to look for new destinations and niche markets for their products in order to maintain and improve this rate of growth," reports Daniel Choto in an article in Elsalvador.com.
An example of this energy and the drive by businesses is the fact that Salvadoran plastics are exported to more than 50 countries, the country is the second largest supplier of plastic products in Central America, after the United States and even ahead of Mexico (oil producer), said Doris Rivera, manager of industrial intelligence of the Salvadoran Association of Industries (ASI).
"Entrepreneurs in the plastics industry are very aggressive and yet (increase of raw materials) have not slowed growth, we have not slowed investments, which in the last three years were $35 million in new equipment to meet the challenges on the world stage," said Moran.
The main export destinations of plastic products are Guatemala, Honduras, Nicaragua, Costa Rica and the United States.
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A hike in the prices of raw materials and other costs is threatening the dynamism seen in recent years in the plastics industry in El Salvador.
This year, participants in the plastics industry projected lower growth due to the rising price of its main raw material, ethylene monomer, resulting in a rise in the cost of the final product. Among the most affected products are packaging, household and hygiene products.
Between 2009 and 2012 exports of Salvadoran plastic products grew by 60%, reaching $105 million, with the main buyer being Guatemala.
The plastics industry of El Salvador increased its foreign sales by 60% between 2009 and 2012. According to data of the Central Reserve Bank of El Salvador, in 2012 alone, over $81 million worth was sold to Guatemala.
Salvadoran industrialists resent the high value of electricity bills, the second most important factor in the cost structure.
Ricardo Moran, president of the Salvadoran Association of the Plastics Industry (ASIPLASTIC) noted that currently the cost of energy represents between 18% and 20% of the final product cost.
Exports of plastic products have been positioned within the "top 10" after totalling $16 million in August 2011.
The data comes from the monthly export report from the Ministry of Industry and Commerce, which places El Salvador as the main destination country, followed by Nicaragua.