Rapid growth in the sector is evidence of Mexico’s determination to become one of the world’s top 10 aviation suppliers.
The Querétaro Aerospace Park, 200km northwest of Mexico City, is a mass of cranes and diggers. A new Aeroméxico and Delta Air Lines heavy maintenance facility – a joint investment costing $40m, with work for 3,000 specialist technicians – is due to open here shortly. Querétaro airport is just next door, with gigantic hangars built by Bombardier, Eurocopter and Safran, rearing up against the arid landscape dotted with cactuses.
Mexico is determined to become one of the world’s top 10 aviation suppliers. In 2005 Canada’s Bombardier was the first overseas firm to build a $200m factory on previously undeveloped land, transferring production here from Ireland and Japan. Since then it has spent a further $300m in Mexico. The 1,800-strong workforce manufactures parts for the Learjet 85, soon to be followed by components for the Global 7000 and 8000 series.
In February, Eurocopter, the latest arrival, opened a 12,000 sq metre facility that will employ 200 people by next year. The EADS subsidiary invested $100m to produce helicopter tail-booms and doors for Airbus A320 and A330s. It plans to invest $500m more over the next 15 years. “The future Airbus production unit at Mobile, Alabama [in the US], opens the way for major developments,” says Serge Durand, head of Eurocopter in Mexico.
Neither Airbus nor Boeing have settled south of the border yet, but they are encouraging their suppliers to do so. Among their number, the French conglomerate Safran is leading the way. In 2012 it opened an engine workshop at Querétaro and it is now Mexico’s largest aerospace firm, with 4,000 staff.
Meanwhile the French composite materials specialist Duqueine plans to open a factory, and two Spanish firms, Turbo Propulsores and Aeronova, have also been attracted to the area. So too has General Electric, with its largest R&D centre, employing 1,300 engineers.
But the aviation heavyweights are not only operating in Querétaro. In May, Safran opened a fourth facility at Chihuahua, near the US border. Brazil’s Embraer, the world’s third-largest aircraft manufacturer, and French equipment manufacturer Zodiac also have plans for a joint production facility in the area. The industry has seen 20% annual growth in Mexico since 2006.
“Our country is attracting the biggest share of aerospace investment worldwide,” says Carlos Bello Rocha, head of Mexico’s Aerospace Industry Federation (Femia). About 20 new projects are expected this year, worth $1.3bn. Aviation exports doubled between 2009 and 2012 to reach $5.4bn.
Femia forecasts that there will be 450 companies working in this field by 2020, representing 110,000 jobs and $12bn in export sales. “With 14% average growth projected for the coming years, Mexico will rank 10th among aerospace suppliers by the end of the decade,” Bello Rocha claims. “The country’s main asset is that it borders the US, the top market for commercial and military aviation. Being so close enables us to deliver parts in eight days at the most, compared with more than 20 in Asia,” says Alfredo Nolasco, spokesman for Bombardier Mexico.
The North American Free Trade Agreement, which has linked the US, Canada and Mexico since 1994, is obviously an appreciable asset too, lifting customs duty on trade between these countries. Furthermore, by moving production into the dollar zone, firms can overcome the problems posed by the high value of the euro and currency exchange risks. The other key advantage of relocating to Mexico is the low manufacturing costs, particularly wages. “In Mexico a technician earns between $500 and $700 a month, an engineer $900 to $2,000, roughly 30% less than their US counterparts,” Bello Rocha emphasises. “But though labour is cheap, it is nevertheless highly qualified.”
In 2007 Mexico ratified an agreement with the US enabling it to validate its certification processes. It has also just joined the Wassenaar Arrangement, which manages controls on arms exports, giving it access to the market for military technology. But there are still major challenges to be overcome, according to Marcelo López Sánchez, minister of sustainable development in Querétaro state: “Our country lacks small- and medium-sized enterprises to shorten the supply chain, so spare parts go back and forth between us and the US.” Barely 10% of all raw materials are sourced in Mexico. Not only is there a shortage of titanium, carbon fibre and other metals, even brain power is lacking, with an estimated 20% shortfall in specialist technicians.
Femia is banking on training to solve the problem, in particular at the Aeronautics University of Querétaro (UNAQ). Located conveniently close to the airport and the Bombardier facility, it opened in 2007.
The other priority is to attract recently launched Mexican SMEs, by upgrading their skills and certifications. To fuel this trend an aerospace testing and technology laboratory – the first of its kind in Latin America – will be opening later this year, on land adjoining the UNAQ campus. It will have a budget of $90m, with the European Union contributing almost a third.