News Article

Clear Skies with a Chance of Turbulence

Thu, 12/06/2018 - 11:22

The Mexican aerospace industry has clear skies ahead with a chance of turbulence rooted in letting opportunities pass by, said Felipe Sandoval, General Manager of Safran Seats and Aerosystems Operations and President of FEMIA in the closing presentation of Mexico Aerospace Forum 2018 at Sheraton María Isabel on Wednesday.

Sandoval said the data supports a positive outlook for the sector in Mexico. He points out that Mexico is the top producer of engineers of OECD, that the middle class is expected to grow substantially in the short term and that the global aircraft fleet will more than double by 2037.

“The growth of the aerospace industry is astonishing,” said Sandoval. “This is one of the industries with the greatest added value in the country both economically and in terms of human development.” He underlined that Mexico’s aerospace industry grows at a rate of 14 percent per annum and that every dollar generated at the top of the aerospace pyramid means US$75 are generated in the supply chain. “It is the industry that generates the most value to the country,” said Sandoval. “For every US$1 that enters Mexico as FDI, US$0.22 stays in the county.”

In terms of Mexico’s aerospace supplier base, Sandoval highlighted that Mexico already has most of the large, world-class aerospace players including both OEMs and Tier 1s, but the Tier 2 and Tier 3 levels have lagged behind. “FEMIA has gone distances to develop local suppliers,” he said. “But there are great areas of opportunity.”

Sandoval explained that while Mexico has evolved to more effectively compete within the global aerospace industry, the country needs to map the industry’s gaps and design strategies to take advantage of them. For instance, he pointed out that Mexico has been traditionally an importer of technology but must develop its own in order to move forward.

According to Sandoval, the country could take advantage of the lessons learned from the development of the automotive industry to develop the aerospace one. He said that in the case of automotive, the Mexican government designed, laid out and executed a strategy to succeed. “We need to learn lessons from what we did right in the automotive industry and apply it in the aerospace sector,” he suggested. He added, however, that the automotive industry has commoditized and is sensitive to economic impact while the aerospace industry maintains its momentum thanks to a solid demand for aviation.

Sandoval explained that Mexico needs to specialize in mechanical systems, which is already a sector where it has a competitive advantage. On the other hand, he said the country also needs to maintain its lead in terms of new materials, which could strengthen its position in the global aerospace industry.

He warned, however, that aerospace is not a national industry, but a global one that plays by macroeconomic rules. “Whatever happens in Mexico has close to no impact on the global industry,” he said. “But Mexico should better take advantage of the opportunities that this industry offers.” He said that demand for aircraft is on the rise and growing on the back of rising demand for plane tickets globally. “OEMs are building planes like they were making popcorn,” added Sandoval. “All of them have backlogs of between 12 and 15 years.”

Sandoval closed his presentation by underlining the objectives of the Mexican aerospace industry by 2020. He said the country will be among the 10 most important nations for the global aerospace industry, that this sector’s exports will be worth over US$12 billion. He said this industry will offer over 110,000 quality jobs. “Opportunities are in front of us. It is up to us to take advantage of them to generate value for our country,” he said. “We face clear skies, but turbulence lies in not making actions based on a national strategic plan.”