Finincing Economic Growth and the Value ChainFri, 12/01/2017 - 13:01
Q: How has Bancomext contributed to the growth of the aerospace manufacturing sector?
A: Bancomext’s goal is to promote Mexican economic growth and employment, financing foreign trade and attracting investment. This is of utmost importance for the aerospace industry, which has been mostly supported by foreign investment. Having seen the industry’s projected growth in Mexico, we developed a specific, dedicated financing program.
Bancomext deems the aerospace industry a priority because of its dynamism and sustained double-digit growth in Mexico since 2005. The sector is a safe bet and is receiving significant support from the Ministry of Economy and local governments hosting the five Mexican aero clusters.
Q: In what ways does Bancomext support Mexican aviation?
A: Bancomext has one of the largest financing portfolios for the commercial aviation sector in Mexico, including most commercial airlines and a few regional ones. We finance fleet acquisition, advance payments for aircraft purchases and working capital for consumables. As a foreign trade development bank, our goal is to provide a range of choices for exporting companies. While we have mostly worked with commercial airlines we can work with business aviation companies as long as they aim to improve connectivity. Furthermore, we finance MROs, including several projects being developed in the north of Mexico.
Value chain creation and development for the sector is a priority for us in both the aerospace and automotive sectors and Bancomext is willing to provide support through “ad-hoc” financial products for the industry. We are also supporting the development of a logistics platform that backs these value chains, including ports to increase load-management efficiency for products coming in or out of Mexico. This logistics platform includes industrial infrastructure and its surrounding areas, which require hotels to accommodate business travelers. For a company to be competitive, it needs good connectivity and energy infrastructure.
Q: What is behind the rapid growth of the aerospace industry and what does that mean for Mexico?
A: The country offers many advantages to the sector, so its continued specialization and development will raise Mexico as an emerging aerospace exporter. Thanks to the automotive sector, aerospace companies were able to find potential collaborators that had already installed state-ofthe-art manufacturing technology. The sectors are distinct in volumes, being automotive an industry of high volume while aerospace is an industry of low volume production, highly sophisticated and with high costs per unit, so their production can coexist. Aerospace emerged and expanded swiftly thanks to synergies with the automotive sector.
Q: How is Bancomext supporting the development of Mexico’s much-needed supply chain?
A: Bancomext allocated over MX$10 billion (US$527 million) in 2016 to the aerospace sector in four different areas: commercial aviation, manufacturing, services and supply chain. We finance the entire aerospace supply chain requirements, including facility expansions and renovations, account receivables discounting, acquisition of supplies in Mexico or abroad and working capital for production process needs.
We also have programs to finance capital expenditures to support growth and consolidation, helping direct and indirect exporters or companies with cash flows in foreign currencies. While some Mexican companies have entered the sector, the demanding certifications and high investment required mean most aerospace companies are financed by foreign capital. The bank is also financing airport renovations and expansions to ensure sound logistics for exporters. We are currently supporting between 20 and 25 companies, including airlines, suppliers and real-estate developers. We expect to allocate MX$10.5 billion (US$553 million) to the industry in 2017.