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The Golden Opportunity

By Enrique Sosa - Universidad Aeronáutica en Querétaro


Enrique Sosa By Enrique Sosa | Rector - Wed, 07/19/2023 - 14:00

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The next decade will offer a golden opportunity for the Mexican aeronautics industry. The global context is presenting factors that rarely coexist: a significant accumulation of demand, a very significant prospect of increased demand from the global military industry, along with major complications related to increasing supply in developed countries. Combined, these factors require companies to seek new horizons to relocate the investments required to achieve the supply increases they need. 

On the demand side, delivery times for commercial and private aircraft are unusually long and are now a major factor in the purchasing decisions of both airlines and individual consumers. Therefore, to grow their market share, manufacturers must increase their production capacity and reflect this quickly in their delivery times. 

On the military front, geopolitical tensions and the war stemming from Russia’s illegal invasion of Ukraine have led to an escalation in military spending in many countries. Nations such as Germany, Japan, Turkey, and Korea are redirecting an extraordinary amount of resources toward their military industries. This trend is unlikely to be reversed in the coming decades.

In this context, it is reasonable to think that the NATO powers, specifically China and Russia will direct their productive capacities and new investments toward increasing their supply for the military sector, which is more strategic and profitable than the commercial sector. As a result, their expansion projects in the commercial area are unlikely to be a priority for the main players in the sector. 

These enormous business opportunities are emerging at a time when it is not as easy to capitalize on them, as supply is limited, especially because of a shortage of specialized and experienced talent. The talent crisis is partly due to the demographic crisis in developed countries, which is particularly dramatic in countries such as Japan or Canada. Additionally, in the developing world, it is becoming increasingly difficult for young people to pursue careers in manual activities, which particularly complicates the operations of MRO companies. 

The talent crisis in the industry is general, with deficits in engineering, manufacturing, maintenance and operations alike. The same is true for disciplines such as software, cybersecurity, maintenance technicians, and pilots. Some due to the lack of demand, and others due to a deficient training strategy on the part of the companies and governments. But regardless of the reasons for these crises, it is a reality that will be a constant factor in the coming years, and that will make it very difficult to increase operations in countries such as France, Germany, Canada, Japan, Spain and the US.

In addition to the above, the crisis caused by COVID 19 in the previous years significantly reduced the aeronautical workforce in some countries and the recovery of the workforce is proving to be complicated, especially because of all the early retirements that took place during these years. It is therefore reasonable to think that companies will have many reasons to invest in developing countries, not only to reduce costs, but also to be able to grow supply at the speed they require.

On the other hand, the expansion of supply in developing countries is not an easy task either. There are only a few countries that currently present themselves as good investment alternatives. The options are limited by a number of factors, the main ones being economic and political stability, geopolitical and military risks, and the availability of specialized talent. 

One of the few players that today represents a feasible and attractive option is Mexico. It is located in a strategic geographical position, it is experiencing an optimal demographic moment, and it has a huge potential for developing talent for the sector. Furthermore, some of the most important companies in the sector already have relevant operations in the country, and these themselves have proven to be very profitable and stable, making it one of their main obvious options for expanding operations. 

This is a splendid scenario that can be capitalized on to multiply the size of this industrial sector in the country, but it requires a national policy that capitalizes on the opportunity, because the investments will not come, if we do not do our part as a country. To be the winners in this game, we need to go after these investments, and we need to do so with a clear strategy, which at least includes the following elements:

  • Convert demographic potential into relevant aeronautical talent

  • Solve the energy supply issue

  • Offer regions with sufficient quality of life and public safety

  • Adapt our aviation regulations to be competitive

  • Streamline and simplify the administrative processes required for companies to set up in the country

  • Generate efficient support processes for an adequate soft-landing of these companies 

This all will only be possible if there is a serious commitment from the Mexican state. However, if this is done, it can generate a significant expansion of the sector, which would be afterward reflected in a notable generation of high-level employment. Regardless of the efforts made by the federation, governments can find here an important key to development. The clearest example of this is the case of Queretaro, in which the state government has maintained a robust industrial policy over more than 15 years, with great discipline. This has made it the most competitive region in the sector, and has allowed it to develop an important industrial pole with high-value jobs in municipalities that were predominantly rural. If other states decide to follow this path of success, Mexico could become one of the aeronautics champions of the 21st century.

Photo by:   Enrique Sosa

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