Luis Lizcano
Director General
View from the Top

Internal Politics Abroad Could Open Door to Competitors

Mon, 04/01/2019 - 17:05

Q: What are the most influential trends affecting the aerospace sector?
A: Commercial aviation is being led by Boeing and Airbus, for commercial aircraft, and Bombardier and Embraer, for regional jets. These companies and their suppliers constantly work to optimize their manufacturing practices to reduce costs as the market demands, which often leads them to outsource processes and services from their home countries. There are concerns that this trend will reverse due to internal policies in certain countries but any policy that prevents companies complying with market demands will impact manufacturers’ competitiveness, creating an opportunity for OEM competitors from other countries, including China and Russia, to enter the North American market. Regardless of the policies, in the long-term the market will always correct itself.
There are two situations to consider. The first is the global market, which is growing especially for the commercial aviation segment. Globally, passengers prefer flying over other methods of transportation. This trend will continue unimpeded unless there is another global crisis. To address the needs for this large number of passengers, airlines must grow and update their fleets. Aircraft are part of a complex supply chain that incorporates companies all over the world and the market is pressuring manufacturers to reduce costs. This may lead them to best-cost countries where they can outsource quality processes and services. The second aspect of the economy which could impact the aerospace industry is seen in specific trade scenarios, but uncertainty at this point means it is not possible to determine how the wind will blow. We are assessing different scenarios and constant analysis should help us to react and prepare for evaluated events.
Q: How could Mexico benefit if it successfully adapts to changing policies abroad?
A: The global market for aerospace products is strong, thus many international companies have a positive outlook. Mexico has one of the most open economies in the world, counting trade agreements with 46 countries. A climate of uncertainty may cause an economic slowdown as companies become increasingly cautious to expand or invest. Many are waiting to see what happens before they commit to any changes in strategy.
Q: How is FEMIA supporting the development of the aerospace supply chain?
A: Our supply chain development program is collecting a significant amount of technical data and information about core competencies of every company in the industry. This data will facilitate the identification of sector needs and what can be done to promote and support individual companies. We are studying the market to determine how many companies have the AS 9100 certification and estimate those to hold it at 60 to 70 percent of Mexican aerospace companies. There are also many other companies that have sufficient personnel and core competencies but have not entered the aerospace sector as they lack the certifications or equipment to do so. This study is a long-term process to create awareness, of which the first phase will be finished by September 2017.
Q: How can Mexican aerospace reach new markets and which areas should the industry turn to?
A: The Mexican aerospace industry is still young. While a few companies have existed for over 40 years, the sector only started to take shape about 13 years ago. To convince foreign companies to invest in Mexico we are reaching out through events and investment seminars all over the world. We have to look toward the European Union and Asia. Europe is a great ally. We estimate that approximately 25 percent of FDI for the aerospace sector comes from this region and the rest comes mainly from the US and Canada. Working with Asian companies is a possibility but it is necessary to take into account the fact that business practices vary widely between countries.