Largest State Gains Even More Capabilities

Q: How has Chihuahua’s aerospace industry evolved and what role is the cluster playing in its consolidation?
A: Major OEMs, including Boeing, Airbus, Bombardier and Embraer, are transferring and developing their supply chain to the state. This is impacting the region and strengthening sub-tier companies and other local suppliers. We are seeing more integration of the supply chain, not just in the city but in the region. Companies are increasingly incorporating local suppliers from Chihuahua, Queretaro, Nuevo Leon and other states. Integration is not new but it is growing fast and stronger, with major companies such as Fokker-GKN finding more local suppliers and SMEs.
Our goal as a cluster is to integrate local companies and to work along with other clusters to increase the capabilities in the country and business opportunities among the regions. Alongside FEMIA, we are performing a comprehensive analysis of the capabilities of the supply chain to understand the competences the state has and what companies from other states have to offer.
The aerospace sector is facing uncertainty due to foreign geopolitical concerns, which has prompted some companies that were considering moving into the state and Mexico to pull back. However, I foresee continuous growth in operations for companies already established here due to efforts to consolidate the local supply chain, which have resulted in new technologies and capabilities coming to the state. The state has been very successful in integrating Mexico’s supply chain due to our collaboration with other clusters.
Q: What new projects and innitiatives were launched in the state during 2017?
A: At the beginning of 2017, EZ Air, the joint venture between Embraer and Zodiac Aerospace, launched the prototype for the E190-E2 interior that was presented at the Paris Le Bourget Air Show. This project brings together many players working to consolidate the supply chain for seats and interiors, including Soisa Aerospace, a local Mexican company that will provide the seats cushion and the covers.
Embraer is now manufacturing parts for its E-Jet E2 family in Chihuahua and has a few projects for 2018 as the company increases its airplane sales. Bombardier continues to expand its aerostructures supply chain and bringing more work to the state, quickly making Chihuahua its most important supplier for aerostructures in Mexico. Boeing’s supply chain is also growing with more programs for the 737 and is developing its suppliers for the 787 in which local companies are participating. Zodiac Aerospace recently celebrated its 10th anniversary; it now has nine divisions and is expanding some of its divisions. The growth of these companies impacts the entire supply chain in the state because it supports the development of local suppliers and engineers.
Q: What strategies is the cluster pursuing to support the development of local SMEs?
A: During the first half of 2017, the local government launched and initiative to accelerate potential SMEs that can be integrated in the industry. Also, a local group of SMEs was formed under the name Cluster Eje (Axis Cluster). We are working with them and after categorizing them by the products they manufacture, we have identified those that can be integrated into the local aerospace supply chain. With the support of the city and state governments and OEMs, we have identified what these SMEs need in order to manufacture for the aerospace sector. The aerospace industry has a seven to 10-year ROI cycle, which is very hard for an SME to handle. This initiative will help support them through this period. Chihuahua is successfully implementing this program and it is also planned to be replicated in Ciudad Juarez and other key cities in the state. We are complementing FEMIA’s work in compiling this database and generating a comprehensive analysis of what every company is doing.
Q: What changes in policy are required to strengthen the local supply chain?
A: Many existing economic policies across Mexico are overtly focused on foreign investment, as the country now greatly depends on FDI. While the country does need it, policies must also provide the critical support SMEs need to develop the local supply chain. Previously, cluster members used to joke that the only ones who could get governmental support were those named “Smith,” but this is changing as the government is increasingly supporting Mexican companies. The government’s role is not just to encourage foreign investment but to also support companies already established in the region to help them grow.
The state and city government has shown great support for the state’s manufacturing sector and is planning to develop comprehensive policies that will even outlast the current administration and lead future governments. This policy will provide continuity, which is important for existing companies and for future investment.
Q: How can NAFTA be modified to improve manufacturing practices in the region?
A: NAFTA should facilitate trade between border cities. For instance, Ciudad Juarez or any other border cities have many manufacturing companies and need services that cannot be found in the city or any other Mexican neighbor state but are available less than 1.5 hours across the border, and vice versa. US companies are aware that they can find a specific process at a better price across the border but they know that sending the part is too expensive and time consuming due to the complex paperwork they have to comply with. The border’s bureaucracy and costs complicates manufacturing across both countries and diminishes the border cities’ competitiveness. If we use NAFTA to support the industry on both sides of the border, we can make the Mexican and US border one of the strongest manufacturing regions in the world.
Q: What new capabilities has the state incorporated?
A: 2016 was an important year for the state. We established a core competence in the manufacture of aircraft interiors, not just seats and design but every part the passenger comes in contact with once they enter the airplane, from floors to entertainment systems. The state is also increasing its capabilities for the manufacturing of sheet-metal and assembly of aerostructures, high precision machining, and secondary processes such as steel heat treat and chemical processes. The cluster is surveying the capabilities of local SMEs and will incorporate this information into its technological road map. This map was launched in 2014 with the incorporation of the local capabilities back then, currently we are updating it and incorporating the new SMEs entering the aerospace industry.