A Long-Term Industry Built Through Ongoing Efforts

Q: How attractive is the Mexican aerospace industry to investors?

A: Mexico is still attractive because of its labor base of technicians, specialists and engineers. Universities are still generating strong human capital, prices remain competitive and operations have the highest quality parameters. As long as there no negative external or internal factors impacting the country, growth will continue.  

That being said, 2019 has been characterized by periods of economic uncertainty in Mexico caused by the delayed USMCA ratification, a new federal administration in Mexico and the 2020 US presidential election. The good news is that the industry is still growing and we are expecting, according to the available information, to close 2019 with an annual increase in exports of 11 percent. That would mean we will be above US$9.5 billion dollars in exports at the end of the year. We also have not seen any disruptive signals for the economy. But our sector is positioned globally and it plans for the long term.

Q: What is the industry doing to attract more young people to the industry?

A: Most of the people who work in the aerospace industry come from the automotive sector. This kind of transition will still happen and we must keep in mind that our sector employs a smaller workforce.

We predict there will be greater human capital availability due to the integration of disruptive technologies in the automotive sector. Beyond workers, the industry will welcome suppliers looking to diversify or move to the aerospace industry, which is good because they are qualified people. The aerospace industry, however, cannot absorb all the people that are going to be displaced as a result of both digitalization and automation, which in some ways is good because it will help us underpin investment. 

Q: What areas are most concerning for the industry?

A: It is hard to prepare for something that is not directly related to Mexico but the US elections are something we are worried about. At the same time, the current administration’s policies have been protectionist while our industry is global. That does not mean the industry will slow down. In fact, this has not harmed us as much as other industries. You cannot be protectionist about a product like an airplane. If the landing gear supplier stops providing, there is no product at all. 

There are still concerns regarding tariffs that could have some impact on the industry but there are other more relevant elements, such as a lack of engineers or a possible collapse in demand, that could really have an impact. However, we do not see that scenario in the short term.

This is a long-term industry, so trends also play out over the long term. There could be variants and things that can have some influence and affect certain subjects but in general, people will continue traveling by plane in the foreseeable future. The population continues to grow and travel is becoming increasingly affordable. 

Q: What new capacities has Mexico’s supply chain cultivated over the past few years?

A: This is an ongoing process and even in basic processes like precision machining, we are still on our way to being competitive. It is not enough to have the latest technology; companies must have a staff with expertise and the know-how to program, make quotations and meet clients’ expectations regarding time and budget. Companies also need to be certified and have quality systems installed. Among our 110 members, there are several that are in their certification process, which is long. For a company that makes the strategic decision to tackle this market and had not been in it previously, it can take four to five years before it starts to see any revenue. It is a long road but once you are in, it is a bet on stability with longer-term contracts. Automotive platforms last five to six years while aerospace platforms last 40 to 50 years. 

Our priority is to establish stability in the Mexican supply chain so we can join the global industry. The supply chain is the root of the industry and by strengthening those roots, the sector will be stronger and enriched, which in turn will provide stability and continuity to the country.

To consolidate the supply chain, we have been applying a particular methodology for almost three years. We have identified market niches, commodities, products and work packages and the suppliers that can participate in such a market. Unfortunately, we thought we would have more players in the supply chain by now but we have noticed that in fact, there are companies but they are not ready to be competitive. Our focus now is to look for potential suppliers that can join the industry and determine how to train them to be the best.