Mexico to Consolidate Its Role in The Supply Chain of Tomorrow

International supply chains have been challenged by raw material shortages, logistics delays and reduced capacity due to COVID-19. The aerospace supply chain is no exception. As the global economy recovers from the shock of the pandemic, supply chains in all industries are rebuilding. Mexico is in an interesting position in the international aerospace supply chain and consolidating it could bring further economic growth, social development and technological innovation. To do so, Mexico needs to tackle certain challenges.

To improve its competitiveness in the aerospace supply chain, Mexico first needs to strengthen its transportation infrastructure, said Antonio Velázquez, Managing Director, Queretaro Aerospace Cluster. Beyond infrastructure and multimodal transportation, the country also needs a reliable supply of energy and water, adds Velázquez.

Other challenges to tackle include cybersecurity breaches and bottlenecks and delays in ports, said Luis Carlos Ramírez, President, Chihuahua Aerospace Cluster. Likewise, Mexico has yet to improve its capital flow within the supply chain. If the circle of capital becomes more agile through the right support and incentives, the entire sector will benefit, said Ramírez.

Citing insights from the World Economic Forum (WEF), Ramírez highlights that “supply chains are much more than systems, structures and technology, they are also people, whose safety and wellbeing must be upheld.” The COVID-19 pandemic is a reminder of the importance of human capital throughout industrial activity. Therefore, to improve competitiveness, the human factor must be prioritized. “We need to go back to basics and teach innovation culture from the early stages in education to give our future professional workforce the needed skills for the technological advancement the industry will need and encourage youth to pursue STEM careers, which will nurture Mexico’s competitiveness in strategic industries,” said Ramírez.

“Specialized human resources are fundamental. Those involved in the supply chain need a specific skill set and research capabilities that can ignite and foster innovation,” said Velázquez. Likewise, “investing in talent and training of the skilled workforce is what Mexico should be doing if it wants to keep its position in the index of global players in the aerospace industry,” said Claire Barnouin, Executive Director, Monterrey Aerocluster. Human capital and talent nurturing will intrinsically shape the future of innovation and competitiveness. “If Mexico wants to be taken seriously in the global arena, we need a strong commitment at the national level to train our workforce. Without talent there is no industry,” said Barnouin.

Mexico has unique opportunities for growth and is increasingly becoming more attractive both in manufacturing and supplying the afterparts and repairs services the aerospace industry demands. “Services is an area where Mexico could grow competitively,” said Tomás Sibaja, President, Baja California Aerospace Cluster.

One of Mexico’s pending accounts is the local development of national technology. “Technology is a powerful enabler for economic development. When a country has its own capabilities to develop its own technology it has the possibility to remain competitive internationally,” said Velázquez. Technological innovation also creates a waterfall effect throughout entire value chains. When a company implements new technology, businesses throughout the entire supply chain benefit, improving efficiency and competitiveness.

However, Mexico is not known for being a technology producer country; it is known as a technology consumer country. Mexico’s condition as a technology consumer country is unlikely to change in the short term. To boost the aerospace supply chain in Mexico, investment and collaboration to produce inhouse innovation is key. The country also needs to implement strategies that allow for the fast incorporation of innovation into industrial processes and procedures. “The tricky part is how to get traditional manufacture companies, most from which are family-owned SMEs to understand the added value they could get from digitizing their operation, as opposed to following traditional methods,” said Barnouin.

To achieve the leap forward, Mexico needs local technological production generated through the joint efforts of the government, companies, academic institutions and R&D centers. In this scenario, the government needs to lead innovation efforts and support companies that are committed to local R&D, said Alejandro Arredondo, Managing Director, Bajío Aerospace Cluster. Meanwhile, academic institutions need to adapt quickly to form the required human talent for new technologies. “In Mexico, better collaboration between the government and the private sector is required to achieve a better understanding of what companies need to improve to favor national competitiveness,” said Arredondo.

Mexico has a privileged geographical location that allows it to position itself as a node for global commerce and supply chain distribution. It also has competitive and capable talent that can perform high-quality work and boost economic growth. However, to boost competitiveness of its national suppliers, public policies and a coordinated government strategy are essential. “Mexico has not asked for anything in exchange from the foreign companies that arrive in the country. Landing is very easy. We need to start asking those companies for local industry development in return to catch up,” said Arredondo.

“We need a national policy and strategy to grow the local aerospace industry and provide the commercial and business environment to capitalize on our talent and increase our competitiveness,” said Barnouin. With a national guideline and united efforts between sectors and stakeholders, Mexico will achieve its full potential and consolidate itself as an international reference in the aerospace industry.