News Article

Mexico: Key to the Global Aerospace Supply Chain

By Andrea Villar | Wed, 11/27/2019 - 08:10

The local aerospace industry is still small but it is growing at an accelerated rate thanks to its ideal location close to the US and a young but highly qualified labour force. Mexico’s trade agreements with over 45 countries and low manufacturing costs also make it an attractive option but there are still many challenges ahead. 

“Mexico became one of the key players in the industry a short while ago. After this, companies started to see the country as a prospective industrial location,” said Managing Director of FEMIA Luis Lizcano at the Mexico Aerospace Forum 2019, held at Mexico City’s Hotel Marquis on Wednesday.

Mexico’s proximity to the US and the availability of talent have helped it gain a foothold in the global industry, Lizcano said. Unlike other industries, there are no logistics problems for aerospace and related costs are low compared, he added. 

The country’s trade ties also play in its favor, Lizcano said. "At present, Mexico has a network of 12 Free Trade Agreements with 46 countries (FTAs). The country also actively participates in multilateral and regional organizations and forums such as the World Trade Organization (WTO), the Asia-Pacific Economic Cooperation Mechanism (APEC), the Organization for Economic Cooperation and Development (OECD) and ALADI"

However, Mexico’s authorities do not yet consider the industry as an area of ​​opportunity, and this is a challenge. "In a span of 15 years, the industry has grown about 14 percent annually,” Lizcano pointed out. Mexico ranks 12th on the world stage with a 2 percent market share. “This demonstrates the great potential we have in the country. We have the production capacity for all systems, from motors to turbines.”

According to FEMIA data, the five regions in Mexico with the most aerospace development in recent years are Baja California, Queretaro, Nuevo Leon, Chihuahua and Sonora.

To face this challenge, Lizcano said the country needs a public policy for the industry to take full advantage of the capital it can attract. If this were to happen, Lizcano believes Mexico could manufacture its own airplane within a year. For its part, FEMIA launched the Supplier Development National Program for the Aerospace Industry, which is aimed at training people and supporting projects focused on the development of the industry. 

“It is not a matter of providing incentives,” Lizcano said. “The aerospace industry is a sector of skills and knowledge, and as we are prepared for that, we will be better positioned.  Currently, we have a lack of tier 2 and 3 suppliers. This represents an opportunity and it is just a matter of time,” he added.

Lizcano also highlighted that in the next 20 years, the industry needs to build 40,000 to 44,000 new aircraft, which is the equivalent of building twice the fleet that is currently operating in the world. Mexico, he said, should grab that opportunity.

“Traveling by plane is becoming increasingly popular. Every day, it is getting easier and cheaper and people who had never traveled by plane now do so. In the Asia-Pacific region, 17 new airports will be built in the next five years, nine of them in China. There is an urgent need for airplanes and airports,” Lizcano said.

Andrea Villar Andrea Villar Journalist and Industry Analyst