Mexico Lacks a Strategic Aerospace Plan: Queretaro Cluster

Q: How has the cluster evolved and what are its main contributions to the local aerospace industry?

A: We have worked significantly on improving the cluster. That being said, we are not underestimating what had been done before, as the people before us got us to where we are. We have changed the cluster for the better, making it more participative, expanding from six to 12 board members. We have also made SME participation mandatory for the board.

A cluster is not what the board does but what all members want, so we pushed for the creation of commissions. The board gets together once a month and through our commissions we are able to reach our goals. We created commissions related to SMEs, HR, technology and the supply chain, among others. We invite associates to work together and contribute human capital to these commissions. For example, the HR commission held two symposiums, which analyzed the industry’s peculiarities regarding skills and wages. In the state, wages are inflationary, they are growing, and companies try to hire employees from each other.

The supply chain commission, on the other hand, performed studies on the capacities the cluster has regarding supply chain management and how willing big companies are to provide work in the area. Results were not as high as we had hoped, but now we have a base from where we can set new goals and expectations. The science and technology commission is also investigating R&D investment figures in Mexico, which are also not as high or as satisfactory as we had hoped. In developed countries like the US, France, Germany, the UK and even Spain, big companies invest around 10 percent of their revenue in R&D. Our study revealed that in Queretaro, the rate is 1 percent. So we have a lot of room to improve that figure in the future.

We have also grown the number of associate members, through advertising in platforms like MBN, where we share with nonmembers the benefits of collaborating or participating in the cluster and its initiatives. For example, we are conducting an experiment focused on COVID-19 with CENAM and CINVESTAV to see how the virus spreads in an airplane cabin. Studies like these are relevant to all cluster members, as well as companies outside of the organization that want to access those results. Four years ago, we had 38  members. We reached  69 members before COVID19. We have accomplished that growth through the joint efforts of all our members.

Q: What weaknesses have you identified in the sector over the past four years?

A: The first important problem that we have in Queretaro and throughout the country, even with FEMIA, is the lack of a strategic plan for the aerospace industry. We need to be strategic, which requires government participation. The aerospace sector is strategic in Spain, Germany, the US, the UK, Russia, Turkey, Indonesia and Japan. In Mexico, there is no clear strategy and the sector is neither strategic nor supported by the government. We need to convince both state and federal administrations of the advantages of a strategic plan for the industry. We do not need a 400-page book but a collaborative effort between the government and the actors that participate in the sector. Governments and the CEOs of the biggest companies in the country need to gather in a forum where 10 to 15 master objectives are set and then transformed into an in-depth plan for the sector.

Another weakness we face is the industry’s lack of participation in defense. In the US, Boeing manufactures commercial planes but also military planes. Airbus does the same. In developed countries, the aerospace sector includes the defense sector; they are intimately linked and work together. In Mexico, aerospace’s participation in defense is negligible.

Q: What could boost Mexico’s aerospace growth?

A: Mexico has grown significantly over the past 10-20 years, considering the aerospace sector did not exist beyond Mexicana de Aviación, Aeroméxico, and ITR and GE in Querétaro. Growth started in Queretaro around 10 to 11 years ago, with the arrival of Bombardier, Safran and Airbus. Still, for Mexico and Queretaro to have a stronger global presence, they should grow faster than the international average. If the global sector has been growing at around 5 percent, Mexico should be growing more than 10 percent year on year.

Growth has come from FDI but that is not infinite. Certain companies have invested a great deal in the region but they are not going to invest on such a large scale forever. What we need is National Direct Investment (NDI). Queretaro is among the biggest FDI hubs but what about national investment? Big industrial poles like Hamburg, Toulouse, Seville and Seattle are not among the top FDI hubs but they do not need it; they have significant NDI levels. Toulouse is not receiving investment from Japan or other countries but from France and Europe.

Participation in the defense sector and NDI are also related. Spain, for example, has invested in defense programs and has purchased military platforms, combat aircraft and military transport planes. If countries buy planes or helicopters from the military industries, they are also required to sign offsets around 5-10 percent of the contract in technology transfers and aerospace works for the country. This translates to the construction of factories for manufacturing military aircraft components. Mexico has not done this because there is no Mexican company with Mexican shareholders that can receive these technology transfers and works.

Q: What are your views regarding FAMEX’s delays?

A: I believe this was a logical decision. It did not make sense to celebrate FAMEX in April, not only because of the pandemic but also because of the aerospace sector's economic situation. Going to FAMEX requires big expenses from companies that are expecting a return after attending the event, in return. At the moment, companies need tangible benefits, which are hard to come by given production slowdowns. 

Celebrating the event in April 2021 would mean small participation. The event is an important economic contributor but only if it goes well. Hopefully, the pandemic will be under control in the coming months, so companies can have more activity, more contracts and more workload. We will meet with the organizers of FAMEX and with FEMIA and cluster representatives to see if we can move ahead with the event in September. Farnborough was canceled last year and Le Bourget (the Paris Air Show) is not happening this year.

Q: What have been the main challenges of supporting SMEs amid the pandemic?

A: My main job as president of the cluster is not to support big companies with the means and the connections to find support, but SMEs. Last year, we created many online courses on different topics, including certification processes. FEMIA has developed a course for SMEs to enter the defense sector and to successfully adopt ITAR standards. SMEs have difficulties paying for courses like these, so we need to be sensitive to that. Recently, SMEs approached the cluster’s board to see if we could help them pay a small percentage of the course. The cluster’s decision was to support them by paying for the course in its entirety. We need to set this as an example to support SMEs so they can attend FAMEX.

Q: What areas of opportunity do you see in Mexico’s aerospace sector?

A: Beyond defense, we also need to develop our capabilities in the space sector, which are very limited. Mexico needs a strategic plan to approach this aerospace industry and it needs to define where it wants to participate. As an example to illustrate the issue, does Mexico want to be good in engine manufacturing, avionics, satellites, or microsatellites? Does the country want to put a man on Mars or build a Mexican rocket? That is the strategic plan Mexico needs to define and what will allow companies to develop their capabilities.