Image credits: Image by Danilo Bueno from Pixabay
News Article

Mexico’s Aerospace Clusters See Opportunities Ahead

By Alicia Arizpe | Thu, 09/03/2020 - 13:45

COVID-19 disrupted global aerospace supply chains as manufacturing plants across the globe were forced to pause their operations to contain the spread of the virus. Thanks to a strong manufacturing arm and significant investment in the aerospace sector, Mexico has positioned itself as a strong supplier for the aerospace industry. While manufacturing activities in the sector have reduced, local industry associations are using this period to strengthen themselves with the goal of attracting new projects from major companies looking to diversify their suppliers.

Mexico’s aerospace industry has grown steadily over the past few years thanks to a young and qualified labor force, ideal location, numerous trade agreements and lower manufacturing costs than its neighbors. These qualities allowed the country to attract the attention of numerous aerospace giants including Safran, Honeywell, Rolls-Royce and GE, among many others, which now manufacture in the country. However, the sector’s competitiveness had already been suffering due to the lack of a strong a strong supplier base. Local industry associations have made it a priority to strengthen Mexico’s aerospace supply chain through programs to attract international suppliers, develop local ones and create alliances among those already operating in the country. Now that COVID-19 has disrupted aerospace supply chains across the globe, Mexico can capitalize on its manufacturing arm and numerous competitive advantages to attract companies looking to diversify their supplier base outside of Asia and closer to home.

“The entire aerospace industry has been greatly affected by the COVID-19 pandemic, a situation that no one could see coming,” said Rogelio Cisneros, President of the Monterrey Aerocluster. “While we have observed that sales have fallen between 50-60 percent, we see opportunities for Mexico as the aerospace industry is heavily labor and time-intensive.” The aerospace clusters of Queretaro, Nuevo Leon and Chihuahua are working closely with FEMIA to exchange best practices, commercial leads and develop joint strategies for training and promotion. Monterrey Aerocluster, for instance, has held conferences for SMEs interested in entering the aerospace industry and has highlighted the capabilities of its members through webinars.

Companies in many industries could see significant benefits in diversifying their supply chains outside of Asia. PwC estimated that companies in the US could reduce their operating costs by 23 percent if they brought their production to Mexico. Local clusters aim to find opportunities in these changing times to help Mexico’s aerospace sector survive the crisis and recover. “While COVID-19 brought troubles, it also brought new opportunities. We are seeing that major aerospace OEMs are now relocating their supply chains and Mexico is a good alternative,” said Rene Espinosa, President of Chihuahua Aerospace Cluster.

Alicia Arizpe Alicia Arizpe Senior Writer