New Development a Testament to Mexican Supply Chain Potential

 Vertical integration within the aerospace supply chain has become very important,  but it still requires stronger participation from local, Mexican companies and the strong and decisive collaboration of the big aerospace companies.

The specialization in more complex processes will make the difference, meaning that Mexico can switch from being a low-cost country contributor to a key supply chain element.

Just recently, I had the opportunity and the honor of being invited to the grand opening for the new process of HIPing, a unique and extremely important process for the industry that has the support and collaboration of a key supplier to the world’s major aerospace companies. The most important and relevant fact is that the entrepreneurs and technical and engineering staff areMexican, a smart team from Chihuahua, a state that after years of significant monetary investment and adjusting to the learning curve, developed the human talent to create a state-of-the-art operation.

 The company referred to above isHTMX, and its head Humberto Ramos and his fabulous team. After a long and complex certification and validation process, HTMX became the first-ever Latin American company to become NADCAP certified for the  HIP + Heat treatment operation. HIPing is a thermo-mechanical process used to improve density in metals and ceramics with the use of extreme temperature and pressure. This guarantees desired mechanical properties for critical aerospace components, among them engine parts. Honeywell has been the key sponsor throughout the whole process, which has taken a few years.

This represents a huge milestone for the development of the Mexican aerospace industry, and proves that dedication, study and a firm vision of the objectives leads to a clear path and success. The key is to follow the right steps, and find a way to bond with final users, creating a true commitment between both parties.

We are very proud of HTMX’s success and hope this inspires others to have the patience, dedication, and discipline to understand the nature of the aerospace business. It is a huge wheel that turns slowly, but it is a long-term relationship with very good economic benefits in the long run.

It has been many years since the aerospace industry started in Mexico, and we have experienced significant progress thanks to foreign investment, but also the participation of a few Mexican companies. It should be recognized that this participation has been growing, although not with the velocity to assure a solid local supply chain based on national investment in the next five five years. Nearshoring in aerospace, however, is now an element that can help solidify this.

Mexico has recovered its first place global ranking as the main exporter to the US. In January 2023, Mexico represented 15.2% of US imports with a bilateral value of US$63.9 billion,  or about US$2 billion more than Canada.

It should be pointed out that current economic conditions represent a high-risk factor in 2023, with a potential recession that could impact cash flows and investment considerations..

On the other hand, history has shown that many companies have been successful by taking  a risk when the market was walking in the opposite direction. I am not  clairvoyant, but certainly when the times calm down, those taking the risk today may be the first  in line to attract or attack the market in the future.

The follow-up and sponsoring that Honeywell did over all these years has come to fruition and demonstrates the exact steps that need to be followed to really create a supplier that is well developed and strongly allied with the exact needs of their business.

Having this kind of commitment and compromise, we certainly will be capable of creating a strong and valuable supply chain. The example exists, and the steps can be shared. Willpower is the key to make it happen; it is a win-win situation .

Unfortunately, there are no clear paths on the federal government side to support these efforts, although it is clear our progress  will bring with it the transfer of technology and make Mexico a higher-value-added country. These efforts can certainly be completed by the private sector, perhaps  with support from some of the states or municipal authorities, which can provide funds to establish the greenfield and basic infrastructures that spur the development of local talent and an entrepreneurial society.

Let's work together, both big companies and PYMES (small and medium size businesses), in our efforts to be competitive and have a strong and solid vertical integration in the country.

The banks will also have a chance to participate in the processes, but current conditions are prohibitive for financing projects, given the high interest rates today. We certainly need to create a real development-based financial institution that can provide support at  lower than market interest rates, just like development banks do in other latitudes. Again, though,  this requires the vision of the government to collaborate on projects that will create  new jobs with significantly better salary ranges. That is how we will really create better jobs that are better paid,  reducing the need for the subsidies that are provided  due to the lack of good job opportunities.