News Article

A New Success Story for Mexico

Wed, 11/09/2016 - 16:31

The Mexican government’s position to push forward the aerospace industry is a national priority, said Francisco González Díaz, Director General of ProMéxico as he kicked off Mexico Aerospace Forum 2016 at the Sheraton Maria Isabel in Mexico City on Wednesday. “This is the start of a story of success for the country,” González, representing the Minister of Economy, said. “We will continue positioning Mexico as an increasingly important player in the sector.”

A day after Donald Trump surprised the world by winning the US presidential election, González expressed concerns about the result and highlighted the uncertainty of the situation. “What happened yesterday is something that we still cannot understand until there is a defined plan from the new president.”

In just one decade, Mexico has moved from a handful of companies in the aerospace industry to more than 300 players contributing to the sector’s growth. With 45,000 people employed nationally, the country now occupies the 14th place in the aerospace industry globally.

With exports of US$381 billion and reserves of US$177 billion in 2015, Mexico is ranked 18th in AT Kearney’s Investment Confidence Index. The country ranks 22nd in the Harvard and MIT Atlas of Economic Complexity, relating knowledge and practices to competitiveness and future economic growth. Coupled with strong commercial relations with 46 countries, this has a strong impact on the growth the aerospace industry is experiencing. “The TPP will also bring a new change, although this evolution will need to wait for ratification of the new agreement from Japan and the US,” added González.

During his opening presentation, the Director General highlighted Mexico’s evolution as an advanced manufacturing hub. “Mexico has moved from basic and low-level manufacturing processes to increasingly complex products including design and engineering processes.” The country is now producing more engineers than France, the UK and Brazil, rivaling the professional environment of countries like the US and Germany. “Mexico is currently the third largest exporter of medium and high-technology products behind Germany and South Korea,” González said.

With a world manufacturing value in 2015 of US$582.6 billion, Mexico has an enormous opportunity for development. “The country’s production costs are 13 percent lower than in the US according to KPMG,” said González. Even so, there are still opportunities to address in the sector. “The government identifies treatments, sheet metal, machining, electronics, castings, forgings and harnesses as the main areas of opportunity,” he states. “We need to create opportunities for Mexican companies to participate in the aerospace sector.”

Queretaro is ranked fourth globally as an investment destination, followed by Chihuahua in sixth place. “Overall, Mexico is ranked third among top countries for aerospace investment according to the numbers between 2009 and 2015,” he added.

Mexico has five large aerospace clusters. Baja California leads the charge with 70 companies, followed by Sonora with 50. Queretaro ranks third with 41 players, while Chihuahua and Nuevo Leon add 35 and 32 each. “I want to publicly add today Yucatan to the list as a state moving into the aerospace industry,” said González.

Mexico’s manufacturing advantages are fueled by a positive forecast in commercial and cargo aviation. “In the next 20 years, commercial cargo fleets will double according to Airbus’ global market forecast,” González said. This will lead the market to increase its demand twofold with generalized growth throughout the globe.

By 2035, human capital needs and the value of the MRO market is also expected to increase. Particularly in North America, González highlights the US$314 billion value of the MRO market and the approximate demand for 73,600 pilots.

R&D operations are also growing with companies like Honeywell, Safran, GE and Bombardier having important projects. However, according to González, “this is something that requires many years and a large investment.”