Opportunity Depends on Supplier Development SuccessThu, 03/28/2019 - 18:03
Q: How is TechBA supporting companies to take advantage of growing opportunities in the aerospace sector?
A: The world will need over 33,000 aircraft within the next 10 years and existing supply chains are unable to deal with this significant demand. In 2018, Mexico exported US$8.3 billion in aerospace components and the sector continues growing at a double-digit rate. The country has a great opportunity to supply between 10 and 15 percent of the components needed by aerospace OEMs within the next five years. To achieve this, FEMIA launched a Supplier Development Program to close gaps in the Mexican supply chain currently valued at US$650 million on a yearly basis, which is significantly more than the US$50 million in contracts the country had closed between January 2018 and March 2019.
We are supporting FEMIA’s program by identifying companies that can enter the local aerospace supply chain. In 2018, we performed a diagnosis of the companies that could participate in this initiative and we identified 180 possible suppliers. The goal is to increase the number of Mexico’s aerospace companies from about 300 to over 500 in the next couple of years. We are now working to help 15 companies in Aguascalientes and 10 in the State of Mexico that operated in different sectors, including automotive, metal-mechanics, electronics and medical devices, to enter the aerospace sector.
Q: How does TechBA identify potential suppliers for the aerospace sector and what are the most important strengths and opportunities the company has identified in the Mexican supply chain?
A: The main strength we have identified is human capital. Local companies have highly qualified employees but they lack quality processes, design, engineering, systems, digital tools and certifications.
Our strategy is to work closely with states because we do not have the resources to target company by company. We chose Aguascalientes and State of Mexico because those states have strong industrial capabilities but no aerospace industry. We have now developed strategic war rooms to help companies pinpoint opportunities in the aerospace sector. We are also training them in other areas, including quotations for the aerospace sector, cost-containment strategies, regulations and supply chain development.
Q: What role do clusters play in the evolution of the local supply chain?
A: Cluster members are companies that are already selling to the aerospace sector. We are working with companies that are not in the sector but could participate in it, filling niches in the existing supply chain and strengthening the network of 300 aerospace companies in Mexico. Many clusters are establishing their own supplier development committees focused on specific specialties, such as machining. They are also forming strategies to better promote their members. Clusters aim to specialize their capabilities in ways that can complement those of other clusters and together offer a stronger value proposition for the global aerospace sector.
Q: What is hindering the development of local design and engineering operations in aerospace?
A: There are already excellent design centers in the country, such as GE’s that employs 2,000 engineers working in turbine design. There is talent and quality education in Mexico; what is missing is the infrastructure and software necessary to engage in design and engineering practices and employ more qualified talent, as some companies consider the initial investment in technology to be very high. It is necessary to change the corporate culture so companies can start developing their own technology locally. This will be a slow process as Mexico is at an early stage in terms of the aerospace industry and most of its manufacturing capabilities follow blueprints developed by other companies. Few players have the capability to improve and change the given designs and create added value for clients.
TechBA is a technology business accelerator for SMEs in different sectors, including aerospace, automotive, pharmaceutical and agrifood. TechBA opened an aerospace division in 2008 and works closely with FEMIA to promote the sector’s development