Potential Hubs on the Rise

Most of Mexico’s aerospace sector is clustered in five states but the industry also is growing, albeit more slowly, in other regions. Unsurprisingly, the areas of greatest attraction are often those states that already have a strong manufacturing side on which aerospace companies can capitalize in terms of infrastructure, people, processes or logistics.

Businesses in the industry can often take advantage of the existing buildings and local talent that exist thanks to the automotive, oil and gas, electronics and technology sectors. Rymsa, which has experience in the appliances, automotive and oil and gas industries, is using these experiences to branch into aerospace. “The correlation between the oil and gas and aerospace industries is not instantly clear but both sectors are similar,” says René Trulin, Operations Vice President of Rymsa. “Some oil and gas areas have significant need for advanced technologies and have strict safety requirements due to the elevated risk associated with certain operations, which is comparable to the aerospace industry.”

Federico de la Hoz, Subdirector of Promotion of the Aerospace Sector at Bancomext, also points out that aerospace companies entering the country can piggyback their auto counterparts. “While these two industries differ in volumes and standards, they share processes, plant layouts, problem solving skills and sustainability practices.”

The existing infrastructure and manufacturing capabilities of some states are leading aerospace firms to regions where there is no specific aero cluster to support them, yet this has not been an impediment to their growth.

JALISCO

Jalisco is best known as the birthplace of tequila but it is also gaining recognition in different manufacturing sectors including IT, telecommunications and automotive. The state is rapidly gaining international recognition as an attractive destination for foreign direct investment (FDI) and received the second largest amount of FDI during the first quarter of 2016, totaling MX$1.45 billion, according to the Ministry of Economy.

Jalisco has a booming technology sector and is the proud owner of the largest technological cluster in Mexico, according to UNAM, and in Latin America, according to Aristóteles Sandoval, the Governor of Jalisco.

The state shares sixth place in quantity of aerospace companies with the State of Mexico and also has a blooming space sector. In late 2016, the state hosted the 67th edition of the International Astronautics Congress alongside the Mexican Space Agency (AEM), bringing together members of major global aerospace agencies including NASA and the European Space Agency (ESA). Jalisco hosts 12 aerospace companies including TATA Technologies, Hydra Technologies, Mercury Aircraft de Mexico and AVNTK.

STATE OF MEXICO

The State of Mexico can be an attractive destination for all manufacturing sectors. It holds third place for state investment in manufacturing after Coahuila, another nonofficial hub, and Queretaro, the rising star, according to León Sametz Ramba, President of Index Metropolitana.

However, the state appears to struggling to attract new investment to the manufacturing sector, Sametz says. While in 2014 the state was the second largest recipient of FDI with MX$3.19 billion, in 2015 that dropped to MX$2.67 billion. During the first quarter of 2016 it received only MX$699 million, placing it fourth, according to data from the Ministry of Economy.

The State of Mexico is well known for its auto sector, having the country’s largest number of automotive companies, 236 in 2015, according to INEGI. Some manufacturers in the state are branching into the aerospace industry, including Indumet, which specializes  in CNC machining and now counts aerospace giants Bombardier, ITP, Aernnova and Bell Helicopter among its clients. Besides these two companies, the state also counts on Raytheon Aircraft Services México, Dupart and Aerovics for aerospace operations.

NORTHERN STATES: COAHUILA AND TAMAULIPAS

Similarly to Baja California, Sonora, Chihuahua and Nuevo Leon, northern states Tamaulipas and Coahuila can capitalize on their closeness to the US to strengthen their manufacturing sector. Furthermore, the volatility of the peso-dollar exchange rate is actually strengthening the manufacturing industry near the border, says Julio César Almazán, President of Tamaulipas Federation of Commerce Chambers, Services and Tourism (Fecanaco). These two states are below Baja California and Chihuahua but above Sonora in terms of FDI and manufacturing companies.

Tamaulipas received MX$173.2 million in FDI in the first quarter of 2016 and in June 2016 held 6.6 percent of manufacturing facilities in Mexico, according to INEGI. In 2015, FEMIA counted 11 companies with aerospace activities in Tamaulipas, including Chromalloy, Eaton Controls, Corning Cable Systems and Cinch Connectors de Mexico. Coahuila is below Tamaulipas in FDI during that same period with MX$121.9 million but above in manufacturing companies with 7.2 percent of the country’s total.

In June 2016, Coahuila was in fourth place for manufacturing companies and personnel, according to Manufacturing, Maquila and Export Industries (IMMEX). Coahuila also places second in state manufacturing investment, at 35.2 percent, according to Index Metropolitana. The state had seven companies with aerospace activities in 2015, including Exova, Senior Aerospace Ketema, GSC International and Howmet de Mexico.

MEXICO CITY

Mexico’s capital also is its major economic center and leads the country in several areas. The city is in first place in employment generation, creating 71,771 new jobs in the first half of 2016 according to the Ministry of Employment and Social Prevision (STPS), and in FDI attraction, receiving MX$2.18 billion in the first quarter of 2016, according to the Ministry of Economy.

Historically, Mexico City has been a strong attractor of FDI reaching an accumulated MX$95.4 billion between 1999 and 2016, which more than doubles the FDI of the first runner up, Nuevo Leon with MX$41.87 billion. However, Mexico City is not known for its manufacturing  capabilities. In fact, according to data from INEGI, the number of manufacturing companies in the capital city has decreased annually from 2007 while the city grows as a business center. For that reason, Mexico City is home 179 to mostly commercial offices for international companies including Airbus Helicopters, Safran, SENER, TATA Technologies and Mirka. But it also hosts other services providers, including MROs such as Mexicana MRO and Servicio Técnico Aéreo de Mexico, and even technology developers like DECSEF, a front-end software designer for defense aviation.

“Emerging aerospace hubs are being built on existing infrastructure and capabilities, with companies that have been operating in Mexico for years,” says Benito Gritzewsky, the former President of FEMIA. “This makes it much easier to obtain certifications that are quality- control oriented and explains why aerospace companies are flourishing in several states in Mexico.”