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Analysis

Queretaro: A Promise of Aerospace Development

By Jorge Ramos Zwanziger | Thu, 07/08/2021 - 13:35

Queretaro is strategically located in the center of the country, giving companies access to Mexico City, several other national markets, and the US. The state participates in all kinds of industries, from automotive to agribusiness, and has earned its position as a very important industrial and economic driver, being awarded different national and international distinctions, according to American Industries.  But there is one industry that has the potential for more, according to IPN. While already relevant in the state and national economy, the aerospace sector in Queretaro still has the opportunity to become even more relevant and impactful.

What is Querataro’s Role in the Aerospace Industry’s Development?

The state has huge participation in both the aerospace and automotive sectors, having both an aerospace and an automotive Cluster. “It is the fourth-leading destination for aerospace investment in the world,” said Major General Rodolfo Rodríguez Quezada, Former President of FAMEX, to MBN. To him, the state is extremely committed to its aerospace sector. “Queretaro has an active aerospace sector with 85 companies, including major players like Bombardier, Safran, GE and Airbus and many projects that will help it to continue growing.”

Since 2004, around 385 enterprises have joined the country’s aerospace industry, with over 450 entities currently operating in the country, reported MBN. Queretaro has been the primary destination of aerospace investments, according to FEMIA, which puts the state in fourth place regarding the number of aerospace economic units. Antonio Bravo Álvarez, Executive Director of FAMEX, said during a Business Forum that the industry had recorded an average annual growth of 14.4 percent in 2020 against 2019. This announcement was made during the pandemic, proving there are positive expectations for growth in the aerospace sector in the state and the country.

There have been different collaborative efforts among states in the Bajio to promote even better results in the region. Different states in the country got together through the Central-Bajio-West Alliance to create a road map to guarantee the integration of the first aerospace, aeronautical, and defense cluster in Mexico. The objective is “to achieve transcendence in the aerospace industry, [by developing a] route toward the integration of the first aerospace, aeronautical and defense supercluster in the country, [which] has been developed collaboratively with the state of Guanajuato,” stated Antonio Velázquez Solís, Director of the Queretaro Aerospace Cluster, according to El Economista.

FDI in Queretaro

According to data from the Ministry of Economy, between 1999 and 2019, the fabrication of aerospace equipment in Queretaro received around US$980,000, which represented close to 31 percent of all FDI in the aerospace sector in Mexico. Most of the products that are produced in Queretaro’s aerospace sector include aerostructures, special treatments, complex components of aerostructures, landing gear and engines, and composite materials. It should be noted that the first investments registered by the Ministry of Economy in the aerospace sector date back to 2006 and 2007, meaning growth is recent and has been fast.

“Growth has come from FDI but that is not infinite. Certain companies have invested a great deal in the region, but they are not going to invest at such a large scale forever. What [the state needs] is National Direct Investment (NDI). Queretaro is among the biggest FDI hubs [in the world] but what about national investments? Big industrial poles like Hamburg, Toulouse, Seville, and Seattle are not among the top FDI hubs but they do not need it; they have significant NDI levels,” said Juan Carlos Corral, President of the Queretaro Aerospace Cluster, to MBN. His concerns are profound as FDI flows are limited and the country has still to develop its own local manufacturing industry.

Support for SMEs

In an effort to develop local industry, the Queretaro Aerospace Cluster has developed programs to support SMEs that want to join the sector. “My main job as president of the cluster is not to support big companies, [the ones that have] the means and the connections to find support, but SMEs,” explained Corral. Supporting smaller companies in the region is extremely important, according to him, which is why measures have been implemented to include SMEs in the board, creating commissions that address their needs, giving them access to different courses and certification processes, among many other strategies to lift them to the level that the industry requires. “SMEs have difficulties paying for courses like these, so we need to be sensitive to that.” Support strategies have become even more important as the COVID-19 pandemic hit the aerospace industry hard.

Can More Be Done?

In Mexico, different challenges remain, according to Corral. “The first important problem that we have in Queretaro and throughout the country, even with FEMIA, is the lack of a strategic plan for the aerospace industry.” To him, this creates a challenge as there is no clear path that the federal or state governments nor private companies can follow. A strategic agenda must be developed for the country’s sector to move forward. “Mexico needs a strategic plan to approach the aerospace industry and it needs to define where it wants to participate.”

Another great challenge in Mexico’s aerospace sector refers to the COVID-19 pandemic, which took a huge toll on the industry, creating different challenges but also leaving room for different opportunities to boost the sector. “Support among the industries is essential for us and we promote it through many different actions, including sharing information, databases, best practices, and business opportunities,” said Jorge Rivadeneyra Díaz, President of CANACINTRA Queretaro, in an interview with MBN.

The aerospace sector is global and this can be beneficial or detrimental for recovery. “The more companies understand the market, the faster investments will arrive. Some calculations by major market analysis firms forecast that 2019 levels will return in 2022, in the best-case scenario, or 2024, in the worst-case scenario. It is true that USMCA will trigger some opportunities due to the new rules of origin but other trust boosters are needed as well,” said Daniel Hernández, Director General of Queretaro Automotive Cluster, in an interview with MBN.

The data used in this article was sourced from:  
MBN, IPN, American Industries, Ministry of Economy, El Economista
Photo by:   Ignacio Velez, Unsplash
Jorge Ramos Zwanziger Jorge Ramos Zwanziger Junior Journalist and Industry Analyst