Spanish Influence Colors Queretaro's Aerospace

When asked about Queretaro’s aerospace industry, many will point to Bombardier’s arrival in 2006 as the true start of its involvement in the aerospace value chain. In fact, the real beginning happened almost a decade earlier when a Spanish titan arrived on Mexico’s shores. Some of its compatriots would soon follow.

The company is one of the top 100 aerospace firms in the world, according to PwC. It saw Queretaro as a suitable location to provide MRO services for the Pratt & Whitney JT8D engine, commonly used in Boeing 727s and 737s. Introduced in 1964, 14,750 JT8D engines were in planes all over the world at one time but they are gradually being replaced. Today, only 2,400 are in use. This has led ITP to reduce its MRO activities and to diversify its services toward developing local engineering and manufacturing for the Rolls-Royce Trent and BR700 and the Honeywell HTF 7000, among several other engines.

“We are planning to manufacture 230,000 rigid engine and aircraft pipes this year, to move from one of the top producers for pipes in America to number one in the world,” says Corral.

After Bombardier’s entrance to the newly forming manufacturing hub, Queretaro’s latent potential awoke and many more aerospace companies gravitated to the state, leading to the creation of the Queretaro Aerocluster, which is the youngest aerospace cluster in the country. In 2015, the local aerospace sector employed 8,000 of the 48,000 total jobseekers in Mexico.

Queretaro also accounts for 37 percent of the domestic aerospace industry and has attracted almost 50 percent of the total foreign direct investment targeting the industry in the last 15 years.

At the end of 2015, the aerospace segment in Queretaro was comprised of 80 companies and institutions, including technical and engineering universities and research centers, Of these educational and R&D facilities, 39 are members of the aero cluster. “Queretaro Aerocluster is the youngest in Mexico but probably the most dynamic,” says Claude Gobenceaux, the cluster’s President.

The state of Queretaro also is building a new facility, the National Center for Aeronautics Technology (CENTA), that will exclusively focus on the aerospace industry. CENTA will employ specialized aeronautics engineers, chemists, physicians, mechanics and mathematicians to generate investigations and solutions for the global aerospace industry, and training talent for local manufacturers in the process.

Aernnova is another of the Spanish companies that saw potential in the state. Javier Pérez, Director General at Aernnova, says the company chose Queretaro after a year-long analysis when it was just beginning to expand internationally. “Studies showed that, out of 20 countries, Mexico and China were the best options for our envisioned process of internationalization,” says the Director General.

The company was attracted to the state’s competitive prices, proximity to existing and potential clients and shared time zones with the US. The move to Mexico rather than a non-Spanish-speaking country facilitated the move for both entities. Expatriated employees must be taken into account to ensure a smooth entrance to the new host country, as low turnover has proven to be integral to most industries.

In 2008, Aernnova inaugurated two plants. One location manufactures metallic components for OEMs and Tier 1 companies. It now employs approximately 200 people and covers 15,000m2. The second plant assembles aeronautics structures such as wings, empennages and fuselages. It has 500 employees and measures 16,000m2. Pérez says that the company’s offices in Queretaro have allowed Aernnova to secure contracts with new clients. Aernnova currently manufactures for Beechcraft, Bombardier and Bell Helicopter, among others. These plants have incorporated the innovative technologies and all certifications required by its clients to its operations in Mexico to ensure the high standards required in aerospace manufacturing are met.

While the two companies manufacture for different segments, they share a similar vision for the state’s industry and what it needs to do to achieve it. “Our analysis in 2007 showed there was not a sufficiently established supply chain to begin operations without importing the majority of the components from Europe or the US,” says Pérez.

ITP faced a similar situation to Aernnova in terms of the local supply chain, amid a lack of suppliers for thermal and surface treatments specific to the aerospace industry. This forced local aerospace companies to perform these specialized treatments in the US. Transporting goods across the border causes delays and extra costs, greatly reducing competitiveness. “Studies showed that, out of 20 countries, Mexico and China were the best options for our envisioned process of internationalization” Javier Pérez, Director General at Aernnova

The lack of specific treatments available in Mexico's industrial clusters is a countrywide problem that some companies, like fellow Spanish firm Aeroprocess TTT, see as an opportunity. The company is an international specialist in heat treatments for the automotive, oil and gas and aerospace industries. Albeit small, as part of the TTT Group, the company's knowledge of machine tools means it can offer Mexican manufacturers carbonitriding and induction tempering, shot peening and grinding, vacuum tempering, nitriding, HVOF and quenching.

But one company cannot bridge the wide supply chain chasm and the state’s booming industry will need much more support in the coming years.

Many entities in the Queretaro Aerocluster are joining forces to close the treatments gap. “Both the state and the federal governments are involved in developing the supply chain through the incorporation of foreign medium-sized companies and the inclusion of local Tier 2 and 3 companies, which are essential for the existing companies in the cluster,” says Gobenceaux. The government's involvement is crucial as process standards must be certified to be able to supply the sector's original equipment manufacturers. These certifications can be the main barrier to entry to small to medium enterprises interested in fulfilling the sector's treatments needs.

As the Queretaro aero cluster keeps growing, local industry will inevitably see more investment from foreign and domestic sources, and will also gain from the experienced input of companies like ITP and Aernnova. For these Spanish businesses among many others, the time is now to take advantage of opportunities to strengthen the supply chain, the aerospace industry and the state.