Stable Demand Will Lead to Continuous Growth

Q: How close is the country to reach Pro-Aéreo’s goal to rank among the Top 10 aerospace suppliers by 2020?
A: The industry has grown significantly in the last few years. Preliminary data indicates that the local aerospace industry registered over 13 percent growth in 2018, from about US$7.6 billion in component production in 2017 to US$8.6 billion. Few industries grow at a double-digit pace. For that reason, I am certain that Mexico will enter the Top 10 global aerospace suppliers by the end of 2020.
In the first Pro-Aéreo, we had calculated a much higher figure for employment, which was inadequate given that aerospace operations require a smaller workforce than other sectors. However, these individuals require much more training and specialization so their jobs have more responsibilities and higher pay. We are working with INEGI and the Ministry of Economy to create a detailed plan to measure how many jobs the aerospace sector creates. By 2020, we expect the sector to employ around 70,000 individuals, up from the 55,000 direct jobs we estimate the industry generated by 2018.
Q: How important is the aerospace industry to the development of the Mexican economy?
A: The country continues to receive FDI projects, although they have been somewhat delayed due to the change in administration and the USMCA negotiations. However, investments in the aerospace sector are often planned years in advance and they will continue despite any short-term circumstances. We do not have exact data to calculate the impact of the aerospace industry on Mexico’s GDP but as the sector continues to grow, we are certain that it is increasingly playing a bigger role in the country’s GDP.
Q: How is FEMIA addressing the main gaps in the Mexican aerospace supply chain?
A: The Mexican aerospace supply chain has significant gaps in metal-mechanic capabilities, including sector-specific casting and forging. The sector also has a need for other special processes specific to the industry. Our goal is to identify companies that can satisfy this demand and bring them to Mexico. Another goal is to consolidate the local supply chain to then focus on exports.
FEMIA created a national program for the development of aerospace suppliers with three phases. The first is the identification and quantification of supply gaps in the sector and at this stage we have identified annual opportunities for over US$630 million in several technological areas. The second phase, which was implemented in 2018 in collaboration with TechBA, was the identification of potential suppliers in related fields. We evaluated more than 400 companies and we are characterizing their capabilities. Once we have this data, the final phase will be to match demand to potential suppliers. This is a complicated matter as contracts in the aerospace industry are extremely complex. We have not officially started the third phase but we are having some early results and have assigned contracts worth US$37 million to 15 Mexican suppliers, many of them SMEs and most of them with a Mexican capital origin. After implementing this plan, we realized that we needed to work more toward having suppliers ready as there was a gap in the capabilities of these companies and the demands of the sector.
Q: What opportunities do you see for the Mexican aerospace sector and how can foreign competition impact its development?
A: The aerospace sector welcomes competition. As the sector operates at a global level, a company in Mexico competes with those in the US, eastern Europe and Asia. Between 90 and 95 percent of Mexico’s aerospace industry focuses on commercial and civil aircraft, a sector that could be subject to migration toward Asia because the region is experiencing growing demand for these flights. However, once a company enters the sector it can supply many other countries besides Mexico. While Asia is expected to eventually surpass North America in flight demand, this is unlikely to have a strong impact on the industry, which would not be the case in other sectors like automotive, where end-product logistics play an important role.

The Mexican Federation of the Aerospace Industry (FEMIA) is a private, nonprofit organization. Its main objective is to group national and foreign companies that operate in Mexico’s aerospace industry to generate synergies and positive leverage