V-Shaped Recovery for Mexico’s Exports

Specialized products exports, including aerospace and technology products, showed positive results in 3Q20, pointing to a V-shaped recovery that could benefit the overall Mexican economy. Between January and August 2020, exports of advanced technology suffered a drop of 2.8 percent compared to 2019. However, according to the US Trade Department, exports rose in June by 6.3 percent, July by 6.9 percent and August by 2.3 percent, reports El Economista.

Mexico’s exports to the US in this segment include advanced electronic materials, biotechnology, aerospace materials, nuclear technology, weapons, flexible manufacturing information and communication, and optoelectronics. According to El Economista, these sectors are among the most important for Mexico’s country's economic and industrial development, representing 18.6 percent of the total export value. Despite the unavoidable contraction, these sectors were also among the least affected during the pandemic, with exports including aerostructures, specialized medical devices, computers, microprocessors, televisions and smartphones.

The aerospace sector, in particular, keeps growing and despite the pandemic, companies have positive forecasts for its future development. In 2004, the country had 100 companies specialized in this area and in 2019 there was an increase of 260, according to FEMIA. Of the entire pool of companies, 72.2 percent are manufacturers, 13.2 percent focus on design and engineering, 11.2 percent on MRO activities and 3.4 percent offer supporting services, report El Economista and FEMIA.  The association also estimated that in 2019, 48 percent of the FDI in the sector came from the US and 36 percent from Canada.

The way to boost growth, according to the US Trade Department, is to develop research centers to support development in the sector, promoting technological solutions, developing new ways to manufacture aerospace components and new engineering processes. “While COVID-19 brought troubles, it also brought new opportunities. We are seeing that major aerospace OEMs are now relocating their supply chains and Mexico is a good alternative,” said Rene Espinosa, President of Chihuahua Aerospace Cluster, in an interview with MBN in August.