Outlook for Aerospace Manufacturing in Mexico
By Doug Donahue
The Mexican manufacturing industry is situated well economically and geographically for optimal growth with regard to the aerospace industry. The growth of Mexican manufacturing within and for the aerospace industry did not happen overnight. As recently as 15-20 years ago, there was a limited manufacturing presence in Mexico for the aerospace industry due to lack of dedicated infrastructure, shortage of skilled engineers locally with aerospace experience and the inability to support the more complicated operations required by the industry.
This has slowly changed over the past generation, as Mexico-based manufacturers have gained a greater reputation as an affordable alternative to Asia for the aerospace sector. Once this tipping point was reached, more aerospace companies, and suppliers to aerospace, chose to benefit from the competitive advantage of manufacturing in Mexico, helping further expand the industry’s footprint in the country.
With companies from Honeywell to Airbus to Bombardier engaging in manufacturing, MRO (maintenance, repair and overhaul) and R&D, a wide range of operations and services for aerospace and aviation are being conducted in Mexico. The Mexican government’s Ministry of Economy conducted a study, “Strategic Program of the Aerospace Industry 2010-2020,” that projects exports in 2012 of $12.26 billion, representing annual average growth of 14%. GE Aviation Systems and Embraer were two major players in the aviation/aerospace sector to recently announce growth plans for their Mexican operations.
What accounts for this explosion of growth in manufacturing in Mexico for the aerospace industry? To be sure, proximity to important North American markets and innovative R&D facilities play a factor. Competitive labor rates have also been a boon to Mexican manufacturing. But recently, Mexico has enjoyed a greater reputation as a partner in the industry, thanks to the creation of an efficient export control system there.
Mexico gained entry early in 2012 into the Wassenaar Arrangement (WA), a multilateral export control scheme in which 41 nations participate. By acceding to WA, Mexico opened itself to new markets and trading partners and further underscored the country’s commitment to transparent trade processes.
Further, several major industry players are working to create the Integral Aviation Systems Center in Mexico. This facility would help manage maintenance programs (particularly engines and fuselages) on mature fleets.
Last but not least, Mexican manufacturing is benefitting from a renewed commitment to education in engineering and technology programs in the country. This phenomenon is not unique to the aerospace/aviation sector, but it helps further explain the high level of engineers available in the country.