Eng. Luis G. Lizcano is the President of the Mexican Aerospace Industry Federation, FEMIA.
Mexico offers the possibility of establishing a highly competitive business platform for North America, especially for European investors.
The Mexican Aerospace Industry Federation (FEMIA – Federación Mexicana de la Industria Aeroespacial) was set up at the end of 2007 with the aim of promoting the country’s aerospace industry. How has the industry evolved since then?
Despite the fact that in Mexico there had been aerospace industry operations since over 30 years ago, it can be said that the Mexican aerospace industry, as an industrial trend, started in the 2000s when different OEMs and Tier 1 suppliers began to consider Mexico as a good option to establish their operations, mainly manufacturing operations (Bombardier, Cessna, Beechcraft, etc.). At that time, annual exports amounted to $1.306 billion. The Mexican Aerospace Industry Federation was subsequently set up in 2007 with 21 founder members due to the fact that important companies in the aerospace industry found the necessary conditions to develop and drive forward a variety of projects in Mexico. By 2014, exports amounted to $6.366 billion, equivalent to an average annual growth rate of 17%, thereby generating more than 42,000 jobs distributed in around 300 companies, which are mainly located in the states of Querétaro, Baja California, Chihuahua, Nuevo León and Sonora.
The Mexican aerospace industry is undergoing constant growth, as can be seen in the job creation and export data. What are the short and medium-term economic forecasts?
Thanks to the signing of agreements like the BASA and Wassenar agreements, the short-term aerospace outlook in Mexico is very promising. Mexico is slated to be in the top-10 by 2020 in terms of international exports, generating $12 billion in aerospace goods. As far is employment is concerned, it is expected that there will be 110,000 direct jobs, of which 30% to 35% will be engineering jobs. National integration accounts for 50% of the manufacturing done by the industry and it will be ranked second in the manufacturing sector with regard to added value/sales.
In the medium-term, it is estimated that around 32,000 new commercial aircraft will be needed by 2035. In order to get an idea of the magnitude of this data, it should be noted that the current world fleet amounts to just over 20,000 aircraft. There is no doubt that this need will lead to a generalised increase in the Mexican aerospace industry’s business.
Which are the states or clusters with the greatest potential and what are the areas of specialisation of the aerospace industry in Mexico? What business opportunities does Mexico offer to investors, especially European investors who account for the lowest percentage in terms of capital investment?
The aerospace industry has a presence in 18 of the Republic’s 32 states. Nonetheless, a significant concentration is focused on five of them (Baja California, Chihuahua, Nuevo León, Querétaro and Sonora). These states have design and engineering centres specialising in aircraft parts, consisting of engine parts (propulsion), wiring, harnesses, interiors, flight control systems, fuselages, avionics and others. Regarding Mexico’s specialisation in the industry, the distribution by the industry’s number of companies is that approximately 80% of the companies focus on manufacturing, 11% on MRO (Maintenance, Repair and Overhaul) and 9% on engineering and design.
Mexico offers the possibility of establishing a highly competitive business platform for North America (United States, Canada and Mexico), especially for European investors. According to a study conducted by KPMG, Mexico is the most competitive country in the hemisphere due to its low manufacturing costs. Furthermore, Mexico offers an attractive establishment scheme for investing companies, since its legal framework facilitates this process, apart from the presence of the so-called “shelters” which provide human capital and many facilities to speed up the process of establishing a business in the country. Mexico can count on experienced construction firms and business parks. It is easier than it seems for European investors to establish themselves in Mexico, since the country offers a variety of investment schemes.
Some forecasts estimate that there could be 900 aerospace industry suppliers in Mexico by 2035. What challenges will FEMIA face in the coming decades?
Analysing the current situation and the forecasts for 2020, the challenge resides in the supply chain’s proper integration and maintaining the pace of generating human capital at a technical level to meet rapidly growing demand rather than the number of suppliers. However, the industry, the authorities and the education system are working hard to meet these challenges.
The training of future aerospace industry professionals is also an essential aspect that Mexico provides. For instance, it produces more than 50,000 engineers a year. What do you think are the great challenges facing the aeronautical training of future Mexican professionals?
Mexico has shown its ability to house the best companies in the aerospace industry, providing them with highly qualified professionals to produce, design, manufacture and market aeronautical components, as well as to maintain and repair them. The growth in demand has been so high that specialised universities have been built and degree courses on the industry set up, mainly in the states of Querétaro, Chihuahua, Nuevo León, Baja California and Sonora, to mention just a few. The main challenge facing future professionals will be to remain at the cutting-edge in the implementation of new aerospace component and aircraft manufacturing maintenance processes and technologies by constantly updating their knowledge of the aerospace industry, as well as its needs, and the development of national certification centres fully operated by Mexican personnel.
Is the “triple propeller” strategy based on companies, universities and the government working jointly the formula for success to consolidate the industry?
There is no doubt that the joint work conducted by companies, the government and academia has turned out to be an essential factor for the development demonstrated by the country’s industry. We are sure that this strategy will continue to give good results in the future to face the promising growth of this industry, which is strategic for the country.
What is the National Strategic Aerospace Industry Programme’s roadmap?
Through the coordination of a committee comprised by the government, the private sector and academia, the National Strategic Aerospace Industry Programme designed strategies to place Mexico among the most competitive countries in the global aerospace industry. Mexico has managed to obtain positive results in export and investment growth to position itself as a key player in the North American aerospace platform through the “triple propeller” strategy.