Mexico: The New Global Aerospace Hub
The competitive and comparative advantages of Mexico’s aerospace sector, such as an effective legal framework for the protection of industrial property, have attracted foreign investment and contributed to the growth of the industry.
Over the last seven years, Mexico’s aerospace industry has posted average annual growth of almost 20%, consolidating it as a leading global actor. There are currently 249 aerospace companies and related entities operating in Mexico, the bulk of which is concentrated in six states and which employ some 31,000 highly-skilled professionals, most of whom are registered with the Performance Review Institute’s National Aerospace and Defense Contractors Accreditation Program (NADCAP) and under the Aerospace Standard 91000 (AS9100) certification.
A combination of advanced technological exports, talented engineers, competitively priced and skilled workforce and an effective legal framework for the protection of industrial property have positioned Mexico as a manufacturing, engineering and development hub of great strategic value to the aerospace industry.
In 2011, Mexico’s aerospace exports were valued at 4.33 billion usd, while investment in the sector surpassed 1 billion usd. Over the last four years, more than 4.2 billion usd have been channeled into the industry by foreign and Mexican investors. By 2021, exports are expected to be worth 12.27 billion usd, with the industry registering an annual average growth rate of 14%, according to estimates by the Strategic Aerospace Industry Program (Pro-Aéreo) coordinated by the Ministry of Economy (SE).
Mexico’s main commercial partner in the industry is the US, where a decline in specialized human resources has played a part in establishing the former as a strategic partner of the latter in the aerospace and defense industries.
Likewise, the budget crisis in the US has forced aerospace companies, especially those with government contracts, to seek out competitive options like Mexico, which, according to a study by KPMG, is the most competitive country on the continent in terms of aerospace manufacturing costs.
Mexico also produces more engineering graduates than any other country on the continent. According to data furnished by the National Institute of Statistics and Geography (INEGI) and the National Association of Universities and Higher Education Institutions (ANUIES), over 745,000 students –30% of the country’s total university population– were enrolled in engineering and technology courses, which yield some 115,000 graduates every year.
These factors have all come together to foster the creation of highly-competitive hubs that operate within a world-class, certified ecosystem. In that respect, Mexico’s geo-strategic position, together with its competitive and comparative advantages, make it an ideal destination for the manufacture of dual-use goods and restricted technologies. Given the huge potential of these sectors, a regulatory framework has been drawn up to guarantee that high technology items produced by Mexico are put to good use and that they do not fall into the wrong hands.
One example is the Bilateral Aviation Safety Agreement (BASA) with the US, which allows for the standardization of certifications granted by Mexico’s civil aviation authority (DGAC), which reports to the Ministry of Communications and Transportation (SCT), and its US equivalent, the Federal Aviation Administration (FAA). That has facilitated the export of designs and products by Mexican-based companies to the US market.
Another argument in Mexico’s favor is that it has an export control system approved by the Wassenaar Arrangement, which seeks to contribute to regional and international security and stability by promoting greater responsibility in transfers of conventional weapons and dual-use goods and technologies, thus preventing destabilizing accumulations. As a participating state, Mexico is not only contributing to the non-proliferation of weapons of mass destruction but has also won some important hi-tech civil and military contracts.
The fact that Mexico was admitted into the Wassenaar Arrangement in record time –even ahead of countries that had requested membership in previous years– goes to show that the international community trusts Mexico as a safe destination for the manufacture of sensitive technologies. Furthermore, it is proof of the country’s commitment to providing legal certainty in the production of dualuse goods and services and restricted technologies.
According to estimates from the Ministry of Economy, thanks to Wassenaar, Mexico’s exporting industry will access an 11.3 billion-usd market.
Mexico’s strategy, then, will be to consolidate its position as a destination that serves the complete aircraft cycle, from design and engineering to the manufacture of parts and structures and their assembly, aircraft maintenance, recycling and/or conversion.
Concomitantly, strategies are being implemented to develop the aerospace and defense industries, which take into account the specific capabilities of each state and the industrial niches they cater to, with a view to defining their area of expertise.