Negocios / Airbus Group and Mexico, partners on board

Airbus Group and Mexico, partners on board

Both supplier and client, however we look at it, Mexico is a key hub in the global business of Airbus, a company with an annual turnover of 57.6 billion Euros and a workforce of 139,000 employees worldwide.

The relationship between the current state of the aerospace industry in Mexico and the expansion of the Airbus Group out of Europe and towards other strategic regions is increasingly evident.

On the one hand, Mexico is a major production hub in the chain of inputs and services required by the constituent entities of the global corporation –Airbus, Airbus Defence and Space, and Airbus Helicopters. On the other, the firm is a major player in Latin America, while a large number of low-cost airlines –which use Airbus aircraft– have increased their participation in domestic markets in a sustained manner.

Frédéric Garcia, CEO of Airbus Group Mexico, confirms that in the past six years the number of suppliers based in Mexico has tripled and is expected to double between now and 2020. Those projections, in his view, are independent of the decisions to be taken by the corporation with regard to the final assembly plant it recently set up in Mobile, Alabama, in the US.

"In our view, Mexico is a very significant country in terms of procurement; in fact, our experts have identified the country as one of the leaders worldwide in that area," he states.

According to Garcia, Airbus Group Mexico currently employs 400 people directly, while some 5,000 jobs in the country indirectly depend on the operations of the pan-European giant of the aerospace industry.

It is worth emphasizing that in May, 2014, Airbus Defence and Space Mexico won recognition as a "Best Place to Work" for the fourth time in the ranking drawn up by CNN Expansión and Top Companies.

Mexico's mark as a supplier country is found in a number of Airbus models including Airbus Helicopters which manufactures in Querétaro the door structures for its A320 family, and Grupo Safran, which produces the cabling for the A380 in Chihuahua, and, again in Querétaro, components for the aircraft's braking system. Other providers located in Chihuahua include Zodiac, which is responsible for the emergency slides, and Honeywell, which delivers parts for the turbine systems. Elsewhere, turbine parts are manufactured in Nuevo León and components for aircraft structures in Sonora.

To that must be added the potential positive impact of transferring Airbus's final assembly lines to North America, which would imply, as the company has indicated in recent months, a gradual increase in the demand from suppliers in the southern US and north of Mexico.

Meanwhile, Mexico will continue to be present at a key moment for the corporation at which it is further boosting the internationalization of its procurement. According to forecasts from Airbus Group Global Sourcing Network, by 2020 around 40% of the group's purchases will be made in countries outside of Western Europe. To that must be added the growing demand for aircraft resulting from the current expansion of low-cost airlines: a large volume of the A320 family and also of wide-body aircraft such as the A330, A350 and A380.

Garcia describes the situation as follows: "There are a number of factors to explain the increasing share of Mexico in the Airbus Group supply chain. One is the growth in demand for aircraft itself. As a group we have a consolidated order backlog as of December 2013 worth 687 billion euros and a large percentage of that is allocated to procurement."

Mexican bodies for business promotion and support have done their bit, Garcia acknowledges, in terms of public policies to develop the aerospace industry in Mexico as a strategic sector. "We have maintained an excellent relationship with ProMéxico, for example, over many years. They were involved from the start in our project to establish a plant in Querétaro and their support has been very valuable in bringing those plans to fruition."

Aerospace industry on the up
According to a number of market projections, Mexico will purchase 634 aircraft over the next 20 years. Most of these will be single-aisle models, like the Airbus A320, but a number of wide-body craft are also under consideration.

"We are not mistaken in claiming that air traffic increases, on average, at double the rate of a country's growth, which is a good indicator for Mexico over the next few years. The demand for air travel in the country will grow at a significant rate," Garcia considers. He continues: "In this context, low-cost airlines like Volaris, VivaAerobus, and Interjet have determined that the new generation of Airbus aircraft, which provide efficiency savings and low fuel consumption, are suitable for that sector of the air transport market."

Indeed, one of the aspects Airbus Group is mostly promoting around the world is its investment in research and development to offer the market products with a reduced environmental impact, modernizing air travel and boosting the use of alternative fuels.

In October 2013, the Mexican company VivaAerobus, part of the IAMSA group, made history by signing a contract with Airbus Group for the largest ever order of aircraft for a Latin American airline. The purchase order is for 52 aircraft –40 A320neo and 12 A320ceo– which represents a full renewal of the fleet, a transition that will be complete by the end of 2016. Meanwhile, in 2012, Volaris and Interjet have placed orders for 44 and 40 aircraft respectively.

Moreover, Airbus Defence and Space recently demonstrated its A400M aircraft to Mexican authorities. "We have received very positive opinions from users and now the decision lies with them –but we firmly believe this is an aircraft highly suited to Mexico's needs, above all in terms of civil protection," says Garcia.

At the same time, the company's plans to set up two maintenance bases have been revealed, one in the center and another in the south of the country, which would service some twenty CN235 and C295 aircraft.

So it is that Mexico and Airbus have found the right formula to remain partners in flight on a journey that, according to many forecasts, points to the consolidation of the Mexican aerospace industry as a key player on the sector's global stage.

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