Mexico Outsourcing Podcasts
Aerospace Industry in Mexico
Podcast Transcript
Interview with: Carlos Bello, Executive Director of the Mexican Federation of the Aerospace Industry
The Offshore Group: Welcome to another installation of another series of the Offshore Group audio podcasts, on subjects that have to do with the Mexican economy, manufacturing in Mexico as well as offshoring subjects.
Today we have a very interesting topic that are going to look at. We have a very remarkable guest, his name is: Carlos Bello, he is the executive director of the Mexican Federation of the Aerospace Industry.
Welcome, Carlos. Can you please tell us a little bit about yourself?
Carlos Bello: Thank you, Steve. I appreciate this to speak with you about the aerospace industry in Mexico.
My name is Carlos Bello; I am the executive director of Federación Mexicana de Industria Aerospacial A.C. (Mexican Federation of the Aerospace Industry).
It’s a very young organization, the aerospace industry in Mexico’s equivalent to the AIA (Aerospace Industries Associations), in United States. Our association was established 3 years ago.
The Offshore Group: Very interesting. During the last 3 years, what kind of progress have you made in the organization?
Carlos Bello: The project started in Nov. 2007 and was officially operating in May 2008. The initial idea to form the association came from several companies from Queretaro, Chihuahua, Baja California and Monterrey who gathered and planned for an aerospace federation in Mexico. The same group created the bylaws and named themselves as founding (original) members.
When I was invited to work at the association, there were only 13 aerospace companies in Mexico as members.
I was involved in establishing the structure of FEMIA (which is the acronym for Federación Mexicana de Industria Aerospacial A.C.), setting headquarters in Mexico City, which allows us to centralize and work closely with every geographic cluster in represented in the aerospace industry in Mexico.
The Offshore Group: How large is the aerospace industry in Mexico today? What do you see as a growth projection over the next five years or so?
Carlos Bello: We have 232 corporations in the aerospace industry in Mexico. That means companies involved directly in manufacturing, MRO or design and engineering in aerospace.
There are also other types of companies related to the supply chain of the aerospace industry in Mexico.
I would say that in total related with the industry, there are approximately 29,000 workers involved in the aerospace industry in Mexico in sixteen states.
The Offshore Group: What kind of growth do you see in the future?
Carlos Bello: We’ve been experiencing a growth rate of about 20% per year, with the exception of 2009 which was a critical year for the aerospace industry worldwide. However in 2010, we started to recover.
We’re estimating that in the next five years there will be three hundred and fifty aerospace companies in Mexico, employing over 37,000 workers. This year we’re expecting exports of over $7.5 billion. This compares with exports during 2010, which totaled about $3.5 billion.
The Offshore Group: Very interesting. Could you tell us, where are the largest concentrations or clusters of aerospace companies in Mexico are located?
Carlos Bello: Even though, there are sixteen states that have aerospace companies in Mexico, I would say, we only have five clusters. They are located in Baja California, Sonora, Chihuahua, Monterrey and Queretaro. They are grouped in three regions: the Northeast, Northwest and Central region of Mexico.
The Offshore Group: In these clusters that you’ve mentioned, what are the main activities being performed and the main products that are currently being manufactured for the aerospace industry in Mexico?
Carlos Bello: Seventy five percent of aerospace companies in Mexico are manufacturers, eleven percent are MROs and ten percent are involved in design and engineering.
Most of the products manufactured in the aerospace industry in Mexico are: harnesses, fuselage, landing gears, parts and turbines, composites. We’re getting very good producing aerospace composites.
Some of the factors that have placed Mexico as a key player in the aerospace industry are:
- Mexico is next to the world largest market, North America, which controls between sixty to sixty-five percent of the global aerospace industry.
- Mexico has an excellent workforce, with engineering skills specialized in the aerospace industry. Mexico’s labor is cost competitive. It offers a savings of between twenty-eight to thirty-four percent when compared to other countries.
The Offshore Group: It is being reported government on several levels is taking significant steps to build a good educational infrastructure so people can learn skills applicable to aerospace companies in Mexico. Can you comment on this?
Carlos Bello: Yes, we have a training commission in FEMIA. Its goal is to identify the seven main job profiles required in our workforce to support the aerospace industry in Mexico. We define specific educational profiles, for example: high school graduates, technicians, engineers, PhDs or Masters. We send the information to the companies and ask them for detail information on their labor requirements, and their project timeline.
We also work with our sister association COMEA, which is the Mexican Council of Aerospace Education. This organization was formed by eighteen universities, and other higher level technical institutions.
We provide them with information related to the skills needed in the industry, and tell them where they can find special training courses. For example these can be found at MIT, in Toulouse France, at McGill University in Montreal, as well as at institutions of higher learning such as Stanford. They work with these universities in an effort to benchmark courses/ techniques to satisfy demand of skills needed in the aerospace industry in Mexico.
The Offshore Group: So, FEMIA obviously is actively involved in training. What other things does FEMIA do to help develop the aerospace industry in Mexico?
Carlos Bello: We have a customs commission, which helps to lobby the government so that lower and more simplified tariffs can be paid by aerospace companies in Mexico.
For example, we have only one tariff for the importation and exportation of any product in the aerospace industry. The tariff number 980600-5 and 980600-6.
We also have a competitiveness commission. We work very closely with the companies to help them to get various aerospace industry certifications. Aerospace OEMs commonly require that their suppliers obtain certain certifications. We are currently working on implementing and helping companies get pre-NADCAP certifications, as well as AS9100 level B and C recognition.
FEMIA has access to government grant money that helps fund seventy percent of the certification costs. Aerospace companies in Mexico that we work with pay just thirty percent. Our goal is to work with the participants from beginning to end. There is no need of any experience, as we provide a counselor to work with each company until their certification is achieved.
We also have a supply chain program, for aerospace suppliers working in Mexico.
We have an infrastructure commission, as well, which is working on analyzing the type of platform and services needed to support the growth of the aerospace industry in Mexico.
We have an incentive commission. This group helps identify special incentives. We have identified sixty-two federal incentives, which companies can benefit from. We inform the companies on how they can take advantage of them. We advise and assist aerospace companies in Mexico on the procedures to request them. There are also state government incentives available.
We are also working on a special security commission, which we are now considering on an international level. We’re about to sign some agreements that would give us international competitiveness to enter into defense programs such as: the BASA agreement, the Australia Group, the Missile Control Regime, and the Nuclear Supply Group.
We are now working on the National Strategic Plan for the aerospace industry in Mexico for the next 10 years. This will be a simple document with many annexes. The final document will have about twenty to thirty pages that describe the state of the aerospace industry in Mexico: Where we stand. What our goals and objectives are. What we require from the government, as well as what we need to do in order to be more competitive in the aerospace industry worldwide.
The Offshore Group: Carlos, would that particular document for those that might be interested in learning the details of how Mexico plans to go forward to develop its aerospace industry. Would that document be available for anyone that might want to seek it?
Carlos Bello: We are currently working on it, and are hoping to it finish by the end of May. It is expected that we will have it ready by the summer, for the aerospace show in Paris. When finished, it will be available in our website. This document is being produced from a collaborative effort between Secretariat of Economy, Secretariat of Communication and Transportation, and FEMIA. All of us would share the information. It incorporates the perspective of the government, the assistance programs, education, and the industry. It’s very well synchronized and is also integrating information provided by the clusters: Sonora, Chihuahua, Baja California, Queretaro or Nuevo Leon to attract more aerospace companies in Mexico.
The Offshore Group: You’ve explained something very interesting. Over the last several years, excluding the economic hiccups, Mexico has seen a twenty percent growth in the aerospace industry per year. Given that, what kind of opportunities do you see in Mexico to set up operations today, and going forward?
Carlos Bello: We need a lot of companies to supply us with raw materials demanded by the aerospace industry in Mexico, such as: special steels, aluminum, titanium, carbon fiber, chemicals for composites, special machining, we are making a strong effort to attract these types of suppliers.
We are currently importing most of these products. We want to really work hard so all these products are available for the aerospace companies established in Mexico, such as: OEMs, Tier 1s and Tier 2s. We are setting a goal to enable them to satisfy thirty percent of their supply chain needs within Mexico.
The Offshore Group: It sounds as though there are a lot of opportunities.
Carlos Bello: Yes, these suppliers have a significantly sized market to approach, as we import over $200 million of aerospace components per year.
The Offshore Group: Carlos, this is a very interesting project. Because the time we have is limited, and because presenting every detail in a discussion of this duration is impossible, I am sure there are folks out there listening that would like to get more information. How can they contact you directly?
Carlos Bello: I would be glad make my telephone number available to those that are interested in learning more about aerospace manufacturing in Mexico Here in Mexico City my telephone number is 011-52-55-9000-7379. Our website is: www.femia.com.mx. Interested parties can find all my contact information on this site, and can access information about FEMIA and the aerospace industry in Mexico.
The Offshore Groupi: Carlos we wish you the best of luck in the development of the aerospace industry in Mexico.
Carlos Bello: Thank you so much, and thank you for the opportunity to talk to your audience. We invite them to come to do business in Mexico.
The Offshore Group: Again, we wish you a lot of success. For anyone who wishes to speak to Carlos, we encourage them to visit Femia’s website: www.femia.com.mx. There you would find all his contact information.
Thank you Carlos, and have a nice day.
Carlos Bello: Steve, have a wonderful day, thank you again.
