Mexicos Aerospace Industry: A Case Study in Global Competitiveness

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Mexicos Aerospace Industry A Case Study in
Global Competitiveness

• Aaron Miller
• International Trade Analyst, USITC
• May 8, 2009

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Presentation Outline

• North American Competitiveness Deloitte Survey
  Results.
• Profile of the Mexico Aerospace Industry.
• Moving Up the Value Added Chain.
• Mexicos Competitive Advantages in a Global
  Perspective.

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Made in North America
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Made in North America?
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Where Will You Be Expanding Production?
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Mexicos Growing Aerospace Industry
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Bilateral Air Safety Agreement

• Essential in Attracting Foreign Direct Investment
  in the Aerospace Industry.
• BASA Certifies that Products, Parts, and
  Components Meet FAA Standards.
• Allows for Direct Exportation to Aircraft
  Assembly Companies in U.S.

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Current Production Profile of Aerospace Industry
in Mexico

• Most Firms are Second-tier Suppliers.
• Labor intensive parts assembly.
• Spools, landing gear fittings, seats, sliders,
  and blades
• MRO (Maintenance, Repair, and Overhaul)

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Higher Value Added is the Goal for Mexico

• Major Tier-one Suppliers and OEMs are Bombardier,
  Aernnova, ITR.
• Composites, fuselages, low-pressure turbines.
• Research Development Facilities.

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Queretaro Aerospace Park

• Local Government Commitment.
• Queretaro University of Technology (UTEQ)
  provides technician training programs.
• The National Aeronautic University of Queretaro
  (UNAQ) opened in January 09.
• UNAQ will be the third university in Mexico to
  provide an aeronautical engineering degree.

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Conclusion

• Low-Cost Supply-Chain Effectiveness
• vs.
• Low-Wage Production and Sourcing

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Conclusion

• Existing Human Capital Resources
• Proximity to U.S.
• Economic Integration
• 20 Cost Savings on Labor
• Strong IPR Protections
• No Military Aircraft Restrictions
• Liberal Investment Regime