Mexico’s Aerospace Industry – The Global Player Continues to Climb the Ranks12.15.15
Major manufacturers, General Electric for example, began making their way south into Mexico after the North American Free Trade Agreement (NAFTA) was enacted in 1994. Even amid the great optimism NAFTA inspired, it is unlikely anyone could have predicted that Mexico would emerge as one of the nation’s most vibrant sectors and host nearly all of the global players in the Aerospace and Defense (A&D) Industry.
A&D plays an integral role in Mexico’s Gross Domestic Product (GDP) growth rate. Reports from 1999 to 2014 show A&D manufacturing delivered a total of $3,184 million USD to Mexico and contributed to the surplus of the trade balance of the industry. Moreover, from 2010-2014 the GDP growth rate of the A&D industry was much higher, at nearly 21%, than the GDP growth rate of the country as a whole.
The Mexican Federation of Aerospace Industry (FEMIA) is one of several institutions in Mexico that are regulating, promoting and establishing the aerospace industry to a higher level. The Managing Director, Luis Lizcano, said, “We started off being the tenth exporting country to the U.S. aerospace market and right now we are considered number six. We actually made a huge achievement in doing so and we plan to continue expanding, growing and going up in the ranking.” Among the objectives FEMIA has set in place is positioning Mexico as the first aerospace service HUB in Latin America.
According to a paper published by PwC the “E7” (China, India, Brazil, Russia, Indonesia, Mexico, and Turkey) are the seven largest emerging market economies, and could overtake the “G7” countries (United States, Japan, Germany, United Kingdom, France, Italy and Canada) by 2017 in Purchasing Power Parity (PPP) terms.
The below exhibit #1, Performance Indicators – Mexico’s Aerospace Industry, reflects Mexico’s annual aerospace exports beginning in 2004 and projects:
- Sustained 15% growth rate for 2015 based on new and expansion projects under development
- Annual estimated foreign direct investment (FDI)
- Annual growth rate of 12%, from 2016-2020
- $12 billion USD in annual exports by 2020
Bombardier, one of the world’s largest airplane manufacturers, started operations in Querétaro, Mexico in 2006. Alfredo Nolasco, Chief Country Representative for Bombardier, Mexico, said, “The aerospace sector has to have long sights into the future. That is why we are aiming at 2032 as our target in our strategy plan. Mexico is fundamental because of the quality of the products that we are producing in Mexico, because of the engagement of the labor that we have in Mexico, and because of that we see that Mexico has provided an added value to all the chain of Bombardier.”