Mexico Aerospace


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This Entrada Group ( presentation explains why and how Mexico is becoming a key manufacturing destination for the world’s aerospace industry.

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  • Back in 2001, employment was at a mere 7,500 workers. By 2010, the number of jobs in the industry reached approximately 31,000, which represents a growth of 313% in nine years. In terms of employment, the aeronautical industry in Mexico is now as large as the aerospace manufacturing cluster of Montreal, Canada, a metro area renowned in the global aerospace community. By the end of 2010, there will be over 270 facilities in Mexico producing parts for the global aviation industry. This is more than four times as many plants as there were in 2001. By 2012, there will be over 300 aeronautical manufacturing facilities, and by 2015 Mexico will blast past the 400 mark.
  • Aerospace development is set to soar, but could unexpectedly suffer gridlock: OEM’s may begin to slow down their growth due to lack of an established local supply chain; Tier-1 are reluctant to invest in Mexico due to lack of Tier-2; Tier-2 does not invest in Mexico as there is insufficient market.
  • Mexico Aerospace

    1. 1. <ul><li>Doug L. Donahue </li></ul><ul><li>Principal, Vice President of Business Development </li></ul><ul><li>Entrada Group </li></ul>
    2. 4. <ul><li>Mexico has experienced a two-digit growth percentage in the last five years. </li></ul><ul><li>The number of aerospace companies established in Mexico has tripled in the same period. </li></ul>
    3. 6. <ul><li>Mexico is connected to the world: </li></ul><ul><li>It is located in the heart of the aerospace world. </li></ul><ul><li>It is the meeting point of the two main manufacturing corridors of North America. </li></ul>
    4. 7. <ul><li>Mexico offers the most competitive operation costs </li></ul>Aircraft Parts Manufacturing - International Results (US=100.0)
    5. 8. <ul><li>A country with qualified labor </li></ul><ul><li>Approximately 107 million inhabitants. </li></ul><ul><li>750,000 engineering and technology students. </li></ul><ul><li>Close to 90,000 new engineers and technology students graduate each year from Mexican universities. </li></ul><ul><li>There are many institutes that offer specialization programs , in order to meet the Mexican aerospace industry’s demands. </li></ul>
    6. 9. <ul><li>New aeronautical educational programs </li></ul><ul><ul><li>Querétaro University of Technology (UTEQ) </li></ul></ul><ul><ul><li>Monterrey Institute of Technology in Nuevo Leon </li></ul></ul><ul><ul><li>The Aeronautical High Technology Training Center in Chihuahua City </li></ul></ul><ul><ul><li>Universidad Tecnológica del Estado de Zacatecas </li></ul></ul><ul><ul><li>Escuela Superior de Ingeniería Mecánica del Politécnico Nacional in Mexico City </li></ul></ul>
    7. 10. <ul><li>The Mexican aerospace industry complies with certifications such as NADCAP, AS9100, AS9100B, AS9199, SIO9000:2000, ISO9001:2000 and TS16949:2002. </li></ul>
    8. 11. <ul><li>BASA (Bilateral Aviation Safety Agreement), is the mutual recognition of aviation certification processes between the US’s Federal Aviation Administration (FAA), and Mexico’s General Direction of Civil Aviation (DGAC). This agreement which was formally signed by both countries in 2007, and ratified by the Mexican Senate on September 2009, provides Mexico with a first level competitive advantage, which forces the country to consolidate its industrial capabilities and look for new product development and marketplacement schemes. These types of regulations are key objectives to accomplish the establishment of new production centers. </li></ul>
    9. 12. <ul><li>Incentives: Aeronautic Mexican HTS: 9806.00.06 </li></ul><ul><li>Since Aeronautic is one of the priority sectors in Mexico, in order to benefit and promote this Industry in Mexico, the Mexican Government through the Ministry of Economy Office (SE), created a duty free HTS (Harmonized Tariff nomenclature), 9806.00.06. </li></ul><ul><li>This HTS allows aerospace companies to import components, machinery, equipment and tooling under one duty free HTS. </li></ul><ul><li>Main benefits: </li></ul><ul><ul><li>Import-Export process simplification; companies do not have to get the information to classify all their products (HTS). </li></ul></ul><ul><ul><li>HTS duty free, import duties are eliminated. </li></ul></ul><ul><ul><li>Certificates of Origin are not required. </li></ul></ul><ul><ul><li>There are not restrictions by Country of Origin. </li></ul></ul>
    10. 13. <ul><li>Geographic distribution of aerospace corridors There are 16 aerospace regions in the country </li></ul>Main aerospace corridors Main aerospace industry regions Main aerospace industry regions + schools <ul><ul><li>Universidad Tecnológica del Estado de Zacatecas </li></ul></ul><ul><ul><li>Monterrey Institute of Technology in Nuevo Leon </li></ul></ul><ul><ul><li>The Aeronautical High Technology Training Center in Chihuahua City </li></ul></ul><ul><ul><li>Escuela Superior de Ingeniería Mecánica del Politécnico Nacional, México City </li></ul></ul><ul><ul><li>Querétaro University of Technology </li></ul></ul>
    11. 15. <ul><li>Companies work mainly in the following areas: </li></ul><ul><li>Manufacturing and Assembly </li></ul><ul><li>Engineering components </li></ul><ul><li>Harnesses and cables </li></ul><ul><li>Landing systems components </li></ul><ul><li>Plastic injection and molding </li></ul><ul><li>Heat exchangers </li></ul><ul><li>Precision machinery </li></ul><ul><li>Audio and video systems </li></ul><ul><li>Isolation for airframes </li></ul><ul><li>Software development and control </li></ul>
    12. 16. <ul><li>Engineering and Design Activities </li></ul><ul><li>Aerospace dynamics </li></ul><ul><li>Control systems </li></ul><ul><li>Computational fluid dynamics (CFD) </li></ul><ul><li>Instrumentation </li></ul><ul><li>Flight simulation </li></ul><ul><li>Non-destructive testing (NDT) </li></ul><ul><li>Virtual instrumentation </li></ul><ul><li>Data and image information processing </li></ul><ul><li>Specialized business information systems </li></ul><ul><li>Equipment design </li></ul><ul><li>Embedded systems </li></ul>
    13. 17. <ul><li>Good Local, State and Federal government support </li></ul><ul><li>Aerospace is a top priority with both Federal and State Governments </li></ul><ul><li>DGAC aeronautical Harmonized Tariff System, allows easy import and export of hardware with no or minimal taxes </li></ul><ul><li>Several excellent Industrial park locations </li></ul><ul><li>Good Shelter operators allowing “Soft landing” </li></ul><ul><li>Labor Situation </li></ul><ul><ul><li>Good availability of quality touch labor </li></ul></ul><ul><ul><li>Low turnover rates…less than 1% in first year, less than industry averages </li></ul></ul><ul><ul><li>Excellent skills, hard working and eager to learn </li></ul></ul><ul><ul><li>Supervisory and Engineering </li></ul></ul><ul><ul><li>Good labor relations </li></ul></ul><ul><ul><li>Most professionals are bilingual </li></ul></ul><ul><li>Logistics </li></ul><ul><ul><li>Good Northern location for ease of travel </li></ul></ul><ul><ul><li>Shipping </li></ul></ul><ul><ul><li>Customs, … </li></ul></ul><ul><li>Infrastructure for Suppliers </li></ul><ul><ul><li>Essential to maintain competitive advantage </li></ul></ul><ul><li>Reduce cost without quality compromise </li></ul>Source: Textron Presentation at Mexico’s Aerospace Industry Conference, February 2010
    14. 18. <ul><li>Work content transferred from Mirabel to Mexico </li></ul><ul><li>Sequence; </li></ul><ul><li>Minor Sub-Assemblies- all models: Excellent type of work to learn about sheet metal fabrication/assembly; </li></ul><ul><li>All Electrical Harness assemblies from Mirabel </li></ul><ul><li>Model 429 Major & Cabin Assemblies: </li></ul><ul><li>Other Major & Minor Structural Assemblies: </li></ul>Source: Textron Presentation at Mexico’s Aerospace Industry Conference, February 2010
    15. 19. <ul><li>Until 2005 the company was predominantly located in the American Midwest </li></ul><ul><li>An initiative was started in 2005 to explore the advantages of leveraging the global manufacturing environment to retain control of manufacturing costs in a competitive market </li></ul><ul><li>Several countries were included in the search and all on the short list were visited and comparative studies were conducted </li></ul><ul><li>Considered a “best value” proposition, Mexico was selected for the first offshore manufacturing project </li></ul><ul><li>Acquisition took place in 2007 </li></ul>
    16. 20. <ul><li>Labor rates are the biggest advantage for any company considering the Mexico option </li></ul><ul><li>A growing aerospace industry exists in Mexico </li></ul><ul><li>Mexican workforce is highly motivated and anxious to learn </li></ul><ul><li>Experience of a mature automotive industry lends itself to a structured, quality-oriented business culture </li></ul><ul><li>IMMEX laws help with duties and taxes encouraging international trade </li></ul><ul><li>Number of experienced service providers exist to help do business in a foreign culture </li></ul><ul><li>State and federal government agencies aggressive seek companies that are looking to relocate jobs to Mexico </li></ul>
    17. 21. <ul><li>When Cessna Aircraft Co sought a low-wage country in 2006 where it could manufacture airplane parts, its first instinct was China. </li></ul><ul><li>After struggling to find a way to ship supplies to the Asian country in less than a month, Cessna discovered a better solution: Mexico. </li></ul><ul><li>“ Shipping to and from Mexico is easier and faster because it’s over land rather than by sea. It provides a way for Cessna to become more competitive as we deal with the challenge of the current economic situation.” - Cessna Chief Executive Officer Jack Pelton </li></ul><ul><li>Cessna now completing a 4 th expansion, in Chihuahua that will bring factory floor space to 10 times its initial size. </li></ul>Source: Bloomberg News
    18. 22. <ul><li>Bombardier Aerospace has a new facility in the Querétaro Aerospace Park, which is responsible for the fabrication of the major composite structures of the Learjet 85 aircraft. </li></ul><ul><li>Mexico’s manufacturing responsibility includes fuselage lay-up and sub-system installation, wiring harness fabrication and installation, wing assembly, and horizontal and vertical stabiliser assemblies. </li></ul><ul><li>“ Through the consistent manufacture and on-time delivery of high-quality components and assemblies to Bombardier manufacturing sites around the globe, the Querétaro site has already proven that it operates at a world-class level” - Réal Gervais, Vice President, Operations, Bombardier Aerospace Mexico. </li></ul>Source: Bombardier Aerospace