Magazine article SourceMex Economic News & Analysis on Mexico

Mexico Quietly Building Aviation Industry

Magazine article SourceMex Economic News & Analysis on Mexico

Mexico Quietly Building Aviation Industry

Article excerpt

Mexico has been quietly building an aeronautics industry during the last few years, with plants in Puebla, Queretaro, Baja California, and Nuevo Leon states all involved in producing parts for aircraft. One company, Canada's Bombardier Aerospace, is hoping to begin producing small aircraft at its facility in Queretaro state in the next few years. But the Mexican aeronautics industry is expanding beyond simple manufacturing, with many operations also involved in consulting, testing, and other services for aeronautics companies in the US and Canada.

The growth of the Mexican aeronautics industry has occurred primarily in the past decade, with Mexican exports of aerospace products increasing by 60% in 2006 relative to 2000. The Secretaria de Economia (SE) estimates that the aeronautics sector now employs about 10,000 workers and is responsible for about US$500 million in exports annually. Officials say Mexico's aerospace industry comprises about 125 companies.

Some industry observers say heavy industry such as aeronautics and automobile assembly offer new options for Mexico, which is rapidly losing other types of manufacturing operations to China and other low-wage countries in Asia and Central America. "Mexico has no choice," said the Los Angeles Times. "It's fast losing basic industries such as textiles to nations with cheaper labor."

The growth of the aeronautics industry could also attract other types of high-impact investment into Mexico, such as electronics and metallurgy, supporters say.

Still, the industry is fairly young. Among the most prominent operations is the Avipro Aircraft Ltd. plant in Puebla state, which produces parts for Bearhawk airplanes. Others are the McDonnell Douglas plant in Monterrey, which has manufactured fuselages for helicopters for just a few years. In Queretaro, Bombardier Aerospace has manufactured tail rudders and stabilizers for executive aircraft for less than two years.

European companies also view Mexico as fertile ground to establish operations. The SE said French-based Labinal plans to establish a plant in Chihuahua to manufacture electronic components for the European aerospace giant Airbus. Similarly, British aerospace manufacturer Smiths plans to invest about US$25 million in a plant in Monterrey to manufacture aerospace components to be shipped to a facility in England. The SE said the French company Messier Services is planning to construct a plant in Queretaro to restore landing gear for A320 and A340 Airbus aircraft.

Canada's Bombardier may build full aircraft in Mexico

Still, some observers say Bombardier's decision to invest heavily in its plant in Queretaro, near the international airport in Queretaro City, two years ago was a major advancement for the Mexican aeronautics industry. The company, which has assembled tail rudders and stabilizers for executive aircraft at temporary facilities for the past year, recently broke ground on a new massive complex that will allow the company to greatly expand its operations. The new plant will allow the Canadian company to assemble wiring harnesses, fuselages, and flight controls. The move toward expansion would allow the company to hire 1,200 workers by the end of the year, compared with its current work force of 450 employees. Company officials estimate that the total work force at the Queretaro facility could reach 1,800 by 2009.

Bombardier plans to eventually turn the Queretaro facility into the main source for electrical wiring for its CRJ 700 and CRJ 900 regional jets and for Challenger 300 and Global Express executive jets.

The ultimate goal, said Bombardier executives, is to convert the Queretaro facility into a plant capable of manufacturing full aircraft. To meet that goal, perhaps in five or six years, the company plans to spend another US$200 million at the facility, said Pierre Beaudoin, Bombardier's president and chief executive officer, in August 2006. …

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