The presence of an aerospace OEM that attracts its suppliers from abroad and promotes the development of local companies is always good news for a state’s economy. Having six of them, as Chihuahua does, is great news.
Chihuahua is one of Mexico’s aerospace champions. The state received 20 percent of the US$3.14 billion of FDI for the aerospace sector that the country received between 1999 and 1H18, making Chihuahua the third largest recipient of aerospace investments in the country, according to data from the Ministry of Economy. These investments have detonated the development of a strong industry capable of producing everything from electric harnesses, seats and interiors to aerostructures and engines.
The OEMs that have landed in Chihuahua are Honeywell, Kaman Aerospace, PAM, EZ-AIR, Bell Helicopter and Textron Aviation. And a variety of suppliers produce the systems demanded by planemakers locally and abroad. For instance, Safran, Zodiac Aerospace and Soisa Aerospace have set up shop in Chihuahua to produce a variety of aircraft components.
These suppliers, in turn, lean on indirect suppliers based in Chihuahua that deliver services, raw materials and parts to take their solutions to the next tier. Companies such as HT-MX and MFCO offer thermal and surface treatments that aerospace components require, just as Esterline and Wesco Aircraft produce small metal components that are used to produce more complex aircraft parts and systems.
What do all of these companies have in common? They all belong to the Chihuahua Aerospace Cluster, a civil association that gathers over 45 aerospace companies representing over 17,000 jobs and 5 million ft2 of industrial space. The cluster gathers business intelligence, catalyzing industrial growth and promoting the state’s aerospace capabilities.
In this edition of the Interview of the Week, MAAR presents an excerpt from its exclusive interview with Rene Espinosa, President of the Chihuahua Aerospace Cluster, that was originally published in Mexico Aviation and Aerospace Review 2018. Check out how the cluster supports aerospace companies in Chihuahua!
Q: How has Chihuahua’s aerospace industry evolved and what role is the cluster playing in its consolidation?
A: Major OEMs, including Boeing, Airbus, Bombardier and Embraer, are transferring and developing their supply chain to the state. This is impacting the region and strengthening sub-tier companies and other local suppliers. We are seeing more integration of the supply chain, not just in the city but in the region. Companies are increasingly incorporating local suppliers from Chihuahua, Queretaro, Nuevo Leon and other states. Integration is not new but it is growing fast and stronger, with major companies such as Fokker-GKN finding more local suppliers and SMEs.
Our goal as a cluster is to integrate local companies and to work along with other clusters to increase the capabilities in the country and business opportunities among the regions. Alongside FEMIA, we are performing a comprehensive analysis of the capabilities of the supply chain to understand the competences the state has and what companies from other states have to offer.
The aerospace sector is facing uncertainty due to foreign geopolitical concerns, which has prompted some companies that were considering moving into the state and Mexico to pull back. However, I foresee continuous growth in operations for companies already established here due to efforts to consolidate the local supply chain, which have resulted in new technologies and capabilities coming to the state. The state has been very successful in integrating Mexico’s supply chain due to our collaboration with other clusters.
Q: What strategies is the cluster pursuing to support the development of local SMEs?
A: During the first half of 2017, the local government launched and initiative to accelerate potential SMEs that can be integrated in the industry. Also, a local group of SMEs was formed under the name Cluster Eje (Axis Cluster). We are working with them and after categorizing them by the products they manufacture, we have identified those that can be integrated into the local aerospace supply chain. With the support of the city and state governments and OEMs, we have identified what these SMEs need in order to manufacture for the aerospace sector. The aerospace industry has a seven to 10-year ROI cycle, which is very hard for an SME to handle. This initiative will help support them through this period. Chihuahua is successfully implementing this program and it is also planned to be replicated in Ciudad Juarez and other key cities in the state. We are complementing FEMIA’s work in compiling this database and generating a comprehensive analysis of what every company is doing.
Q: What changes in policy are required to strengthen the local supply chain?
A: Many existing economic policies across Mexico are overtly focused on foreign investment, as the country now greatly depends on FDI. While the country does need it, policies must also provide the critical support SMEs need to develop the local supply chain. Previously, cluster members used to joke that the only ones who could get governmental support were those named “Smith,” but this is changing as the government is increasingly supporting Mexican companies. The government’s role is not just to encourage foreign investment but to also support companies already established in the region to help them grow.
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