Mexico’s Aerospace Sector Takes Flight
August 20, 2014
Attracting profitable high-tech industries has been an important goal for many developing countries in the last few decades and it appears Mexico manufacturing is leading the effort. A highly skilled and educated work force, lower labor costs and extensive free-trade agreements make this nation of 115 million an attractive option for tech industries, such as aerospace in Mexico. Many aerospace companies have in fact begun to shift their business here from other manufacturing juggernauts such as China; the Canadian firm Bombardier constructed a $200 million dollar factory on Mexican soil in 2005, pulling production from Ireland and Japan and spending another $300 million since.
The growth of manufacturing and maintenance facilities related to aerospace in Mexico doesn’t show any sign of stopping, with an estimated $1.3 billion worth in projects being spent in 2013 and exports having doubled between 2009 and 2012 to $5.4 billion. The country’s Aerospace Industry Federation predicts that there will be 450 such companies in Mexico manufacturing, doing research and performing maintenance services in the industry to the tune of $12 billion.
This hasn’t all happened overnight, of course. The rise of Mexico’s manufacturing industry in many ways traces its roots back to the late 1960’s when changes in US treaties and immigration policies left many former migrant workers jobless. This huge pool of labor was tapped by both local entrepreneurs and foreign companies, such as Ford. By the mid-70’s a huge number of American companies and multinationals were getting many basic parts and assembly jobs done south of the border. Much of this work was sent to border towns such as Tijuana, Mexicali, and Juarez, but plenty of business found its way farther south to cities such as Guanajuato and Monterrey. The North American Free Trade Agreement (NAFTA) opened further doors in the mid-90s, paving the way for the current boom.
Companies that have opened up aerospace facilities in Mexico cite many reasons for the move. Shipping costs are much cheaper in many cases than from China, with worker productivity and education also being considerably higher. Mexico’s geography is also a big factor, of course, sharing a border with the economic juggernaut (and lucrative market) represented by the United States and Canada. Its extensive natural resources also play a large part, often driving down raw material and fuel costs. Keeping business centered in the dollar zone also helps companies, especially from Europe, avoid some of the current economic turbulence in the European Union.
Already the 13th largest economy in the world and ranking 11th in purchasing power, Mexico’s high-tech future looks very bright and should be just as beneficial for the companies that can take advantage of the boom. Right now is the perfect opportunity to get in at the ground floor in this highly competitive international enterprise.