Mexico is the largest military and commercial aircraft market in Latin America. It has the second largest business aircraft fleet in the world and has a large private aviation services industry. Much of this is in response to the oil and gas sector where executive transport is regularly used.

Market overview

After China, Mexico and Latin America are forecast to maintain the second largest market for the Aerospace sector in the next two decades.

Mexico is well placed considering the low-cost, competitive manufacturing platform and it’s strategic location in North America. The savings in manufacturing costs, plus its reputation for intellectual property protection, has helped the sector to make leading global aeronautical manufacturing firms land in the market.

Mexico is on of today’s brightest opportunities, it has expanded it’s aerospace productivity by 17% since 2010.

Opportunities are available in every aspect of the aviation industry. When the major contributors to the aviation industry grow (i.e. airlines, airports, etc.) so do smaller and mid-sized firms that supply the inputs to these larger industry contributors.

FACTS – AEROSPACE INDUSTRY IN MEXICO/ADVANTAGES

• Mexico is becoming the key provider for the world’s aerospace industry, which in the last five years has experienced a two-digit growth rate. Furthermore, the number of aerospace companies established in Mexico has tripled in the same period.

• Mexico is located in the heart of the aerospace world, and it is the meeting point of two of the main manufacturing corridors in North America.

• Mexico has a border of more than 2,000 miles with the United States, the largest aerospace buyer in the world. Furthermore, Mexico has 7,000 miles of coastline and favours trade relations with Asia and Europe.

• Mexico has the world’s largest free trade agreements network. Furthermore, the political and legal systems in Mexico favour the development of new businesses and offer judicial safety for investments.

• Mexico offers the most competitive operation costs. According to KPMG’s “Competitive Alternatives” research, compared to the current industry leaders, companies established in Mexico can save up to 30% on operation costs.

• Mexico is a country with a qualified labour force. Mexico’s population is 112 million people. In 30 years, the country’s economically active population will reach 69 million people. There are over 750,000 qualified engineers and technology students in Mexico.

GENERAL CHARACTERISTICS OF MARKET/CLUSTERS

Presently, 80% of the aerospace companies established in Mexico carry out manufacturing and assembly activities; 10% offer engineering and design services, and 10% perform Maintenance, Repair and Overhaul (MRO) services.

The country envisions entering a third stage in which complete aeroplanes will be designed and assembled, and Mexico will be consolidated as a first class innovation centre for the global industry.

The global aerospace market is experiencing a strong period of growth given the strong demand for the main OEM (Original Equipment Manufacturer) (Boeing, Airbus, Bombardier and Embraer). The increasing demand for Airbus A380 and Boeing 777 and 787 means that GE, Rolls Royce and other leading aerospace suppliers will experience a strong period of growth over the next few years. Engine OEMs will also continue to put pressure on their suppliers to consider low-cost manufacturing options such as Mexico.

Another interesting characteristic in the industry is the growing pressure on the supply chain to become faster and leaner, similar to the automotive industry. This means that key suppliers and partners will have to work more closely in increasing aspects of programme development and production.

Cost pressures are also a significant factor, particularly as many of the production elements including metals, composites, tools, utility costs, energy costs and R&D are becoming more expensive. As a result, engine manufacturers like General Electric, SAFRAN, United Technologies and Honeywell have established supply chain offices in Mexico developing Tier 2 and Tier 3 suppliers across the country and migrating suppliers from abroad to Mexico.

The Mexican economy has proven to be strong enough to facilitate a supply and manufacturing base in the sector of aerospace that would benefit both itself and the US. Mexico is currently the ninth major supplier of aerospace components to the US.

Of the 200 aerospace manufacturing companies in Mexico the main clusters are located in the northern States of Nuevo Leon, Sonora and Baja California, including Primes such as Honeywell, GE Aircraft Engines, United Technologies, Textron and Snecma. All have International Procurement Offices in Mexico, mostly responsible for developing suppliers in Latin America.

Aerospace parts manufactured in Mexico include, among others, turbine fuselage and landing gear components, plus harnesses and cables. There are also audio and video systems, heat exchangers, insulation panels as well as some interior parts such as bathrooms and galleys.

The current government continues to be committed to developing the aerospace sector. Dozens of new international companies have invested in this sector over the last few years. There are currently more than 67 foreign aerospace suppliers (including several UK companies) comprising of around 190 firms

Key opportunities

• During the last five years, Mexico has developed significant Engineering & Design capabilities for military and civil applications.

• Mexico also provides other advantages including the ability to manufacture parts and components for military and defence.

• As a member of NAFTA, Mexico is excluded from import-export tariffs, giving suppliers in Mexico an advantage over suppliers in other countries.

REASONS GIVEN BY FOREIGN COMPANIES FOR SETTING UP OPERATIONS IN MEXICO

• IP protection regulations exist.

• Ability to take advantage of Mexico’s 12 free trade agreements (FTAs) with over 44 countries including the EU.

• The availability and cheap cost of labour, as well as the availability of highly qualified staff.

• Political and economic stability.

• Proximity to the US.

• Highly experienced shelter operations.

• Work ethic and cultural similarities.

The Mexican government is working to attract more aerospace manufacturing investment by creating opportunities for foreign suppliers. The current government continues to be committed to developing the aerospace sector.

Dozens of new international companies have invested in this sector over the last few years.

New plants and expansions in 2010-2011 included: Safran, AE-Petsche Bombardier, Cessna, Hawker Beech-craft, Zodiac, Textron, Triumph, Daher Socata, BE Aerospace and very likely soon, Eurocopter among others.

In general, best prospects for products and services in the general aviation/aerospace industry include:

• Aeroplanes and spare parts.

• Remodelling services.

• MRO (Maintenance, Repair and Operations) and FBO (Fixed Base of operations) services.

• Ground support equipment.

• Security systems.

• Identification systems.

• Access controls.

• Luggage checking systems; amongst many others.

Business opportunities aimed specifically at UK companies are added daily to UKTI’s website. These leads are sourced by our staff overseas in British Embassies, High Commissions and Consulates, across all sectors and in over 100 markets.

Latest export opportunities – Aerospace

Latest export opportunities – Mexico

Getting into the market

The UK and Mexico have an increasingly important commercial relationship in this sector. GKN have significant manufacturing operations in Mexicali, San Luis Potosi and Guanajuato, serving the aerospace and engineering sectors.

There are over 900 Mexican Institutes and Universities that offer specialisation programmes for engineers and technicians, particularly in the areas of high tech and advanced manufacturing. Currently over 12,000 and 14,000 new engineers graduate from Mexican universities, and the vast majority speak English as a second language.

Institutions and associations such as The Mexican Council for Aerospace Education and The Mexican Aerospace Industry Federation work to train aerospace engineers and promote the industry.

Mexico has acquired a vast experience in the automotive and electric/electronics industries. This helps guarantee success for the aerospace industry’s success. The country’s aerospace industry has world class infrastructure, thanks to:

• Transfer of quality methodologies

• Development of suppliers

• Manufacturing standards

• Certification

• Human talent

British companies wishing to develop their business in the Mexican market are advised to undertake as much market research and planning as possible in the UK. UKTI’s team in Mexico, with its wide local knowledge and experience, can provide a range of services to British-based companies.

This can include:

• Provision of market information.

• Validated lists of agents/distributors.

• Key market players or potential customers in the Mexican market.

• Establishment of interest of such contacts in working with you

• Arrangement of appointments.

• Organisation of seminars or other events for you to meet contacts and promotion of your company in the Mexican market.

• Media and publicity.

To find out more about commissioning this work, or accessing other UKTI services and specialist advice, please visit the UKTI website to find contact details for your local UKTI office.

More about doing business in Mexico

Contacts

Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).

To commission research or for general advice about the market, get in touch with our specialists in Mexico or contact your local international trade team.

• Sarah Hildersley, Trade and Investment Consul British Consulate, Monterrey. Tel. +52 (81) 8356 5359 or email: [email protected]

• Alejandra Rodríguez, Trade and Investment Office British Consulate, Monterrey. Tel. +52 (81) 8356 5359 or email: [email protected]

Contact your local international trade team

UKTI Events

UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.

Latest events in Aerospace

Major Events

EXPO MANUFACTURING 2012

5-7 February 2013

Monterrey, Nuevo León (CINTERMEX)

www.expomanufactura.com.mx

Useful links

More about OMIS and other UKTI services for exporters