Querétero: Rocketing to the Top Mexico’s Aerospace Industry

Querétero: Rocketing to the Top Mexico’s Aerospace Industry

Wed, 2012-08-22

In 2006 Bombardier, the world’s third-largest commercial airplane builder, opened a factory in the central Mexican state of Querétero. At the time, Querétero only hosted two other aerospace companies, and the total number of jobs generated by the industry in the state numbered about 100. 

Yet Bombardier saw a bright future for itself in Mexico, based on three factors. Mexico’s proximity to the United States and Canada meant that parts could be delivered in a matter of days, a far cry from the 4-6 weeks it would take to get them to the States from Asia. Moreover, Querétero is in the same time zone as Bombardier’s other major production facility in Wichita, Kansas, and its headquarters in Montreal, Canada, making conference calls and day-to-day coordination easier to arrange. 

Second, Mexico’s competitive wages also helped. In a recent interview conducted by Guy Taylor of the Washington Times, Nicolas Maillard, director of a French aerospace company with a plant in Chihuahua City, said: “In France, labor would account for about 30 percent of the cost of production on an item like this,” referring to brakes for jumbo jets. “Here, it’s roughly ten percent.” Also, inflation in Mexico is lower than in Brazil or China, allaying multinational’s concerns that large factories won’t be price competitive years down the road. 

Finally, Mexico offers a wealth of engineering talent. A recent article in the Miami Herald reported, Mexico has, per capita, three times as many engineering graduates as the United States.  

The move worked. In addition to the benefits Bombardier counted on, a slew of intermediate suppliers moved to Mexico, including Cessna, Fokker, Hawker Beechcraft and Honeywell. From 2006-2011, Mexico’s aerospace industry more than doubled in size. Exports of aircraft and related parts topped $4.3 billion last year. 

Of the various expansion announced by airplane parts makers in Mexico, perhaps GE’s is the most ambitious. Known as GEIQ, the 8,000-square meter advanced testing center in Querétero is already the company’s largest facility outside of the United States. Currently, the facility focuses on designing and testing software and parts, but it’s ramping up operations.  By 2015, GE will invest an additional $20 million in the facility, in part so that it can assume much of the work for GE’s “ecoimagination” series of engines and parts, which will provide the likes of the Airbus A380 with more power while using less fuel.  

Industry insiders often draw parallels to Mexico’s formidable car industry. In the 1970s Mexico produced parts for a handful of US and German automakers. Over the course of the next twenty years the country came to make the whole car. In 2011, 14 percent of all US cars were made in Mexico, bringing the country more revenue than tourism or oil.  

If anything, aerospace stands to become an even more dynamic industry in Mexico than autos. José Luis Enríquez, head of Nordam Mexico, an offshoot of an Oklahoma-based aerospace outfit, predicts, “the difference is the evolution won’t take 40 years, it will occur much, much faster because the Mexican government now knows how to develop an industry like this. It learned a thing or two from the first time around with the auto industry.”

One thing the Mexican government has evidently learned is the importance of providing appropriate education. The federal and local governments have invested more than $20 million in vocational programs over the past decade in order to ensure ample supply of skilled workers. In concert with Bombardier engineers and academics from across the continent, the Querétero University of Technology devised a series of 3-6 month programs to train factory technicians specializing in fields ranging from precision machining to composite materials. 

And based on commitments from Bombardier and Safran Group, a Paris-based aeronautics conglomerate, the Querétero state government helped launch an aeronautics university in 2009. It will soon graduate its first class of 40-plus engineers. Executives from Europe and the United States routinely cite government support and willingness of university academics to craft appropriate training programs as unique factors that draw investment to Querétero. 

While Querétero is the country’s leading hub, Mexico’s aerospace industry now features over 260 firms, spread out over 16 of the country’s 31 states, and employing more than 31,000 people. The pace of growth in recent years has been stunning considering the global economic headwinds. Yet supply still doesn’t meet demand. Currently, the number of jet craft produced falls short of global demand by anywhere from 30-50 percent, according to industry estimates. Given forecasts for strong demand and the government’s far-sighted investment in training, the aerospace industry may not be so much taking off in Mexico as it is landing.