In Nuevo León, some 1500 people are directly employed in the aerospace sector, but the state wants to attract many more companies in this fast-expanding industry in the next few years.
The state is home to one second-tier company, MD Helicopters, which undertakes the sub-assembly of primary systems of aircraft. The state government is keen to attract an original equipment manufacturer – which designs and assembles aircraft – and other companies at first-tier level which assemble the primary systems of aircraft (such as hydraulics, pneumatics, landing gear and engines).
Nuevo León is home to eight third-tier companies, including Frisa Aerospace and Tecmaq, which make the machined components of aircraft and undertake the sub-assembly of secondary systems. There are also six companies at the fourth-tier, which produce minor components for aircraft, and three companies that provide complementary services and make components for the sub-systems of aircraft.
According to ProMexico, the federal agency that promotes trade and investment in the country, aerospace companies in Mexico exported products with a total value of $3.4bn last year, compared to $2.6bn in 2007.
Alejandro Páez, the secretary of economic development of the state of Nuevo León, says: “A large proportion of the growth of the aerospace industry will come from Airbus in Europe and from Boeing in the US. Airbus has more than 85% of its inputs priced in euros but its sales are in dollars. Up until recently, the euro was getting stronger against the dollar and the company’s sales were flat or declining in dollar terms.
“Increasingly, Airbus must produce in a dollar zone, not in a eurozone. We believe this is an opportunity for Mexico and in particular Monterrey. Here, we have the industrial manufacturing tradition, we are very important in car manufacturing and mechanical engineering, and we want to become much more involved in one of the most important industries of the future: aerospace. We have the human capital, the universities and technical schools. There are so many synergies already in place.”
Aircraft parts that are already being manufactured in Nuevo León include the metallic components of empennages and heat exchangers for tails; blades and metal components for wings; blades for engines; the titanium and nickel rings of turbines and ring support; the fuselage of helicopters; the chassis of aeroplane computers; and landing gear rotor keys.
The most important companies in aerospace manufacturing in Nuevo León include Frisa Aerospace, which produces titanium and nickel rings and rotor keys; Procesos Térmicos de México, which carries out heat treatment; Bodycote, which tests thermal processing and is Nadcap-approved; Desarrollo Tecnológico de Maquinas, which makes machining parts; and EZI Metals, which manufactures sheet metal and welding parts.
Mario Cruz, manager of planning and systems at Frisa Aerospace, says: “Our clients include the principal turbine producers: Rolls Royce, GE Aviation, Pratt & Whitney and Snecma. We have been producing rings for aircraft turbines since 2004. We also make rings for gas turbines and our annual sales for all our products are 600m pesos [$43m].
“I believe that Nuevo León has a number of advantages over other states of Mexico. The most important is its human capital, the culture, the hard-working nature of the people here. For example, Monterrey Tech is constantly producing engineers of the highest order who are multilingual and have spent periods in France, Germany, the US or the UK on exchange programmes.”
Viakon, a Monterrey-based company, which is part of the local Mexican group, Xignux, plans to obtain the accreditation to provide cables to the aerospace industry this year and to start supplying local industry next year.
Patricio Murga, director of technology and development at Viakon, says: “Really, Monterrey is no longer a choice for labour-intensive industries – but for high-value-added, high-tech sectors it is paradise. The labour pool is excellent and stable. Industrial action is rare.
“We are the most important cable producer in Mexico. Another part of Xignux, Prolec GE, makes transformers and is 50% owned by GE Electric. This provides Viakon with the know-how and strength to act globally.”
EZI Metals is a precision sheet metal and plate manufacturer, certified to ISO9002 and AS9100, which has two plants in Nuevo León at Santa Catarina and Apodaca as well as one in Torreón in the state of Coahuila. With a total of 19,500 square metres of plants, the main processes it undertakes include sheet-metal bending from 80 tonnes to 320 tonnes, laser cutting from three kilowatts to five kilowatts, and punching of up to 30 tonnes. Its main aerospace clients are Cessna, Honeywell and Hamilton Sundstrand.
Rogelio Cisneros, director at EZI Metals, says: “The two markets we are strategically focusing on are aerospace and transportation; they are important growth markets of the future. Currently, 90% of what we produce is destined for the US market, so Nuevo León’s proximity to that market is incredibly important. Mexico also has so many free-trade agreements with other countries; this enables companies based in the country to access the global marketplace on very good terms.
“I think the main way in which we are able to compete with our rivals is through the quality of our products; prospective clients come to our plant and see that we have state-of-the-art equipment. We really pride ourselves on automation and clients can see that,” he says.
Herramental Monterrey is an important tools and equipment distributor to the local aerospace industry and can provide many products, including bucking bars, angle drills, grinders and sanders, pneumatic tools, lubricants, drills, clecos and microstops.
Emilio Lozano, director of Herramental Monterrey, says: “Traditionally, we have been a supplier for the car-making and metal engineering industries of Mexico. However, two-and-half years ago we started supplying tools for the aerospace industry. We have been broadening our product range gradually and can now provide a complete range of tools for the assembling of aerospace systems. We are the only company of our kind in Mexico.”
Mr Páez says that there are a number of ways in which the Nuevo León state helps local companies. In 2007, the Indian IT group Infosys and some other Indian companies moved to Monterrey, leaving local companies concerned that the labour costs for engineers would rise.
“We got together with Infosys, local industry and the universities, and we came up with a plan,” says Mr Páez. “Infosys said it wanted to have a good relationship with the local business community, so it offered to show us its methodology for hiring people, and how it converted them to match its needs. Nuevo León sent 36 professors from the top five universities here to India for a month to see how Infosys works there, and how it trains its new employees. Once they returned, they created a virtual institute for talent development in IT.”
One of Nuevo León’s recent biggest successes in attracting FDI was the decision by Ternium, the Argentine steelmaker, to invest $4.2bn in two plants in Pesquería, a Monterrey suburb, for the production of sheet steel and rolled steel. This is one of the biggest investments by a foreign company in Mexico’s history. The plants are expected to be fully operational by 2013 and will produce 3.3 million metric tonnes in total.
Nuevo León’s government has a good track record for helping businesses to set up there, and local companies in the aerospace sector are fully prepared for an original equipment manufacturer or first-tier aerospace company to invest in the state soon.