The aerospace industry in Mexico is anticipated to grow at a CAGR of more than 5% during the forecast period.
- The Mexican aerospace industry is experiencing excellent growth with significant foreign investment and job creation. Aerospace industrial exports from the country are increasing over the last 15 years, at a healthy growth rate of over 14% per annum.
- The favorable ecosystem for the manufacturing sector and the low production costs in the country are attracting investments from aerospace manufacturing firms, thereby driving the market growth. According to Federación Mexicana de la Industria Aerospacial or FEMIA, Mexico’s aerospace sector grew from 100 manufacturing firms and organizations in 2004 to more than 350 in 2019.
- Factors like new initiatives to integrate smaller local suppliers into the Mexican aerospace industry, as well as support from the government to support smaller firms and opportunities generated from trade agreements between the United States, Canada, and Mexico are estimated to further improve contribution of the aerospace sector toward the Mexican economy.
Key Market Trends
Increasing Aerospace Exports From Mexico
The aerospace manufacturing sector in Mexico is a top-performing sector and contributes significantly toward the overall growth of the Mexican economy. Currently, Mexico is the 14th largest aerospace supplier globally and is expected to enter the top 10 during the forecast period. Over the last 15 years, exports from aerospace manufacturing in Mexico grew with a healthy growth rate of over 14% per year on average. In 2019, the aerospace exports from Mexico grew by 10 percent over 2018. The advent of major aircraft OEMs and suppliers like General Electric, Airbus, Safran, Bombardier, and Latécoère Group, among others into the country's manufacturing sector, driven by the lower manufacturing costs in the country, has significantly contributed to the growth in exports from the country over the years. In 2019, about 80% of the production of the aerospace industry in Mexico was exported to the United States, while the rest of the exports are to countries like Canada, France, Germany, and other foreign nations. Aerospace manufacturing capabilities in Mexico range from engines and engine parts to fuselages, cargo doors, landing gear assemblies, avionics, and several other components that are now present in several aircraft models over the world. Thus the growing capabilities of the mexican aerospace manufacturing and the increasing exports of the country indicate a healthy environment for the growth of aerospace industry in Mexico.
MRO Industry Held the Largest Market Share in 2019
MRO is a key industry segment in Mexico and is now the largest revenue generator for the aerospace industry in the country. The increasing replacement parts manufacturing in the country, along with the growth in local MRO capabilities (which is assisted by the investments from the aircraft and component OEMs) has helped the market grow a long way to become the largest segment in the industry. The segment is expected to become more vital in the years to come, as the fleets of the airlines and private aircraft continue to grow. The average age of commercial aircraft in Mexico is around 9 years. The oldest fleet of aircraft in the country’s airline fleet has an age of above 30 years. In addition, the average age of military aircraft in Mexico is around 20 years. The presence of old aircraft in the country’s fleet is necessitating frequent MRO requirements at present. Also, with its strategic geographic location between North and South America, Mexico is in an ideal position to become a regional hub for MRO services. The low labor costs are one of the main reasons for companies to establish their manufacturing facilities in Mexico. The capabilities of Mexican manufacturers include several tier 1, 2, and 3 components ranging from turbines, fuselages, and sensors for jet engines to the fasteners in the fuselage. As the demand for MRO is increasing from both North and South American countries, Mexico is also developing its MRO capabilities to cater to the same. Many aerospace giants are investing in the country’s MRO industry and are setting up new maintenance plants in Mexico. The growing availability of skilled labor in Mexico is also helping the cause. For instance, in July 2019, Leonardo announced that its new Gulf of Mexico Helicopter Support Center has achieved its full operational capability, and can now provide full helicopter blade repair, spare parts, and technical support to customers across the North and South American regions. Such developments are expected to bolster the market prospects during the forecast period.
The aerospace industry in Mexico is highly fragmented due to the presence of several companies in Mexico. Currently, there are no local aircraft OEMs based in Mexico. However, there are several foreign players that manufacture, engineer, and design aircraft parts and components for commercial, military, and general aviation in the country. According to Federación Mexicana de la Industria Aerospacial or FEMIA, Mexico’s aerospace sector grew from 100 manufacturing firms and organizations in 2004 to more than 350 in 2019. Baja California, Queretaro, Sonora, Nuevo Leon, and Chihuahua are the Mexican states that are known for manufacturing in the aerospace sector. Queretaro is home to many companies in Mexico, which includes Bombardier, Safran, Aernnova, Meggitt, ITR, GE, and Airbus among others. With the availability of a skilled workforce comprising mainly of engineers graduating from the local and nearby universities, these companies are planning to increase their investments into the country to enhance their design and engineering capabilities.
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