Chihuahua City’s Aerospace Industry – Part 2

PART 2:
(by Guy Taylor, WashingtonTimes.com) CHIHUAHUA CITY, Mexico –

Tension over jobs

Mexican aerospace leaders understand that high-tech job creation in Mexico is a sensitive issue when U.S. unemployment rides steadily above 8 percent.

Several executives argued that growth in cities such as Chihuahua is actually sharpening the competitive edge of major U.S. companies on the world stage.

“We’re not trying to take jobs from other countries,” Jesus Mesta-Delgado [president of Index Chihuahua, the city’s business group] said. “What’s happening is that things are moving in the global market. By investing in operations, jointly or directly, in Chihuahua, a company can become stronger and more competitive on the global market by producing at a lower cost.”

That is why Nordam set up in Chihuahua, Jose Luis Enriquez [of aerospace company Nordam’s Mexico division] added.

“If it weren’t for this facility, we wouldn’t be able to bid competitively on the global level, and that would equate to a serious loss for U.S. jobs, not to mention the ability of the United States to embrace 21st-century thinking about business,” he said.

“Knowing that intensive labor-related jobs are already fleeing the United States, it’s either jump on the train, or you’re going to lose your competitive advantage to other countries like Brazil or China.

“If you’re going to have to go out of the United States, Mexico is a great choice.”

He said companies are still going to be able to preserve jobs in the United States, particularly in management, research and development, engineering, design, logistics support and service.

“We still have all those jobs in Oklahoma,” he said. “If [a company goes] to China, your chances are much higher of outsourcing all of that.”

U.S. analysts argue there also is something much deeper at stake than simply tapping cheaper labor south of the border.

“A full 40 percent of the content of U.S. imports from Mexico was originally made in the United States,” according to a November report by Washington-based Woodrow Wilson International Center for Scholars.

“Despite an ‘hecho en Mexico’ or ‘made in Mexico’ label, a large portion of the money U.S. consumers spend on Mexican imports actually goes to U.S. companies and workers,” the report states.

“The same cannot be said for Chinese imports, which have only 4 percent U.S. content, or for goods coming from any other country in the world, with the exception of Canada, where U.S. content is 25 percent.”

Mexico ranks as the second-largest destination for U.S. exports, which translates into an estimated 6 million U.S. jobs dependent on trade with the southern neighbor.

Some analysts noted that property rights are better respected in Mexico.

“There are very strong intellectual-property-rights agreements between Mexico and the United States, and that’s not the case with China,” said Frank Esparza, vice president of sales at Co-Production International, a San Diego-based consulting firm that helps U.S. companies open in Mexico.

“If a company moves operations to China, they don’t own anything in China. They’re basically turning over the production work to China,” he said.

“At some point, the Chinese will copy it. And two or three years down the road, you’re going to see your product on the market in the U.S. for less money.”

Other factors are driving companies to Mexico.

Apart from its location just south of the United States and its highway infrastructure for shipping, the “educational system in place here was a big factor,” Mr. Luis Enriquez said.

“The government, locally, is working very hard at helping companies like us meet our workforce need here,” he said.

Growing the future

“What is making Chihuahua so attractive is not only the $4-an-hour salaries, but also the growing number of engineers here,” said Alonso Ramos Vaca, vice president of strategic studies at Chihuahua Economic Development, a nonprofit organization.

“The local colleges and universities are developing centers that specialize in engineering and aerospace technology,” he said.

“What we’re trying to build here is the whole package, not just some industrial park. It’s like an entire ecosystem of business for aerospace manufacturing that we’re trying to build.”

Mexican federal and state governments have spent roughly $20 million over the past 10 years to create vocational schools like the Cenaltec High Technology Center in Chihuahua.

Foreign companies setting up shop in Chihuahua also help pay for their workers to be trained at the schools.

“At first, there was only a small group of students. But then the companies started realizing how useful this is, especially since we adjust the training programs to meet what individual companies need,” said Alberto N. Salomon, director of operations at the center.

There is also a higher-education trend taking hold at the region’s universities, and, with the aerospace industry’s growth, new programs are increasingly competitive.

Jose Luis Rodriguez, manager of Fokker’s plant in Chihuahua, beamed when he revealed that his son was accepted recently to the newly minted aerospace program at the Autonomous University of Chihuahua.

“They only accepted 20 students out of a pool of 350 applicants,” he said.

Louis Eduardo Rodriguez, 18, stood with his father on a recent day near the Fokker plant.

“I wanted to get into aerospace because it’s a growing field, and I’ve gotten a good experience from my dad,” the younger Mr. Rodriguez said.

He added that his personal sights are set much higher than basic manufacturing.

“I’d like to work for NASA one day,” he said with a smile. “That’s my dream.”

Copyright 2012 The Washington Times, LLC.  Reprinted from The Washington Times for educational purposes only.  Visit the website at washingtontimes.com.