Chihuahua City’s Aerospace Industry – Part 1

Daily News Article — Posted on May 16, 2012

PART 1:

Instructor Hipolito Correa shows students Isabel Lugo (right) and Luisa Elizondo how to operate a lathe at Cenaltec, an aerospace-industry training center in Chihuahua City, Mexico, set up by state and federal governments in collaboration with local businesses. (Keith Dannemiller/Special to The Washington Times)

(by Guy Taylor, WashingtonTimes.com) CHIHUAHUA CITY, Mexico – When a jumbo jetliner touches down almost anywhere in the world, the last thing on the pilot’s mind is that the plane’s brakes likely were made in the capital of one of the most crime-riddled states in Mexico.

Behind the headlines of warring drug gangs and a soaring murder rate in Mexico, a fast-growing high-tech economy centered on the aerospace industry has sprung up in recent years.

In Chihuahua City alone, 36 aerospace plants have opened since 2007 as a growing number of international parts makers use the city as a base for tapping a massive airplane-production market in the United States.

“Our first objective was to get into the U.S. market and get a deal with U.S. customers,” said Nicolas Maillard, director of the French-owned Manoir Aerospace plant in Chihuahua City, 235 miles south of El Paso, Texas.

Shiny, precision-shaped steel discs produced by the plant are shipped to companies in Ohio and Kentucky, where they are added into the assembly line for brake systems on the Boeing Co.’s commercial airplanes.

With the average cost of manufacturing labor running about $6 per hour in the city, a new era of high-tech growth is taking root. [NOTE: The cost of living is much less expensive in Mexico than it is in the U.S.]

“The real advantage is the cost of labor,” Mr. Maillard said. “In France, labor would account for about 30 percent of the cost of production on an item like this. Here, it’s roughly 10 percent, and we’re [located] closer to the market we’re trying to reach.”

The sky’s the limit

Jose Luis Enriquez oversees Nordam Mexico, the Chihuahua City branch of the Tulsa, Okla.-based aerospace giant [Nordam] that specializes in making everything from airplane windows to cockpit doors.

“Right now, it might seem like we’re doing basic things. But going forward, I see aerospace in Mexico moving along a similar trend that the auto industry did 40 years ago,” Mr. Luis Enriquez said.

U.S. and European automakers have been tapping [Mexico’s] cheaper labor pool since long before the 1994 North American Free Trade Agreement [NAFTA]. A Ford Motor Co. plant in Chihuahua City has built 6.5 million truck engines since 1983.

“What started as parts manufacturing in the auto industry now involves design and making whole cars. This is what will happen with aerospace,” Mr. Luis Enriquez said.

“The difference is that 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.”

The prediction appears close to a reality. In 2007, Mexico had 150 aerospace factories exporting roughly $2.7 billion worth of products. By last year, the number had soared to 260, with exports totaling $3.8 billion, an increase of more than 40 percent over four years.

The same period saw violence spiral in Mexico, a nation plagued by more than 47,000 drug-war killings since 2007. But the killing has done little to deter foreign companies from wanting in on the hot aerospace market.

The sector drew $1.25 billion in foreign investment in 2010 in a 25 percent increase over the previous year, and 30,000 Mexicans are employed in factories spread across 16 of Mexico’s 31 states.

The states of Baja California in the west and Queretaro in central Mexico are emerging as aerospace hubs.

And signs of growth are around almost every corner to the north in Chihuahua City, a city of roughly 900,000 people, where a visitor can’t help noticing the abundance of new housing developments.

More revealing, city planners say, are the dozen of vast and neatly demarcated open lots that surround recently opened factories east of downtown.

“You can see we have a lot of room to grow,” said Jesus Mesta-Delgado, president of Index Chihuahua, the city’s main nongovernment business group.

“Today, the world’s capacity to produce airplanes is falling about 50 percent short of demand,” he said.

“By 2030, 33,500 new airplanes will be needed. To meet that demand, there will need to be more than double the production of what’s so far been made in the history of the airplane industry.”

One-stop city

The top three commercial airplane makers in the world are the French-based Airbus, the U.S.-based Boeing and the Canadian-based Bombardier.

Business leaders in Chihuahua are pushing for the city to emerge as a go-to destination for the hundreds of smaller companies supplying parts to the giants.

“What we’re planning to do is to make Chihuahua a one-stop city,” Mr. Mesta-Delgado said. “In the U.S., you’d have to travel to seven different cities to do what we’re trying to make possible right here.”

The key, he added, rests in the region’s ability to attract what are known as original equipment manufacturers (OEMs) – brand-name companies that not only make parts, but also buy components from other firms.

Chihuahua so far has attracted four of them: Cessna, Hawker Beechcraft, Textron and Honeywell.

The Wichita, Kan.-based Hawker Beechcraft recently opened its second plant in Chihuahua, a 180,000-square-foot facility that assembles sheet-metal sections for its jets.

“That the big OEMs are now here means they’re attracting small companies, and that’s why the boom in aerospace is coming,” said Jose Luis Rodriguez, who runs Chihuahua operations at Fokker Aerostructures, a plant owned by the Netherlands-based Fokker Technologies.

A stroll across the facility’s vast production floor, which opened in January, gives one the sense of being surrounded by life-sized sections of a model airplane.

“This is the tail, and this part is where we put the rudder,” said Mr. Rodriguez, pointing to various sections of plane spread across the production floor. “Over there, those are the wings.”

Passing through the building’s spanking new corridors, meanwhile, can feel a bit like crossing the lobby of an international hotel. Dutchmen, Americans and Mexicans work side by side, with English the common language among them.

In one section of the plant, Daniel Gerardo appeared beside a half-built airplane wing to announce that he was having a “great experience” at the new plant.

Mr. Gerardo said he lived in Colorado for 10 years while growing up but later returned to his native Mexico and felt fortunate to have his current job.

“There’s a lot of work here in Mexico right now, but I feel very lucky that I got in here,” the 19-year-old said.

He explained that Fokker hired him in November and sent him through three months of training to prepare for the job of drilling and riveting wing sections together.

…See PART 2 in tomorrow’s Daily News Article at StudentNewsDaily.com…