Aerospace Reviews

During the past decade, the aerospace industry in Mexico has grown
rapidly – and over the past few years, it’s really begun to soar. The
Mexican government has placed a strong emphasis in helping improve this
the operating environment for aerospace manufacturers by improving the
internal regulatory environment for the industry. For example, in 2006,
the Mexican government set an effective tariff rate of zero percent on
the importation from any country of any item entering the nation to be
used in Mexican aerospace manufacturing operations. This and other
factors have led to a tripling of aerospace imports for the period of
2006-2011. These imports enabled Mexico to increase the volume and value
of its aerospace parts and products exponentially. The vast majority of
these exports are consumed by aerospace OEMs in the United States.

Along with automotive, the aerospace industry in Mexico is one of the
country’s most significant and thriving industry sectors, with over 300
aerospace companies relying upon the utilization of special
considerations provided under the maquiladora, or IMMEX, program to
produce exceptional quality for considerably lower costs. Within the
past decade, the aerospace industry in Mexico has reached a compounded
annual growth rate of over 15% and has expanded into several new
segments. Some of the more notable US aerospace companies enjoying
Mexico’s stable and business-friendly environment include Hawker
Beechcraft, Gulfstream Aerospace, General Electric, Textron, and
Honeywell.

One of the most notable changes in recent years for
that has made the aerospace industry in Mexico more conducive to foreign
capital has been the September 2007 implementation of the US-Mexico
Bilateral Aviation Safety Agreement or BASA. Prior to the ratification
of this accord, aerospace parts that were manufactured in Mexico were
required to be sent to the United States to obtain FAA safety
certifications. With BASA, Mexican-produced aerospace parts can now be
certified in Mexico, and used in the manufacture of larger products or
sold directly to end users. This effectively eliminated an extra step
and significant extra cost in the value chain.

The respective
aerospace regulatory bodies of the US and Mexico – the Federal Aviation
Administration (FAA) and the Mexican General Directorate of Civil
Aeronautics (DGAC) – oversee and enforce the agreement, ensuring
compliance with all applicable safety and quality standards. Under the
BASA, the US and Mexico agreed to facilitate acknowledgment of each
other’s airworthiness authorizations and environmental testing and
approval of civil aeronautical products, as well as qualification
evaluations of flight simulators. The success of this agreement was
critical to the Mexican aerospace industry’s ability to expand in terms
of size and global competitiveness.

The practical result of the BASA is the removal of significant
obstacles for aerospace companies seeking to near shore aerospace parts
and component production south of the border. Its provisions allow
manufacturers to verify and transport machinery directly from Mexican
factories, rather than sending them back to the US for security checks.
This then avoids the need for expensive re-certifications or secondary
reviews altogether. It also opens the door for the possibility of
performing critical secondary operations in Mexico such as heat and
other metal treating processes.

Of primary significance is the
“Airworthiness Approval” ruling of the BASA, which dictates that the
design or change to a design of a civil aeronautical product meets
standards agreed upon between both the US and Mexico, and is in safe
operating condition. If the standards are met, the exporter receives an
export certificate of airworthiness. Since products no longer have to be
sent back to the United States for certification prior to being sent to
an end user, direct shipment can be made that results in reduced costs,
lessened reduced regulatory burdens, enhanced air travel safety, and
the continued vibrant growth of the aerospace industry in Mexico.