mexico and globalization of the aerospace industry
DESCRIPTION
Luc Beadouin of Aeroshores positions Mexico's aerospace globally at a Mexico Now conference in Las Vegas, Nevada in May of 2011.For more information please visit http://www.offshoregroup.com/category/mexico-outsourcing-presentations/TRANSCRIPT
Las Vegas, NevadaMay 19-20, 2011
Bellagio
Manufacturing in Mexico ConferenceNear-Shoring - Maquiladoras - Site Selection
For more Mexico business information, visit the presentations section of The Offshore Group website.
Cover
May 19th, 2011
Manufacturing inMexico Conference
Las Vegas
Mexico
and
Globalization of Aerospace Industry
For more Mexico business information, visit the presentations section of The Offshore Group website.
Relevancy of Mexico in Aerospace
Aerospace business practices in evolution
The Decision of Offshoring
Section 1 – Globalization
For more Mexico business information, visit the presentations section of The Offshore Group website.
A m
atte
r o
f I
ndus
try
sur
viva
l
Aerospace is embracing new realities
Socio-economics
Demographical
Market
Competition
Best practices
Technologies
Pace of changes weighs on Aerospace
Challenging the established order:
Traditional Aerospace players
Protectionism around Aerospace
Ways of doing things
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The Transformation of our sourcing practices
TraditionalPurchasing
StrategicSourcing
CompetitivePurchasing
The OEMs impose profound changes on Suppliers
Source: Northrop Grumman & Business Week
Reduction in numberof suppliers
Outsourcingmanufacturing
Developpartnershipswith largesuppliers
Gettingsuppliersinvolved instudies
Subcontractcompletesystems
Risk sharing
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Performance
Contribution to OEM business interests
Source: EADS GSN- May 2007
A new model of collaboration between Primes & Suppliers
Target area for
Qualifying Suppliers
Cooperation
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Globalization of the Supply Chain
Source:Conference Board of Canada, Sept 2008
At presentation to Aerospace Industries Association of Canada
Major Value Chain
Investments
by 121 OEMs
1990-2009 *
Source: AeroStrategy, September 2009* As of August 2009
“OEMs are reconstructing their Value Chain by
positioning each link at the place in the world that
will minimize COST and maximize RETURN”
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French Aerospace – Strong deployment in Morocco and Tunisia
New battlegrounds for competitiveness - Example
For• The language• Its costs
• Its proximity• Its logistics• Ease for suppliers
Investments in• New capabilities• New infrastructures• Training
For more Mexico business information, visit the presentations section of The Offshore Group website.
Relevancy of Mexico in Aerospace
Aerospace business practices in evolution
The Decision of Offshoring
Section 1 – Globalization
For more Mexico business information, visit the presentations section of The Offshore Group website.
The Precursors – before 2005
We started to see an increasing number of aerospace companiesestablishing in Mexico (60-100) in the early of decade 2000
The vast majority were smaller manufacturing investments
The majority were U.S. investments
Even big names started very modestly
1986 – 40 employees
2001 – 25 employees
LABINAL1998 – Acquisition of Aerotec
For more Mexico business information, visit the presentations section of The Offshore Group website.
The Beginning of Organized Aerospace in Mexico - 2005
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The Beginning of Organized Aerospace in Mexico - 2005
Bombardier’s announced its Mexico investment in October 2005
They came with a Long-Term Strategic view
Decided to setup in Mexico as at any other Bombardier plant
For the eventual assembly of airplanes in Mexico
For thousands of jobs
With a Supplier Strategy in mind
They were instrumental in
Creation of a National Aerospace
School
Development of a Supplier Park
BASA
For more Mexico business information, visit the presentations section of The Offshore Group website.
Surge of French Aerospace in Mexico
Late 2007 and early 2008 have been difficult for European aerospace
The exchange rate of the British Pound and Euro against the US Dollarreached record highs
The Primes such as Rolls-Royce, EADS, SAFRAN suffered deeply theimbalance between their production cost in local currency relative to theportion of their revenue made in USD.
Mexico them became a strategic platform to
• Diminish costs
• Edging the currency effect – Mexico is a USD zone
• Penetrating strategically the North American aerospace market
For France, for instance, Mexico became such an important platformthat it received the highest level of attention
Mexico was declared a “Pôle de Compétitivité” for the French Aerospace
The French and Mexican Governments established a Bilateral High-LevelCommittee to study collaboration initiatives in the areas of:
• Aerospace education
• Support to investments and development of suppliers
For more Mexico business information, visit the presentations section of The Offshore Group website.
Aerospace Trade Education
France is giving its support to several aerospace training initiatives:
An aerospace campus with a capacity of 600 to 70 students was announced last July by
SAFRAN
Eurocopter has developed several partnership with local trade schools and universities in
support to the training of its workforce
•
•
•
EADS has opened a Global sourcing office
French primes are holding suppliers conferences in Mexico
Mexican local companies are assisted by French companies to qualify for their work
The French Aerospace is developing a strong presence
There is a rapid deploymentof French aerospacecompanies in Mexico
For instance, SAFRAN is thelargest aerospace employerin Mexico with over 3000employees in 6 plants.
Sourcing
For more Mexico business information, visit the presentations section of The Offshore Group website.
Significant growth since
Mexico is strategic as well for the UK Aerospace
As a Strategic Sourcing LocationAs an Offshore Manufacturing Location
ADS has conducted several missions in Mexico, including a recent one in Baja CaliforniaUKTI in Mexico is actively supporting UK aerospace development activities the country
Canada and the United States see as their strategic low-cost partnerwithin the framework of an integrated North American economy
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Mexico is building its aerospace backbone
As set the essentials bodies required for structuring the industry such asthe Mexican Aerospace Industry Association
Is getting more COHERENT and STRATEGIC in its deployment
Is harmonizing its law and rules of aviation with other countries
Is investing and cooperating in the development of aerospace education
Is supporting initiatives in support of aerospace certification of suppliers
Is reviewing ways to provide better government support to the industry
Mexico has made significant strives in the last 5 years
For more Mexico business information, visit the presentations section of The Offshore Group website.
Aerospace Industry in Mexico
16.5
12.57.5
31.0
21.0
37.5 1,2001,100
900
450
250200
7,500
5,000
3,4002,700
1,300
270
310
250
190
150
110
65
Source: MexicoNow Research
2001 2004 2007 2008 2010 2012E
TotalEmployment(inthousand)
2001 2004 2007 2008 2010 2012E
AnnualInvestment(US$Million)
2001 2004 2007 2008 2010 2012E
AnnualExport(US$Million)
2001 2004 2007 2008 2010 2012E
TotalNumberofPlants
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Main Aerospace Clusters
Baja California• Mexicali• Tijuana
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Main Aerospace Clusters
Sonora• Nogales• Guaymas
For more Mexico business information, visit the presentations section of The Offshore Group website.
Main Aerospace Clusters
Chihuahua• Chihuahua• Cd. Juarez
For more Mexico business information, visit the presentations section of The Offshore Group website.
Main Aerospace Clusters
Nuevo Leon• Monterrey
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Main Aerospace Clusters
Queretaro• Queretaro
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Mexico is building its aerospace backbone
Aerospace Trade Programs available from TECHNICAL COLLEGES
Aircraft Structure assembly
Electrical Harness assembly
Composites
Basic Machining
Advanced CNC Machining
Sheet Metal / Fabrication
Aircraft Maintenance
LONG PROGRAMS6 months to 18 months programs
With free internship in companies
SHORT COURSESMetrology
NDT
Quality Standard
Chihuahua
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STRUCTURESSimpletoComplex
ENGINESSimpletoComplex
SYSTEMSSimpletoComplex
MROSimpletoComplex
•MinorAssy•MajorAssy–Smalla/c•Metalcomponents•Compositesecondarystructures
•BladeMachining•RingMachining•Somesurfacetreatments
•HarnessesAssy&design•JBAssy/Connectors•Interiorsfab&assy•MechanicalSystemscomponents•Systemstesting
•EngineMRO•LandingGearMRO•CaptiveA/CHeavyMtce
•MajorAssy–Largea/c•Moremachining•Processes•CompositesPrimaryStructures•Partsmachining-Military
•Titaniumcastings•Aluminum&Magnesiumcastings•SurfaceTreatments•LPModulesub-assy
•A/CBrakingSystems•Flightactuators•AvionicsPCBAssy•LDGsub-Assy•Mechanicalsystemssub-assy
•APUComponentsMRO•IndependentA/CHeavyMtceMROshop
•Helicopterassy•GeneralAviationA/Cassy
•CompressorAssy&testing
•Avionicsboxesfullassyandtesting•FullMech.Syst.Assy
•APUMRO
Established
Imminent
Next Phase
2nd Next
Phase
FUTURE – Expansion of Aerospace in Mexico
… room to grow
For more Mexico business information, visit the presentations section of The Offshore Group website.
Relevancy of Mexico in Aerospace
Aerospace business practices in evolution
Offshoring to Mexico as One option
Section 1 – Globalization
For more Mexico business information, visit the presentations section of The Offshore Group website.
Aerospace supply chain under great pressure
Process improvements initiatives such Six Sigma, Lean Manufacturing,Value Engineering and others will not be sufficient to respond to entirerequirements of cost reduction and to remain competitive
Can process improvements guarantee for long-term survival?
Can process improvements can realistically provide a net 20%-30% costimprovement?
Market competition grows in Low Cost Economies, either through
My traditional competitors taking the opportunity of Globalization
New Suppliers being groomed abroad by the OEM’s
Long-term growth means embracing OEMs/Tier-1 strategies & priorities
Business model
Globalization
Cost reduction
Is Status Quo an option?
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Offshoring as one of the strategies
It is one more option in our “Card Deck” of ManufacturingStrategies
Must not be the unique strategy
It offers a paradigm shift. There offers the possibility to replicatethe best of what we are but in a lower cost structure.
Without compromise on the content, complexity and practices
Offers opportunities to create value-added activities at home
The whole creating increasing overall enterprise value
Probably no more efforts than many other Improvement / COSTSaving initiatives available to you
For more Mexico business information, visit the presentations section of The Offshore Group website.
Mexico as a new market for Aerospace?
Mexico, by large, is not a net source of new Aerospace business.
The volume of worldwide aerospace work is set by the number of commercial,business, rotary aircraft in production and the military spending.
The production of aerospace goods of Mexico is a geographical redistributionof an existing market.
Are there some pockets of new opportunities in aerospace in Mexico?Certainly, but it remains marginal
More MRO work as the Mexican fleet of aircraft is growing more rapidly thanthe average
More airport-related services and equipment as the airport infrastructures ofMexico are getting beef-up
Mexico must be seen as a platform- For global competitiveness- To reach the U.S. / Canadian markets
For more Mexico business information, visit the presentations section of The Offshore Group website.
Is it within my reach?
Limited Financial Resources
Limited Human Resources to apply against project
Management attention is spread out
I am risk adverse – a lot of unknown
Managing at Distance
Should be a complex undertaking
I am only a relatively small supplier !
Can I realistically consider an Offshore operation?
ANSWER: Definitely YES under proper setting,under proper guidance
For more Mexico business information, visit the presentations section of The Offshore Group website.
AeroShores is a Consulting and Services firm dedicated at thesuccessful launch of manufacturing investments in Mexico
w w w. A e r o S h o r e s . c o m
Our values resides in
our strategic thinkingour expertise in manufacturingour hands-on experience at implementationsour knowledge of Mexico
Your contact:
Luc Beaudoin – PrincipalTel: +1 (514) 667-1534Cell: +1 (514) [email protected]
Thanks for your attention
For more Mexico business information, visit the presentations section of The Offshore Group website.
Las Vegas, NevadaMay 19-20, 2011
Bellagio
Manufacturing in Mexico ConferenceNear-Shoring - Maquiladoras - Site Selection
For more Mexico business information, visit the presentations section of The Offshore Group website.