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Mexico Maquiladora Program

Mexico Maquiladora Industry

Mexico delegation at Paris Air Show 2013

Mexico Maquiladora ProgramSources: SRE, SEDECO, Paris Air Show

The 50th International Paris Air Show, known as the world´s premier event dedicated to the aerospace industry, took place at Le Bourget Exhibition Centre.

The Paris Air Show is held every two years and brings together all the industry’s players across the globe to showcase the latest technological innovations and to network during the B2B Meeting activities organized during the show.

This year’s attendance had more than 2,200 exhibitors from 44 countries, around 150,000 trade visitors and 290 official delegations.

The Mexican official delegation consisted of 20 Mexican companies and a delegation of about 100 members from the states of Baja California, Chihuahua, Nuevo Leon, Queretaro, Sonora and Yucatan. For the first time during an international event Interjet, a Mexico Corporation presented an aircraft of its own.

The Mexico Corporation Interjet, received a Russian Superjet. Interjet plans to fly the aircraft from Mexico City, Guadalajara and Monterrey.

As a consequence of the participation at this event, The French company, SNECMA, announced new investments in Queretaro totaling USD$35 million; the Zodiac company announced new investments of USD$25 million and the Snecma-Pretel consortium announced investments of USD$5 million.

As a result of the Baja California delegations meetings held during the participation in the 2013 Paris Air Show last month, a delegation of French companies scheduled a two-day tour in the state in search of business opportunities in the renewable energy sector. The French delegation consists of representatives of the firm DCNS, a global player in marine renewable energy.

In the last seven years there’s been a real spurt in aerospace industries manufacturing in Mexico, with growth averaging 20% a year, growing from 60 transnational corporations in 2005 to 270 aeronautics companies in 2013 that operates under a Mexico Maquiladora Program. Mexican-made aircraft parts are trucked to Canada and shipped across the Atlantic to Europe, but the USA is still the biggest commercial partner for Mexican aerospace companies.

 

Mexico Maquiladora Program

Tijuana- a space for innovation

Mexico Maquiladora ProgramBy Adina Moloman

Sources: Tijuana Economic Development Corporation, MIND Hub, BIT Center

Legislation and institutions are working together in the State of Baja California in order to foster Science Research, Innovation and Technology. To boost competitiveness through innovation is the latest focus in the Baja California region. Last year the Congress of Baja California state approved a new law to promote innovation and create the framework for the operation of Baja California’s Research, Innovation and Technological Development system.

Private and public technological initiatives of the past two years in Tijuana: the Business Innovation and Technology Center, MIND Hub, and the Ignitus Program, among others.

The Business Innovation and Technology Center is a program launched by one of the largest high-tech trade association in Mexico, CANIETI with the cooperation of the academia (UABC) and the public sector (SEDECO, ISSSTECALI), in order to gather a diverse set of companies, freelancers and different private and public sources of capital to work on high tech innovation programs.

MIND Hub or Mexico Innovation and Development Hub is a private initiative where high tech entrepreneurs can collaborate at a bi national level. MIND Hub supports and also funds new technology business opportunities and startups in the Baja California-California region. MIND Hub foster’s a small number of startups that offer their services in different industries such as medical, education, business solutions and financial, most of them related to Tijuana Manufacturing activities.

Tijuana Economic Development Corporation, a nonprofit corporation dedicated to helping transnational corporations establishes their manufacturing in Mexico operations under the Mexico Maquiladora Program, last year lunched its technology and innovation program called Ignitus. This program consists in gathering entrepreneurs, investors, trade agencies, incubators, international mentors, etc. Participants of this program also have access to international markets through strategic alliances with the Mexican Council for foreign trade and the U.S Department of Commerce.

Baja California is one of the top five states in Mexico in the investment of government and private capital for science, technology and innovation programs such as Tijuana hosting the world’s first program dedicated to building new businesses around artificial intelligence.

Maquiladora Industry

The most dynamic sectors in 2013

Mexico Maquiladora ProgramBy Adina Moloman

Sources: Industry Classification Benchmark, Financial Times

FTSE Group[1] and Dow Jones Indexes created in 2005 a definitive classification system called the Industry Classification Benchmark (ICB) covering over 70,000 transnational companies that are classified into Industries (10), Supersectors (19), Sectors (41), and Subsectors (114).

ICB provides a standardized base for investment research and global sector analysis, stock selection and performance measurement.

According to their research at a sector and sub sector level on the most dynamic industries, the Health Care sector is one of the top growth sector worldwide, followed by the Financial sector and the Consumer Goods sector.

Within the Health Care sector the top industries are: Biotechnology, Pharmaceuticals, Medical equipment and Medical Suppliers.

Within the Consumer goods sector the most dynamic global industries based on the last year analysis are: Home Construction, Farming and Fishing, Durable household products, Automobiles, etc.

This concentration enables them to develop a clear understanding of the complex issues and emerging trends in those sectors.

Based on last year trends, sectors that are showing less dynamism are: Basic Materials, Telecommunications, Utilities, etc.

The Health Care sector in Baja California is already of great strategic and economic importance – with over 60 Medical Device companies in Baja California working on assembling and manufacturing surgical instruments and parts for other medical products. All of them are transnational corporations operating and manufacturing in Mexico under the Mexico Maquiladora Program, which offers a growing range of careers in this sector, which already employs around 30,000 people. Industry, academia and government agencies are increasingly working together to ensure the sector continues to grow.

[1] FTSE is an independent company jointly owned by The Financial Times and the London Stock Exchange.

Mexico Maquiladora Program

The first Aerospace Center in Precision Machining (CADTE) in Baja California

Mexico Maquiladora ProgramBy Adina Moloman

Baja California inaugurated the first specialized Aerospace Center in Precision Machining (CADTE) this April 2013 at Cast Conalep. This CADTE will train students to produce precision parts that fulfill the criteria required by the aerospace industry.

Baja California has encouraged the setting up of manufacturing in Mexico facilities by leading aerospace companies in Mexico under the Mexico Maquiladora Program. Mexico has been working in its policy measures to incentivize the aerospace sector, developing Mexico to be a relevant part in this world-class high technology industry.

So far the decision of transnational aerospace companies to establish in Baja California have been strongly related to the manufacturing advantages. Baja California has over 50 aerospace and defense companies, which represent about 25% of all companies within Mexico, most of them located in Tijuana, Mexicali and Tecate. The main activities are related to manufacture and assemble parts and components for the aerospace and defense sector.

The vision is to encourage cooperative programs among universities, aerospace industry, and Federal, state and local governments. This specialized center is part of a co-joint initiative of Baja California Aerospace Cluster, local government, Pro Mexico, CDT, SE, Zodiac Aerospace. There are four more centers to be opened in the following months: the UTT Center, UABC Center and Cetys-ITT Center.

All this centers were created to establish and maintain a regional network of universities and technical schools with interests and capabilities in aeronautics, space and related fields required by the aerospace industry in this region.

The region is producing over 15,000 engineering students; these centers promote the technical content of the educational skills required, training them within the norms, regulations (AS9100) of the aerospace industry. The main goal is to reach highly skilled and motivated workforce who are dedicated to continuous improvement in both processes and manufacturing technology.

Mexico Maquiladora Program

Tijuana- San Diego- cross-border economic interdependence

Mexico Maquiladora ProgramBy Adina Moloman

Sources: The New York Times, UT San Diego

The San Diego-Tijuana region has many shared assets. San Diego is well known for the development of important economic sectors such as defense, telecommunications and biotechnology; the international trade and visitors industry.

Tijuana, has a growing industrial base and in the last couple of years has transformed into the world’s premier hub for making flat-screen televisions, and a site for aerospace and medical equipment manufacturing, two growing sectors that are strategically promoted by the Mexican government.

Even when the region boasts fine educational institutions and recreational options on both sides of the border the cross-border student exchanges have fallen in recent years and the art and cultural partnership is not that solid as it should. A good explanation for that is the poor image of Tijuana.

Tijuana arts and cultural climate is attracting attention among the arts community around the world and should be much more exploited regionally.

A good start is to raise awareness of cross-border economic interdependence.

This can be changed when actors from both sides of the border are aware of the economic benefits of their interaction.

The first in seeing the benefits of cross-border economic interdependence are the entrepreneurs. The city of San Diego is one of the most diversified high-tech economies in the U.S. and in the last three years San Diego’s entrepreneurs looked for direct business partners in Tijuana.

Basically this happens for a few reasons: Mexico has shifted into a new manufacturing model that gives to the transnational corporations established under the Mexico Maquiladora Program a maximum flexibility and market access, with competitive prices and skilled labor, which brings high returns with shorter supply chains.

Another reason is the salaries in China that are rising fast.

Due to these reasons a large number of U.S. and Canadian businesses – large and small –decided to bring some of its business back to North America, specifically to Mexico.

Both San Diego and Tijuana are working together to collectively respond to regional issues such as border delays and are working on infrastructure projects: a national desalination plant, investments in renewable sources of energy, and a cross-border airport terminal and the Otay East port of entry.

Mexico Manufacturing Company

A new side of Mexico

Mexico ManufacturingBy Adina Moloman

Source: The Economist, The New York Times

This info is based on a different side of Mexico that the world is not familiar with, a Mexico with a rising economy, with a huge Mexico Manufacturing industry dedicated to create sophisticated products mostly executed by a skilled labor force. A direct consequence is the increase of the middle-class population segment.

Little by little, Mexico shifts focus from violence and drug wars to economy and secure energy. There is a rapid increase of manufacturing in Mexico, making its economy to have outpaced Brazil economy in 2011 and is expecting the same for 2012.

Starting 2009 more than 200 Chinese companies have expressed interest to re establish their operations to Mexico to save on costs, around 40 multinational companies from different countries are also considering business operations under the Mexico Maquiladora Program.

According to a recent edition over US-Mexico relations published in the Economist “Mexico is already the world’s biggest exporter of flat-screen televisions, BlackBerrys and fridge-freezers, and is climbing up the rankings in cars, aerospace and more”.

Mexico is also the most energy secure nation among the 25 largest energy-consuming countries.

There is also a different approach on US-Mexico relations. Mexico shift relations with the United States toward improving the economy, loosening up trade and reconsider the migration issue.

Mexico exports 80% of its goods to the United States, US imports are coming every day more from his south neighbor than from any other nation. Mexico has gained $277 billion from exports to the United States.

The Mexican migration is changing.  Mexican immigrants or American citizens of Mexican descent account for almost 70% of the Latino community in the United States estimated at 50 million people. The balance between Mexicans who are moving to the United States and those whom are coming back home has changed. Due to economic issues where the unemployment rate in US is nearly twice as high as Mexico’s, less Mexicans are crossing the border to US and a higher number are entering south.

Positive trends are registering in US-Mexico trade and both nations also are determined continuing to work closely on fighting drugs and organized crime in order to reach higher economic levels.

Maquiladora Industry

High tech investment in Baja California

Mexico manufacturingBy Adina Moloman

Sources: SEDECO, CANIETI

It has been a busy technological week In Baja California, where was the inauguration of the second phase of the Technology Consortium of Baja California and also it took place the official presentation of the recent handing over innovation incentives on the Bit Center (Business Innovation and Technology Center) in Tijuana.

Both of them are innovative centers dedicated to provide engineering, lab testing and design services for manufacturing and technology companies. There are considered two important initiatives to provide the infrastructure for incubating and developing software and information technology.

The Bit center is part of the CANIETI management and is intended to be the host of a mix of IT& software companies and developers, entrepreneurs as well as academic researchers and institutions. This new form of cooperation at the local level, between local governments, the private sector, and universities for improving the local technological offer is an adapted model of the high-tech economic center known as Silicon Valley in Northern California, famous in recent years for its innovations in software and Internet services.

The Technology Consortium is part of the Mexico’s Science and Technology Council known as CONACYT, with the participation of the State Government of Baja California and also the private sector.

The Technology Consortium is also intended to provide technological services to local industry given the fact that Baja Californian is an important host of multinational corporations operating under a Mexico Maquiladora Program.

The technological offer of the Consortium is strictly related to the industry needs such as: metrology, process automation, mechatronics, PLC´s, energy efficiency, and advanced materials research, among others.

Both projects are intended to help the Mexico manufacturing companies become more competitive by providing new tools and incentives mostly for technical innovation.

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Biofuels in Aviation – New energy technologies

New energy technologiesBy Adina Moloman

Sources: European Biofuels Technology Platform, Renewable Energy World

Worldwide organism and organizations express concerns that measures should be taken in order to reduce greenhouse gas emissions. For such there are many proposals of integrated policies on climate change that includes different aspects, such as technical (research and innovation in the field of sustainable alternative fuels), environmental, business and economic aspects.

Biodiesel is made from vegetable oils and animal fats and is used to produce biofuel which are considered to be CO2 neutral. Corn-produced ethanol has been the most common resource used for mixing with gasoline. Some side effects have been detected like corrosion from the ethanol.

In the last five years the use of biofuels was considered for off-road equipment such as vehicles used in agriculture, mining, forestry, construction, power and heat production, which mostly use diesel fuel and were easier to adapt them for biodiesel use.

Starting in October last year the first commercial flight was tested using biokerosene by the Boeing company, it has shown the viability of biofuel use in the aviation industry to power aircraft.

Since then, In June 2012, Air Canada flew its first flight using biofuels produced from recycled cooking oil. The flight from Toronto to Mexico City, supported by Airbus, was especially prepared for the G20 meeting held in Baja California Sur, to be in the spirit of the event. Demonstration flight using jet fuel (produced from sugarcane) took place in April 2012 by Porter Airlines, All Nippon Airways and Qantas and in June 2012, by Azul Brazilian Airlines.

In March 2012 Airbus, Boeing and Embraer, all of them with Mexican manufacturing plants, operating under the Mexico Maquiladora Program, signed a collaboration agreement to accelerate the commercialization of sustainable biojet fuel.

The USA is currently the world’s biggest producer of biofuels, followed by Brazil and China.

In Mexico there are companies working to produce the fuel from animal fats, jatropha especially in Chiapas, vegetable oils and nopal. Interesting projects are coming along for bioethanol production using agave, which is used to make Tequila, as well as maize and soy.

So far, most of Mexico’s biodiesel production was promoted for export to Europe and the bioethanol output is also exported to the U.S.

Mexico Maquiladora Program

Honeywell turbocharging technology 2012

Mexico Maquiladora ProgramBy Adina Moloman

Source: Honeywell, Reuters

There is a higher concern from global manufacturers and engines maker to look up for better technologies for achieving more efficient engines and by those allowing automakers to shift to smaller engines. This concern comes as the gas prices are not dropping this year.

Honeywell Turbo Technologies, the business unit of Honeywell Transportation Systems, a well known automotive turbocharger developer in the world, had the vision to work in this project by launching an average 100 new turbo applications globally. This division developed a program with almost every major global manufacturer to reach this efficiency. By definition turbocharging technology consists in replacing larger naturally aspirated engines by downsizing to a smaller turbocharged engine with improved fuel economy with equal or better performance, where the engine can provide a 20 percent to 40 percent fuel economy improvement and deliver the same performance as a larger engine.

Honeywell Turbo Technologies  wins 2012 Automotive News Pace (TM) Award for New Fuel-Efficient Technology this April.

A few examples of manufacturers that already incorporated the new Honeywell turbocharged technology: the Mercedes-Benz E350 and R350 models in the European market and Ford’s EcoBoost lineup, Chevrolet Sonic and Chevrolet Cruze with huge selling in the US this year, which is showing even more a change in the US consumer behavior. Next year are also expecting brands like Dodge Dart, Fiat 500 Abarth and diesel models of the Chevrolet Silverado and Volkswagen Touareg to also feature a fuel-efficient Honeywell turbocharged engine.

This new applications are a consequence of the increasing demand for fuel-efficient downsized turbocharged vehicles, which is expected to reach sales of 3.2 million in 2012 in North America, compared to 2.2 million in 2011.

Honeywell is a huge global corporatation with aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; specialty materials, etc.

Aerospace and automotive divisions are also presents in Mexico and especially in Baja California there are located manufacturing plants from those divisions that are working under the Mexico Maquiladora Program.

Mexico Maquiladora Program

Latin America, the next big thing in aerospace industry

Mexico Maquiladora ProgramBy Adina Moloman

Sources: Economy watch; Aerospace-technology.com; Promexico.gob.mx/ National Flight Plan (Mexico); www.trade.gov/Flight Plan 2011(US)

It has been proved that there are a few strategic countries for the development of aero-space industries, such as: China, India, Russia, Brazil and Mexico, where most of US, Europe and Canadian air craft companies are willing to invest.

China and Brazil are a clear example of countries, which have been acquiring general aviation capabilities through foreign direct investment and now Mexico is following their steps.

Most US air and military companies strategically are orienting their investments in Latin America, considering mainly Brazil and Mexico for their high engineering and manufacturing capabilities proved by organizing themselves in important aerospace clusters.

For instance in Brazil there is an important foreign direct investment in maintenance, repair, and overhaul industry, manufacturers operating MRO facilities such as GE, Rolls-Royce, Pratt & Whitney Canada, and Goodrich, etc. Brazil also manufactures turboprops, military aircraft, agricultural aircraft, business aircraft, helicopters, and other general aviation aircraft.

But the success Brazilian story is the production of regional jets, by its Brazilian manufacturer Embraer the main competitor of Canada‘s Bombardier.

The Brazilian aerospace industry started in the 70’s with an accelerating growth in the 90’s and has become a major player after 2006, where many of local Brazilian aerospace companies are integrated into the global aerospace supply chain, comparing to Mexico local suppliers, which are just starting to integrate, but nevertheless during the past ten years, the Mexican aerospace industry has acknowledged a rapid and constant growth.

As a result of a strong cooperation between governments, universities and private sectors, which are working together to promote and rise the capabilities of aerospace sector in Mexico, foreign manufacturers who were already installed in Mexico are now planning to increase their operations not only manufacturing but also established an engineering base.

For instance in Mexico, Baja CA, Chihuahua, Nuevo Leon, Sonora and Queretaro have larger aerospace clusters where most of the manufacturers are working under the Mexico Maquiladora Program.

For 2012, there are almost 300 aerospace companies registered in Mexico.

The strategic clusters mentioned above are having different vocation: Baja California is manufacturing  interiors and electric power systems manly for US aerospace companies; Sonora cluster is manufacturing highly complex engine parts;  Chihuahua cluster is manufacturing for the military and defense industries; Queretaro cluster is manufacturing and assembles complex fuselage parts (engine components and subassemblies and thermal and surface treatments), etc.

Mexico has developed significant Engineering & Design capabilities for military and civil applications that supply mainly markets in the United States, Canada, Germany and France.

 

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