Unconcerned by NAFTA collapse, aerospace companies in Mexico see other issues ahead

1 November, 2017

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Aerospace companies with manufacturing operations in Mexico are not likely to leave the country if NAFTA comes to an end, at least not in the near term. However, the lack of qualified personnel and reliable supply chains raises doubts about the potential to expand such operations, executives warned to Mexican news outlet Expansion.

“The departure of the United States from NAFTA will result in slightly higher tariffs. In the worst case, we would have to pay 5 million-dollar fees per year. But this will not cause us a problem,” said Craig Breese, Honeywell president for Latin America, in recent days at a business summit in San Luis Potosi.

But the executive noted there’s concerns that if the cost overrun derived from the payment of fees adds to the shortage of skilled labor and the lack of raw materials and components, their competitiveness will be affected.

"62% of everything we do is software content. Therefore, more than half of the 25,000 engineers we have in the world are software engineers. This industry is migrating towards the 'connected aircraft', and I’m worried because Mexico is not graduating the software engineers we need," said Breese.

The official also pointed out the need to develop supply chains. "Mexico is a country that produces metals, but we have to import titanium, because there’s not a single manufacturer in the country that can provide it. And if we do not work on the development of new suppliers, in a few years China will win this battle," said Breese, who noted that Honeywell’s facility in Chihuahua imports 93% of the materials required to assemble the engines it assembles.

You can read the whole piece here.

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