Mexico’s aerospace industry faces a new reality defined by geopolitical conflicts and nearshoring. MRO and Sustainable Aviation Fuel (SAF) may be central.
The aerospace sector is currently going through its largest period of change since the introduction of composite materials in aircraft structures during the 1990s and the integration of digital technologies into avionics systems. Industry players must now adapt to new geopolitical rivalries, the realignment of supply chains, inflationary pressures, technological disruption, and volatile energy markets.
In addition, uncertainty over logistics derived from conflicts between nations and stricter trade policies is forcing companies to look for regional partners closer to home.
“Never before has there been such pressure for the industry to change its competitiveness model,” states the Keys to Positioning the Aerospace Industry in Mexico analysis prepared by KPMG partners.
Mexico aims to consolidate itself as a center for advanced aerospace manufacturing, but also seeks to climb up the value chain by capitalizing on four key pillars:
- The integration of aerospace supply chains throughout North America
- Stabilization of OEM manufacturers
- Boosting the country’s MRO ecosystem
Transitioning to sustainable aviation
Through these strategies, Mexico hopes to become more than just a low-cost manufacturing destination but instead play a leading role in aerospace design, engineering, certification, and specialized services with higher levels of added value.
Attracting and Integrating North America’s Aerospace Supply Chain
Experts Eliseo Llamazares, KPMG’s Aviation and Tourism Lead Partner, and Mario Hernández, KPMG’s IMMEX Segment Lead Partner, pointed out that one of Mexico’s biggest objectives is going to be stabilizing and restructuring North America’s aerospace supply chain under the recently renegotiated United States–Mexico–Canada Agreement (USMCA).
“Aerospace was one of the sectors most impacted by the pandemic due to shortages in the supply of critical components and interruptions to international transportation,” they explained. “This was the result of having a fragile supply chain overly concentrated in Asia.”
Other challenges that impacted aerospace manufacturers globally included inflation, strong demand for commercial and cargo aircraft, nearshoring, and trade restrictions and tensions surrounding tariff policies.
In spite of these issues, Mexico remains “one of the countries that strategically allies itself most with the United States and Canada due to its geographic location, cost-competitive labor market, network of free trade agreements, and consolidated industrial base,” the report stated.
“The current geopolitical scenario in which we find ourselves can be an opportunity for Mexico to strengthen and integrate production processes throughout North America,” they added. “Decreasing dependencies with nonregional countries could accelerate the aerospace manufacturing regionalization process.”
Addressing OEM Volatility
The analysis also indicated that OEMs are struggling with worldwide delivery delays on new aircraft produced due to:
- Shortages of a qualified workforce
- Limited availability of certified suppliers
- Bottlenecks in Tier 1 and Tier 2 parts, especially engines, electronics, and advanced composites
Restrictions caused by international trade agreements and new regulatory requirements
These are compounded by tighter sustainability regulations and increasing requirements to adopt new technologies such as AI, advanced robotics, and additive manufacturing.
“Mexico has the opportunity to position itself as a strategic hub due to our country’s extensive pool of talent and capabilities in high-precision manufacturing,” says the report. Mexico’s abundance of suppliers, both Tier 1 and Tier 2, also makes it attractive as a platform to deploy new technologies while scaling design and engineering capabilities.
Growing MRO in Mexico
The MRO segment is quickly gaining importance as commercial aviation continues to grow globally and new aircraft deliveries continue to be delayed. A lack of components, especially engines and parts needed for repairs, has driven up TAT times, which has forced more aircraft to remain grounded and harmed airlines’ bottom lines.
A lack of skilled maintenance technicians has also created a bottleneck for MRO growth. Ironically, while new planes are being delayed production-wise, the planes that are flying are flying more cycles and hours, which is resulting in greater demand for MRO services in Mexico such as inspections, repairs, and overhauls.
Mexico is no stranger to the MRO industry, but by increasing investment in the sector, obtaining international certifications, and adopting new technologies MRO in Mexico could begin serving not just national demand but international customers as well.
Opportunities for MRO services in Mexico include:
- Engine overhauls and component repair services
- Line maintenance and heavy maintenance services for commercial fleets
- Digital solutions for predictive maintenance and AI-based diagnostics
- Regional MRO hub for North American and Latin American airlines
Mexico has the potential to be one of the most competitive MRO service providers in the Western Hemisphere if it continues to invest in policy reforms and training programs to develop a skilled workforce.
Transitioning to Sustainable Aviation
Transitioning toward sustainable aviation and lowering carbon emissions across all areas of aviation will be one of the biggest changes the industry will have to undergo in the coming years. Some key areas include:
- Adoption of sustainable aviation fuel (SAF) as a pillar of decarbonization
- Technological innovations in engines and advanced materials
- Improving the aerodynamics of aircraft
- Reducing emissions during manufacturing and industrial processes
Promoting circular economy strategies, such as repairing and reusing components rather than disposing of them.
Mexico, along with other Latin American countries, has the raw materials needed to produce Bio- Sustainable Aviation Fuel. Agricultural waste, biomass, and used oils can be utilized for domestic SAF production. Mexico and other countries in the region also have high potential for clean power generation through solar and wind energy.
As a result, a new era of aerospace manufacturing could arise in which Mexico doesn’t just produce parts but designs, innovates, repairs, integrates, and certifies sustainable aircraft and aerospace components in partnership with the United States and Canada.
Gearing Up for the Future
To remain competitive in the aerospace sector, nations will have to pivot toward purposeful manufacturing by integrating vertically and horizontally throughout the supply chain. The implementation of the USMCA, nearshoring, and the renewable energy transition may provide Mexico with a once-in-a-generation opportunity to move up the aerospace value chain and become the leading aerospace producer in Latin America.
“If public policies are adjusted to meet these new realities, attract investment, and prioritize the development of human capital while strengthening the industrial infrastructure, we could turn the current global realignment into a platform for long-term growth,” experts concluded.
One key area where Mexico could capitalize is MRO. Experts believe MRO in Mexico could be one of the aerospace industry’s fastest-growing sectors as FDI begins to enter the region and airlines look for more reliable service partners throughout North America.