Arturo Avila toiled and suffered to build his Mexican start-up into a thriving aerospace company — and the last thing he’s going to do now is lose sleep over Donald Trump’s NAFTA threats.
Avila is the founder of Altaser Aerospace, one of more than 300 companies that make up Mexico’s small but booming aerospace sector, which has grown 179 percent since 2009 to become a $19-billion industry.
These companies, which provide some of the millions of highly specialized parts that go into every commercial airplane, have thrived under the North American Free Trade Agreement — the 23-year-old deal the United States, Mexico and Canada are trying to revamp this week in Mexico City, at Trump’s behest.
Last year, Mexico’s aerospace industry exported more than $7 billion in parts — nearly triple the $2.5 billion it exported in 2009.
It has not been easy breaking into the highly demanding sector, known for white-knuckle deadlines, complex technology and intense global competition.
Avila still remembers how hard it was to get a foothold. He recalls details like the sympathetic smile on one Bombardier executive’s face when the aerospace giant rejected his bid to become its supplier.
The Canadian multinational told him he would need to have far more sales history, and a solid client portfolio.
“I suffered for the first three years,” said Avila, 51.
“You have to be humble, very humble, to understand that it’s a tough industry. You have to win their trust,” he told AFP.
Today, he has a thriving medium-sized business in the state of Chihuahua, on the US border, specialized in making parts for airplane wings.
It has orders booked through 2034, and will soon employ a total of 500 people when it opens a new factory in the city of Hermosillo, in the neighboring state of Sonora.
His clients include such US giants as General Electric and Spirit Aerosystems.
Boeing, Airbus, Lockheed Martin, BAE Systems, Raytheon, Northrop Grumman: all the world’s largest aerospace and defense companies source parts in Mexico.
– Bigger worry: Asia –
Given NAFTA’s central role in creating this boom, Avila and his fellow entrepreneurs might be expected to be nervous over the American president’s repeated threats to “terminate” it.
But at the Mexico Aerospace Summit — held in the aeronautics hub of Queretaro just before the latest NAFTA talks opened — Mexican executives said they had more pressing concerns.
“It’s not something we’re losing sleep over,” said Avila.
Mexico exported 81.3 percent of its aerospace products to the United States in 2015, and 6.6 percent to Canada. The two countries accounted for 81 percent of the $2.1 billion in foreign investment in the sector from 1999 to 2015.
But Mexican executives say they are confident the industry is so globalized, with such complicated and deeply integrated supply chains, that even if Trump pulls out of NAFTA, he can’t staunch demand for their products.
The main reason is that their prices are so competitive, with or without tariffs: Mexican factory workers make an average $2.30 an hour, about one-tenth the average US factory wage.
And demand keeps growing.
“The current supply chains are maxed out, so there’s opportunity for suppliers who have the know-how,” said Xavier Hurtado of the Mexican Aerospace Industry Federation.