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The Aerospace Industry In Mexico And The Us-mexico Bilateral Aviation Safety Agreement
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During the past decade, the aerospace industry in Mexico has grown rapidly – and over the past few years, it’s really begun to soar. The Mexican government has placed a strong emphasis in helping improve this the operating environment for aerospace manufacturers by improving the internal regulatory environment for the industry. For example, in 2006, the Mexican government set an effective tariff rate of zero percent on the importation from any country of any item entering the nation to be used in Mexican aerospace manufacturing operations. This and other factors have led to a tripling of aerospace imports for the period of 2006-2011. These imports enabled Mexico to increase the volume and value of its aeropace parts and products exponentially. The vast majority of these exports are consumed by aerospace OEMs in the United States.
Along with automotive, the aerospace industry in Mexicois one of the country’s most significant and thriving industry sectors, with over 300 aerospace companies relying upon the utilization of special considerations provided under the maquiladora, or IMMEX, program to produce exceptional quality for considerably lower costs. Within the past decade, the aerospace industry in Mexico has reached a compounded annual growth rate of over 15% and has expanded into several new segments. Some of the more notable US aerospace companies enjoying Mexico’s stable and business-friendly environment include Hawker Beechcraft, Gulfstream Aerospace, General Electric, Textron, and Honeywell.
One of the most notable changes in recent years for that has made the aerospace industry in Mexico more conducive to foreign capital has been the September 2007 implementation of the US-Mexico Bilateral Aviation Safety Agreement or BASA. Prior to the ratification of this accord, aerospace parts that were manufactured in Mexico were required to be sent to the United States to obtain FAA safety certifications. With BASA, Mexican-produced aerospace parts can now be certified in Mexico, and used in the manufacture of larger products or sold directly to end users. This effectively eliminated an extra step and significant extra cost in the value chain.
The respective aerospace regulatory bodies of the US and Mexico – the Federal Aviation Administration (FAA) and the Mexican General Directorate of Civil Aeronautics (DGAC) – oversee and enforce the agreement, ensuring compliance with all applicable safety and quality standards. Under the BASA, the US and Mexico agreed to facilitate acknowledgment of each other’s airworthiness authorizations and environmental testing and approval of civil aeronautical products, as well as qualification evaluations of flight simulators. The success of this agreement was critical to the Mexican aerospace industry’s ability to expand in terms of size and global competitiveness.
The practical result of the BASA is the removal of significant obstacles for aerospace companies seeking to nearshore aerospace parts and component production south of the border. Its provisions allow manufacturers to verify and transport machinery directly from Mexican factories, rather than sending them back to the US for security checks. This then avoids the need for expensive re-certifications or secondary reviews altogether. It also opens the door for the possibility of performing critical secondary operations in Mexico such as heat and other metal treating processes.
Of primary significance is the “Airworthiness Approval” ruling of the BASA, which dictates that the design or change to a design of a civil aeronautical product meets standards agreed upon between both the US and Mexico, and is in safe operating condition. If the standards are met, the exporter receives an export certificate of airworthiness. Since products no longer have to be sent back to the United States for certification prior to being sent to an end user, direct shipment can be made that results in reduced costs, lessened reduced regulatory burdens, enhanced air travel safety, and the continued vibrant growth of the aerospace industry in Mexico.
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