Mexico Aerospace Success Story

A Mexico Aerospace Success Story Successful manufacturers understand that behind great products and outstanding customer service are a myriad of best practices and a passion that drives people to be their best. That is why behind great companies are equally committed partners who share fundamental principles of value, risk and reward.

It is these shared principles that have earned The Offshore Group the no. 1 position as Mexico’s largest provider of support services to Manufacturers. Through outstanding performance for over 27 years, our team of committed professionals maintains this distinction by being our Clients’ most valuable ally in Mexico.

As a primary stakeholder in a vision to build a North American gas turbine engine manufacturing center of excellence, we are proud to have joined the efforts of the State of Sonora and the expertise of BCI Aerospace to host the first annual EngineForum SONORA. This publication highlights the essential factors which are key to attaining this vision.

The EngineForum SONORA was the perfect venue for aero-engine components manufacturers from around the world to share the vision and plans for building more efficient and capable supplychains. To this end, The Offshore Group is proud to announce that its manufacturing communities in Guaymas and Empalme Sonora are home to Mexico’s largest cluster of aerospace precision machining and secondary operations in Mexico.

We know that our work has just begun and we invite the aerospace community to come and see why Sonora and The Offshore Group are positioned to serve the needs of the aerospace industry today and in the future. Come and create your own success story.

Luis Felipe Seldner III President

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Comments from the Economic Development Council of Sonora

Government of Sonora and BCI-Aerospace partnered to boost the aerospace industry in Sonora

“

The EngineForum SONORA was an event conceived two years ago for which we sought an alliance of the Economic Development Council for Sonora with BCI-Aerospace (Business Conventions International), a French company with over 10 years in the aerospace industry in Paris, Montreal, Tokyo, Seattle, etc.

Enrique Ruiz Sánchez

EngineForum SONORA 2013

Director of the Economic Development Council for Sonora eruizs@sonora.org.mx

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BCI-Aerospace is a strategic partner for Sonora, because it places us on a global level. Our goal is to put Sonora as a part of a global circuit where business transactions for aircraft parts are conducted. Other companies like The Offshore Group and RollsRoyce were invited as sponsors and partners for this event celebrated in Hermosillo on May 13-16, 2013.

Our strategy in Sonora is to attract an OEM (Original Equipment Manufacturer) and engine manufacturers, among such as Rolls-Royce, Safran, Pratt and Whitney, etc.

BCI Aerospace supported this strategy and committed to the first EngineForum SONORA, which, in addition to strategic partners such as the State of Arizona, had the participation of Rolls-Royce, Safran, Boeing, Bombardier, among others, during conferences and B2B meetings.

The aerospace cluster in the State has the presence of companies that are now manufacturing parts for these OEM’s, as is the case of JJ Churchill, a Rolls-Royce

We chose an event dedicated exclusively to engine components due to the capabilities we already have in the State, as we aspire to be the center of excellence for engine components fabrication in the world. Sonora already has casting, precision metal machining and surface coating capabilities; having this integration of the supply chain provides us with a global advantage. Currently, the parts manufactured in the United States are shipped to the UK and then to Mexico, consuming valuable time and complicating the process, which slows down production and increases the cost of parts. Therefore, any opportunity to make this process more efficient is a business opportunity for the companies in the aerospace industry.

certified supplier. They design their parts at their cor-

We also believe that within the strategy of large aerospace companies there is a search for region diversification, as it is not profitable for them to manufacture parts in countries where the currency is the euro or the pound sterling, since the aerospace contracts use the dollar and they are long term contracts. Fluctuations in the exchange rate cause operations that were competitive five years ago to be uncompetitive today.

harnesses assembly processes. They began opera-

The advantage that Mexico holds is that its currency maintains parity with the dollar as well as its competitive labor force, geography and technological adaptation.

porate offices in the UK, activity that in the future can be brought to Sonora.

Regarding aerostructures, the “Sonora Institute for Aerospace and Advanced Manufacturing” (SIAAM) was created in order to train young people in aircraft doors assembly operations. The SIAAM study plan is based on the Canadian aerospace school “EMAM” (Aerospace Trade School of Montreal), with whom the State has associated and now we have teachers trained in France who will train the future employees of the aerospace companies in the State.

The French aerospace company Latecoere, has invested in Sonora to implement aircraft doors and tions last year. This company will be the first tenant in the new aerospace park near the Hermosillo airport, where we aim to develop the supply chain for the aerostructures sector. The project with Latecoere will generate around 500 jobs in addition to an investment of approximately 28 million dollars and a large potential for growth, once operations begin.”

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Q: So basically in your experience, do you recom-

State of Sonora have been doing to encourage the

mend Sonora to another company?

key elements of the supply chain to co-locate here,

Yes! Absolutely! And I am delighted when I’m in the

to cluster here, is making a real difference. If you just

UK to be, talking up Mexico but actually talking up

look around the show today, you have companies like

Sonora and Hermosillo as well because for a small company it’s quite daunting, quite nerve-wracking to take your first investment overseas. It’s a lot of money,

Incertec who are already here, already approved for Boeing and other companies like Ellison who are look-

it’s a lot of senior management resources, but the help

ing to come. There are many of these supply chain

that you can get from COPRESON and the Sonoran

outlooks that are coming in. It is difficult; it’s not like

government makes it a lot easier, a lot more straight-

the auto sector. In aerospace you do have to have the

forward and it reduces risk.

supply chain all together. But the legal framework and

Q: Do you or your company have concerns about

the shelter scheme means it is really possible to get

the safety, the security? No. No. This is one of the

that going and it’s happening. So the only element

problems. As you get to know more about Mexico, it’s

that we are missing at the moment would be preci-

quite interesting, that the homicide rate per thousand people is about the same as in the US. If you go to parts of London it can be dangerous as well. It’s about

sion forging but there is a lot of work happening on that now to encourage that inward investment into

where you are and being aware. Actually we’ve

the state. So it is difficult, but frankly, wherever we go

found Sonora, incredibly relaxed and friendly. Of

in the world it is difficult. In my home base in the UK, I

course there’s some places we’ve been in other states

have to send parts hundreds of miles away for coating,

where we had to be a little careful but here I have a

here I would be able to have them coated eight miles

General Manager, he is British, he has a young family here with him and he is comfortable. It’s a wonderful

“In my home base in the UK I have to send parts hundreds of miles away for coating, here, I would be able to have them coated eight miles away, it’s an advantage”

away, it’s an advantage.

Here I have a General Manager, he is British, he has a young family here with him and he is comfortable. It’s a wonderful place, good climate, good food, friendly people.

place, good climate, good food, friendly people.

Q: How common is it for small enterprises in this industry to move to other parts of the world.

Quite unusual. We are leading edge in this area. We have very high technology and therefore we are very selective where we are going to go in the world. This is why we haven’t gone to China. Now, I speak Chinese.

An easy decision would be for me to move business to China. But our technology, our intellectual property, our IP and know how, we need to protect. That means, in China, I can’t protect it. It would leak. Actually, Mexico has a good reputation here for looking after technology, for growing businesses in a very nurturing tive even though I am a small business. And although today we are about 30 million US dollar turnover and it’s all in the UK we have set a target by 2020 to be 80 million US dollars and of that 30 million is going to come from here in Mexico, so I’m quite optimistic.

Q: What do you think about the suppliers? Is it difficult at this point to get suppliers from Mexico?

I think it is difficult, but it’s changing very, very quickly and the promotional activity that COPRESON and the

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EngineForum SONORA 2013

environment. So, I’m comfortable from that perspec-

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It’s nice to see Mexico growing in the aerospace industry

Rafael Navarro Morales

Commercial Manager rnavarro@elimnco-prettl.com

Facing the United States Elimco - Prettl Aerospace. We are a 100% Mexican joint venture but with equity 50% German 50% Spanish.

We design and manufacture both electrical harnesses and control decks for civilian and military aviation as well as control units for civilian and military aviation.

Here I have found many possibilities not only to Mexico but also facing the United States and especially in ways of collaboration and the willingness to work of Mexican companies across different states, be it Sonora, Baja California or Querétaro desire to work with each other and that is very good.

Xavier Poulin and Jean Laliberté of Atlas Aeronautik said: “It’s nice to see Mexico growing like that in the aerospace industry. We can see some potential business to do in the future but we see it as a new seed, coming, growing up and putting itself on the market.

Compared with the automotive industry, years ago there was nothing going on with the automotive industry in Mexico and now it’s growing very fast, the assembly plants, the suppliers for the automotive industry.

Same thing is happening in the aerospace business here in Mexico. The reason, I don’t know, it’s probably the good will of making business, getting along well with other countries and the specialization, there are many specialists here in your country of many kinds of products and people want to work and they work hard.

This event is interesting. There are many, many companies and we’ve discovered new potential. Even with scheduled meetings with different customers we have had the chance to meet new visitors and create new opportunities. That’s interesting, very interesting for us. We will see the future.”

Eric Dolby

Marketing Manager Ellison Surface Technologies

“Quality is a given. Time is a requirement. Relationship with customers is what differentiates.”

Xavier Poulin Solution Manager of Atlas Jean Laliberté Director Center of Excellence atlasaeronautik.com

Elimco - Prettl Aerospace only manufactures aerospace harnesses but Prettl Group is a very strong German group who also manufactures, in fact its main activity is the production of electrical harnesses for the automotive industry. They wanted to enter the aerospace sector and found a partner in Spain, which is the Group Elimco, who has been Tier1s of EADS Group for over 20 years and together, combining the experience of Elimco Aerospace and the financial capacity of Prettl. We work for major global OEMs as well as major Tier1. We are Tier1 or Tier2, depending on the project.

Here I have found many possibilities not only to Mexico but also facing the United States

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EngineForum SONORA 2013

26 ROCA FUERTE INDUSTRIAL PARK. Guaymas, Sonora, Mexico.

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You Manufacture... We do the rest Our services free companies to focus on what makes them competitive

access to logistics infrastructure, and within a regulatory framework that is fair and predictable, provides an environment where manufacturers can thrive.

Having a keen understanding of the elements that manufacturers need to succeed, Manufacturers around the world are con-

The O ffshore Group operates a business

tinually challenged to find competitive ad-

model that has proven effective for over 27

vantages. The global economy has expanded

years. The model has three key components

the playing field and striking the right balance

that are seamlessly integrated:

between cost, quality, delivery, flexibility, and innovation often results in achieving one objective at the expense of another. However,

Strategically located and fully integrated manufacturing communities in Mexico

one thing holds true for most manufacturers

A legal framework commonly known as a

trying to be great at everything, regardless of

“shelter” that mitigates risk and exposure

where they operate, is an exercise in futility.

Which is why having the right partners, suppliers, and service providers often makes the difference between failure and success.

We also know that operating in the right

A comprehensive set of world class support services configured and delivered specifically for manufacturers Today, over 59 manufacturers leverage The Offshore Group’s infrastructure, knowledge, and expertise resulting in the employment of more than 16000 people in Mexico working across 4 million square feet of industrial space, and the processing of over $1.5 billion dollars in Customs declarations.

Clients of The O ffshore Group include Fortune 500 multinationals as well as small to midsized manufacturers, serving the aerospace, automotive, medical devices, electronics, metal fabrication and machining, plastics

EngineForum SONORA 2013

molding, appliances, office products, and

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HVAC industries.

The Offshore Group’s Value Proposition Foreign companies, regardless of their size, venue is the foundation for sustaining high

have a number of options available to them

levels of productivity and efficiencies. Man-

for establishing a manufacturing presence

ufacturing in locations with proximity to a

in Mexico. The most common modes of op-

capable and motivated labor force, access to

eration are standalone, shelter, joint venture,

skilled leaders, an established supply-chain,

and subcontracting. Each of these presents

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advantages and disadvantages in terms of cost, control, and risk.

When conducting their due diligence, foreign companies evaluating a presence in Mexico often compare a standalone vs. shelter scenario and generally reach the following conclusions: Standalone operations retain full control over all aspects of the business in Mexico but also assume all the risk and exposure associated with regulatory compliance and the often costly learning curves of working in a new business, legal, and social culture.

Leveraging our Economies of Scale Manufacturers of any size who choose The Offshore Group to help them gain a competitive advantage in Mexico from day one, have immediate access to economies of scale that only large multinationals are able to build over a long period of time.

For example, The Offshore Group’s Mexico affiliate in Guaymas and Empalme, Sonora is in fact the largest private employer in the State of Sonora. Among the

Shelter providers, and more particular the shelter version that The Offshore Group delivers day-to-day to its manufacturing clients, is a means for mitigating risk and reducing operating costs. Most importantly, the foreign manufacturer retains the control of all aspects of production, engineering, quality, delivery, supply-chain, customer service, assets, and manufacturing technology and know-how. All production related activities are directed and managed by the foreign manufacturer while administrative and regulatory functions are carried out

by The Offshore Group’s team of experts, state-of-the-art systems, and ISO 9001:2000 certified processes.

The Offshore Group’s Services

Labor recruiting and management, payroll & tax compliance, and employee benefits management Import, export, and cross border management and regulatory compliance Building maintenance and park security management Environmental, health, and safety compliance Employee transportation management and optimization In-Mexico procurement of MRO and services including vendor accounts payable and VAT recovery Fiscal compliance and controls Government, community, and trade association affairs and corporate social responsibility

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benefits that Clients derive from operating within The Offshore Group are lower costs on employee transportation services and local procurement due to volume negotiations, employee retention by providing access to on site medical care and child care, access to resources for workforce development, and preferential response times from all utilities providers.

Through The Offshore Group’s size in Mexico, Clients have a strong voice in national-level trade associations that it turn regularly interface with governmental bodies (such as Mexico’s Congress as well as State and Federal Leaders), and have the ability to productively engage with local labor union chapters.

By leveraging The Offshore Group’s economies of scale, which have been steadily in the making since the company’s inception 27 years ago, Clients enjoy the peace-of-mind of being served by Mexico’s most reputable and well established shelter provider in the country.

EngineForum SONORA 2013

Over 700 people make up The Offshore Group’s support staff which is continually trained and motivated to provide outstanding service to its 56 manufacturing clients.

The services carried out include:

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PHOENIX

USA

TUCSON

NOGALES NOGALES SONORA

SANTA ANA

SONORA

EngineForum SONORA 2013

HERMOSILLO

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GUAYMAS

EMPALME

Guaymas/Empalme, Sonora is located in the Northwest Mexican State of Sonora, on the Gulf of California. This region is located 300 miles south of Tucson, Arizona. It is easily accessible by air, rail and four lane highway.

The city’s universities and technical schools serve as a recruiting base for The Offshore Group client companies.

The Offshore Group’s Manufacturing Communities in Sonora

Roca Fuerte Industrial Park Guaymas SONORA

Bella Vista Industrial Park Empalme SONORA

The Offshore Group’s long-established facilities in Guaymas and Empalme, are home to Fortune 500 multinationals as well as small to midsized manufacturers, serving the aerospace, automotive, medical devices, electronics, metal fabrication and machining, plastics molding, appliances, office products, and HVAC industries.

Bellavista Industrial Park

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Visiting the Manufacturing Technology Training Center

A new way to learn Math These educated youth will be prepared to take their place in a Mexico aerospace industry that is growing by the year.

By Eduardo Saavedra

Executive Vice President of Business Development The Offshore Group

Guaymas, Sonora is a small coastal manufacturing city situated in the country’s Northwest region. It is home to 150,000 inhabitants, and is host to one of the largest clusters of world class Mexican aerospace precision machining operations in the country.

Although every major aerospace OEM knows about Guaymas, and its growing aerospace manufacturing acumen, few know that this manufacturing haven is proactively training a current and future workforce of precision aerospace machinists.

EngineForum SONORA 2013

A new and practical way of teaching mathematics has recently been introduced to junior high school teachers and students in Guaymas. The method is called Metromatemáticas or “Metromathematics.”

Its goal is to give teachers and students real world problems to solve using applied mathematics in classrooms. These classrooms, however, are more akin to metrology laboratories that might be found in some of the more advanced manufacturing facilities than the traditional classroom.

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A trip to Guaymas and tour of the Manufacturing Communities took place on the third day of the EngineForum SONORA. The tour included a visit to The Offshore Group’s Manufacturing Technology Training Center and the laboratory classroom of Metromathematics.

The visitors received information and met with students that are currently studying mathematics in this innovative setting.

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While “on the job,” the teachers and students dress for the occasion each day they go to class. Everyone’s attire consists of long white lab coats. Dressing in this manner instills a sense of professionalism in the participants, and gives the students’ parents a feeling of pride that their early teenagers are on a path to find a great job in the growing Mexico aerospace industry.

Metromathematics was conceived by Nahum Correa.

He is a Six Sigma Master Black Belt and the owner of an authorized Mitutoyo equipment and machinery distributorship located in Hermosillo, the capital city of the state of Sonora. With financial and infrastructure support provided by The Offshore Group, Mr. Correa has graduated 70 junior high school teachers and 140 junior high school students from the pro-

gram in a short 18 months. Aerospace manufacturers in the Guaymas area provide parts and raw materials used in their machining operations. Teachers use those parts along with metrology equipment such as calipers and coordinate measuring equipment (CMM’s), to understand tolerance requirements used in the emerging aerospace industry. The math being taught is immediately relevant. This captivates the attention of both the students and the teachers. The result of this “real world” feel is that class time flies by. As one might expect, there is zero student absenteeism.

Everyone shows up. All of the teaching conforms to the international standards of ISO/IEC 17025:2005.

One special feature of the program is the “tournaments” that are held periodically among teachers and students. The contests consist of solving challenging problems using newly acquired math skills. Winners get trophies and receive great distinction from their peers for their accomplishment. At the end of the program, all the graduates proudly parade through downtown Guaymas with banners and flags, to the accompaniment of local school bands. The parade makes the winners, as well as the rest of the students, feel great pride as their family and friends celebrate their victory in public.

When these students enter high school and college math programs, they will already have a superior academic foundation, a fearless attitude towards mathematical problem solving, and a level of comfort that will be conducive to exercising greater creativity in related subjects. The logical result will be higher skilled and more competent engineers and scientists than those produced by traditional math classroom programs and teaching environments and methods.

These educated students will be prepared to take their place in a Mexico aerospace industry that is growing by the year.

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To support aerospace OEMs and the local supply chains in Mexico’s

Bodycote

Grand oppening of the facility in Empalme Sonora

Bodycote’s Empalme, Mexico plant achieves multiple aerospace accreditations

EngineForum SONORA 2013

Mexico plant supports nearby aerospace cluster in Guaymas, Sonora

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Worldwide thermal processing specialist, Bodycote, announced that it’s facility located in Empalme, Sonora, has achieved Nadcap accreditation as well as prime approvals for Rolls-Royce Aero Engines, MTU Aero Engines, and Pratt & Whitney Canada. The Empalme plant was established to support aerospace OEMs and the local supply chains in Mexico’s rapidly expanding aerospace industry.

The facility conducted its official inauguration on May 16, 2013, with a ceremony attended by key dignitaries including Guillermo Padrés Governor of the State of Sonora,México; Justin McKenzie Smith, Chargé d’affaires of the British Embassy in Mexico Sarah Hildersley, Director of UK Trade and Investment in Monterrey; Matthew Alty, Vice-President of Bodycote’s Surface Technology business and Mike Sobieski, Vice-President North America Operations of Bodycote’s Aerospace, Defense & Energy division, as well as distinguished guests from a range of regional aerospace companies and organizations.

Tracy Glende, President of Bodycote’s global Aerospace, Defence & Energy division says: “Obtaining Nad-

cap accreditation is the key to unlocking new potential in the Guaymas region and beyond. It opens the way for Bodycote Empalme to widen its customer base and provides greater visibility of the capabilities of the plant.

We look forward to driving on and adding to our thermal processing and coatings portfolio in the very near future.”

Bodycote’s core business is to provide services that protect and improve the properties of metals and alloys, thereby improving the material properties of components, extending their operational life and making them safer. The company plays a vital role in the aerospace supply chain.

Paul Dymond, Senior General Manager for the Empalme plant, adds: “The presence of a Nadcap accredited facility enables companies in the State of Sonora to access the highest quality heat treatment and brazing services, and provides a cost-effective option for aviation and power generation manufacturers within the region, enabling them to achieve complete processing without transporting parts back to the USA.”

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