Economy|AviationMexico’s aerospace sector is growing. Will it be undercut in USMCA review?A North America trade deal helped Mexico get into aeroplane manufacturing. Now that is under threat with Trump.

Aerospace Industry Developments in Mexico

Monterrey, Mexico – In April, Mexican President Claudia Sheinbaum projected that the country's aerospace industry could experience a sustained annual growth rate of up to 15% over the next four years. This growth is attributed to a strong local manufacturing workforce, rising exports, and a significant presence of foreign companies.

The upcoming review of the United States-Mexico-Canada Agreement (USMCA) introduces uncertainty for the industry. The treaty has played a critical role in the sector's growth, and its future is uncertain amidst potential changes.

Stakeholders emphasize the importance of maintaining investment stability and enhancing labor standards to protect the North American supply chain. Mexico aims to rank among the top 10 countries in aerospace production value, as outlined in Plan Mexico, which focuses on boosting competitiveness in key sectors.

As the sixth-largest supplier of aerospace parts to the US, Mexico has benefited from USMCA-driven supply chain integration, according to Monica Lugo, director of institutional relations at PRODENSA. Nonetheless, the industry faces an "unprecedented moment" due to US tariff policies, which may impact trust and lead to potential capital and job losses.

Growth and Challenges in the Aerospace Market

The Mexican aerospace market, valued at $11.2 billion, is expected to reach $22.7 billion by 2029, according to data from the Mexican Aerospace Industry Federation (FEMIA). With global companies such as Bombardier, Safran, Airbus, and Honeywell operating in Mexico, the country is a significant player in the global aerospace market and ranks as the world's twelfth-largest exporter of aerospace components.

Marco Antonio Del Prete, Queretaro’s secretary of sustainable development, highlights the region's investment in education and training, notably with the establishment of the Aeronautical University. This has contributed to Queretaro becoming a high-skilled manufacturing hub.

Despite Mexico's advances, the International Association of Machinists and Aerospace Workers (IAM) Union expresses concern over a potential shift of advanced manufacturing and assembly work to Mexico due to local investments in education and training.

Mexico's competitive edge in the USMCA agreement is its low-cost manufacturing. Edgar Buendia and Mario Duran Bustamante from the Rosario Castellanos National University note Mexico's low labor costs and proximity to the US as key advantages. The US has pressured Mexico to raise wages to reduce unfair competition.

Under Sheinbaum's administration, Mexico has increased the minimum wage significantly. However, a substantial wage gap remains between Mexican workers and their US and Canadian counterparts.

The USMCA mandates Mexico to eliminate "protection unions," which have historically hindered genuine union organizing. While new laws promote collective bargaining, challenges remain in establishing independent unions. The IAM calls for strengthening the Rapid Response Mechanism to address labor rights violations.

According to FEMIA, 386 aerospace companies operate in 19 states, creating numerous direct and indirect jobs. In Queretaro, unions are reportedly independent, with no strikes in the private sector for decades, indicating a controlled workforce environment.

Based on reporting by Al Jazeera.