Aerospace Manufacturing Facility in Mexico - Case Study

Company profile

Senior Aerospace Mexico (SAM), established in 2001, specializes in the fabrication of aerospace sheet metal components and sub-assemblies, machined airframe and interiors, and industrial components; all processes are labor intensive and in-house.

• Employees: 90, all staff members are citizens of Mexico.

• Revenues (2010) [Peak year 2008]: (US $8 Million) [US $11 Million]

• Initial scope: Satellite operation of an existing operating company in the USA

• Current scope: Stand-alone entity within the Group

• Total manufacturing area: 58,000 sq. ft.

Aerospace Industry Certifications and Approvals:

o System Approvals:

 Quality Management: ISO9001:2000/AS9100B

 EHS System: ISO14001:2006

o Nadcap Approvals:

 Chemical Processing Scope:

• Anodizing (Chromic);

• Chemical Cleaning – Alkaline Cleaning;

• Chemical Cleaning – Titanium Cleaning – Acid;

• Chemical Cleaning – Titanium Cleaning – Alkaline;

• Chemical Cleaning – Ultrasonic;

• Conversion/Phosphate Coating;

• Surface Treatment – Passivation – AMS-QQ-P-35;

• Surface Treatment – Passivation – Customer’s Spec.;

• Pre-pentrant Etching.

 Non Destructive Testing

• Penetrant Inspection

 Heat Treating Process:

• Aluminum Alloys – AMS 2770;

• Cryogenic Treatments; Nickel and Cobalt Alloys – AMS2774;

• Nickel and Cobalt Alloys – Customer Specs;

• Stainless Steel – Customer Specs;

• Titanium Alloys – Age, anneal, and/or duplex anneal, and stress relief;

• Titanium Alloys – Customer Specs;

• Vacuum Heat Treating – Customer Specs;

• Hardness Testing – Rockwell hardness;

• Conductivity testing;

• Heat Treatment – AMS 2750

 Welding Process Scope: Fusion Welding (GTAW, GMAW)

o Customer Quality System and Process Approvals:

 Boeing Commercial Airplanes

 Goodrich Aerostructures

 Cessna Aircraft Company

 Bell Helicopters

 Snecma Moteurs

 Rolls Royce

 Solar Caterpillar Turbines

Business Situation

December 2000, Senior Aerospace Mexico wanted to set up a lucrative manufacturing site in Saltillo, Mexico. SAM needed to reallocate its technology from a sister company in the U.S.A. The aerospace production was fully new to Saltillo, which has extensive history, and a strapping manufacturing institution.

Mexico Manufacturing Strategy

The initial five years were committed to building a manufacturing culture within the Saltillo manufacturing plant.

Objective products and processes were divested of fine points; the apparatus was assembled in the main factory in California, USA. Operations were labor intensive and of low technical complexity in the first stage. Training and technical development was carried out using a widespread expansion plan.

Challenges Facing the Company in its Mexican Setting

A challenge SAM faced with the Mexico start-up was that there was little experience in aerospace manufacturing in Mexico at the time of company start-up in Saltillo.  Significant amounts of training was required.

Benefits of Manufacturing in Saltillo

Manufacturing in Saltillo, Mexico means cost savings endemic to operating in a low-cost country. Saltillo has a high-mix, low volume environment and it’s in close proximity to the USA border. This translates into faster and cheaper transport.

There is already an available pool of capable and proficient technical and engineering resources, and there are technical schools and universities in the area. This meant that more educated workers would be graduating every year. The easy access to specialized service, spares, equipment, etc. enables a quick manufacturing set up as well. The citizens of Saltillo enjoy a superior living standard, which allows companies to plan for a longer-term relationship with their workforce.

Lessons Learned in Mexico Manufacturing

As  one of the first aerospace manufacturing companies in Saltillo, many lessons had to be learned by Senior Aerospace staff while simultaneously carrying out company defined  manufacturing strategies. As far as the employment of workers is concerned, one should hire from the ample pool of qualified technical personnel with a basic set of skills and then train and qualify them to perform specific manufacturing functions. A business must develop a clear set of expectations and operators must get personally involved in order to avoid chaos or confusion.

A Mexico shelter agreement should be signed to ease and help with the process. Support from a Shelter service provider in Mexico includes: non-value added (but needed) activities are carried out by third party; building leases; Mexican legal entity; Assets, IP, technology, inventory, customer and supplier relationships. Always consider the costs of extended staff (administrative, local purchasing, HR).

Conclusion

The Mexico manufacturing shelter option was chosen, and the company broke ground in 2000. SAM maintains a vision of pursuing lucrative growth with aerospace OEMs and primes, and they are currently establishing operations in Mexico in addition to staying true to their clear and concrete marketing strategy.

When considering the option of developing manufacturing facilities in Mexico, execute a solemn and systematic study of stand-alone in opposition to shelter options. The “start-from-scratch” alternative necessitates far-reaching examination and the venture of resources. In addition to these considerations, knowledge of Mexican business norms and profitable acquisitions and contractor services is indispensable. Business decisions should always be carefully scrutinized and should be based on professional recommendation. A strong suggestion is to regard the Mexican government as your main consulting unit, get in contact with them immediately. Mexico is a good option for business development regardless of scheme—there is low-cost labor, easy access to a variety of resources, and beneficial industrial support.