The role of multinational enterprises in the aerospace industry clusters in Mexico: The case of Baja California

Abstract

The aerospace industry in Mexico has been growing significantly in recent years. This study seeks to determine the productive and organizational capabilities of multinational aerospace enterprises that are developing in the Baja California region, in northern Mexico, especially for the particular way in which they are joining the Global Value Chain. Undoubtedly, this is related to the way in which the industrial regions of developing countries are integrated into the global value chain by multinational corporations. Data for the analysis come mainly from ProMexico, a Mexican federal agency. According to results, at the present time Baja California aerospace industry integrates to the industry global value chains in the low steps, similar to what happens in other sectors and other regions around the country. Baja California activity specialized in manufacturing producing of parts or components for other foreign companies, which in turn are the ones that actually develop the aircraft’s systems and subsystems.

Possibilities of Mexican SMEs insertion in the aerospace industry value chain, the Baja California case

“…Although this finding seems contradictory to the study of Gomis & Carrillo (2016), which concluded that the terms of the global value chain (gvc), the bulk of the activity seems to be at lower levels or links of the production process, it suggests that companies located in Baja California mostly realize procurement to support companies that produce parts and components for other companies outside the country, which in turn produces systems and subsystems. These authors also found that most companies in the region (80%) are Tier 3 and 4.…”

“…Although it is one of the most dynamic states in terms of investment in this sector, it is noted that the linkage with foreign companies is very low at the level of local companies, because, as Gomis & Carrillo proposed, there is little or no obligation on Multinational Enterprises (mnes) to establish contracts with Mexican companies, which is compounded by the fact that established mnes don't seem to have a special interest in linking with local businesses (Gomis & Carrillo, 2016).…”

“…These authors also found that most companies in the region (80%) are Tier 3 and 4. It means that their activity is geared towards providing manufacturing parts and components to other companies that produce systems and subsystems (Gomis & Carrillo, 2016). This suggests that local businesses are suppliers of companies located outside the country and not multinationals established in Baja California, this idea makes sense because 90% of the production of the analyzed companies go abroad, and only 10% stays in the domestic market.…”

“…In this industry, a low volume, and at the same time, a high mixture of products dominates, plus the production rates are slow with a high degree of planning, engineering and quality control (Gomis & Carrillo, 2016).…”

“…However, the development of the sector in the region did not start until 1966 with the establishment of Rockwell and Switch Luz enterprises. Today, according to a study by Gomis & Carrillo (2016), based on ProMéxico data, 106 companies operate in the state, heterogeneously distributed, 85.3% are concentrated in Tijuana and Mexicali. These companies are engaged in manufacturing and assembly of electrical and electronic parts for aircraft and engine equipment.…”