Taking Off for Europe
With an annual growth rate of 17 per cent, the Mexican aerospace industry is among the fastest growing markets in Latin America. According to estimates by the Mexican Office for Economic Affairs, it will be in tenth place worldwide by 2020. The aviation industry is located primarily in selected federal states, including Baja California, on the border to the USA. This is also where Sergio Segura established his firm InnoCentro Aerospacial. In 2018, he participated in the MP and, as a result, invested in a German firm in order to boost his business with Europe and to become less dependent on the US market.
“We are purely an export business; 90 per cent of our exports are to the USA and Europe”, says Segura. So far, the 47-year-old mechanical engineer has fared well with this strategy. There is strong demand for suppliers of aircraft components in the American market, which is dominated by the industry giant Boeing. In addition, Mexico benefits from preferential tariffs through a free trade agreement with the USA and Canada. Back in spring 2018, InnoCentro’s order books were therefore full when Segura took part in the Manager Training Programme of the Federal Ministry for Economic Affairs and Energy whilst also keeping his eyes open for new business opportunities. At the time, business with the US accounted for 90 per cent of his turnover; he generated roughly 10 per cent through German sales. “Up to then, we had always only had temporary projects with German firms, no long-term dealings”, Segura adds.
In Germany, he got to know AviaWerks GmbH in Bremen, a medium sized enterprise strong in the field of technical flight simulation. “We have specialised in aircraft interior design, and a simulation system is the perfect supplement to that. With it, we can find out in advance how we can, for example, improve passenger comfort even further”, Segura explains. Together with his business partner Roberto Corral, who is also an MP alumnus from 2015, he decided to acquire AviaWerks. “In the beginning, the German personnel had reservations”, Segura says. In the meantime, he has been able to dispel their concerns. As he proudly reports, he has already even heard that “a Mexican boss is better than a German one”. He says that the MP helped him and his partner with this intercultural challenge as it taught them a lot about the German business environment. Moreover, the two business owners are now learning German to improve the communication with the team and with customers and hence the long-term development of the firm.
Aeroplanes are not assembled in Mexico; the country supplies aeroplane components to the USA, Canada and Europe. The umbrella association for the Mexican aviation industry – of which co-founder Segura has been a member since 2006 – estimates that demand for supplies amounted to about US$500 million in 2018. “It is currently difficult, but not impossible, to conclude new agreements” says Segura. He adds that there is primarily demand for components for turbines, aircraft fuselages and landing gears but also for plastic parts, composite materials and other special materials. “The duopolists Boeing and Airbus determine the market development in the aviation industry; as suppliers, we are dependent on them. If Boeing is not doing well, as is currently the case, this has an effect on our business too”, the entrepreneur says. He adds that orders are partly decreasing because less aeroplanes are being produced; at the same time, demand is increasing for cabin refurbishments. He met with several potential cooperation partners in Germany in the area of interior equipment and fittings, including a manufacturer of aeroplane tables, seat coverings and interior equipment made of synthetic materials. Due to the poor order situation at Boeing, he has had to put his established contacts “on ice” for the time being. Now, with the help of the new firm, InnoCentro is concentrating its energy on expanding its European business, which is dominated by Boeing’s main competitor, the German-French company Airbus.
Pictures: ©InnoCentro/Segura, Shutterstock