Mexico eyes aerospace growth as Safran opens plants

Thu Mar 18, 2010 3:38am IST

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* France's Safran opens two new Mexico plants

* Mexico keen to become independent power in aerospace

By Tim Hepher

QUERETARO, Mexico, March 17 (Reuters) - Mexico hopes to one day become an independent power in aerospace, the country's president said as he inaugurated two French-built factories to make parts for Boeing and Airbus aircraft on Wednesday.

President Felipe Calderon said the opening of two new plants in central Mexico by French engine and parts supplier Safran SA (SAF.PA) signalled international confidence in the country's economy as it pulls out of recession.

Safran said it was investing $150 million in the plants, in part to reduce costs and curb a dependence on the strong euro.

The plants will make parts for jet engines built by Safran subsidiary Snecma and undercarriages built by sister division Messier-Dowty, competing with Britain's Rolls-Royce Group Plc(RR.L) and U.S. equipment supplier Goodrich Corp GR.N,respectively.

"We have decided to make a competitive production chain that will permit this country, in years to come, to fly an aircraft completely designed and built in Mexico," Calderon said in a speech, according to an official interpreter.

That goal remains some way off as the gleaming Safran plant stirs to life and Mexico embarks on a programme to train aerospace workers abroad. But Safran joins a growing list of aerospace companies looking to Mexico for lower costs along with the marketing benefits of close access to the United States, the world's largest aviation market.

The French company is already the largest aerospace employer in Mexico with 3,000 employees.

Its latest expansion, near the colonial city of Queretaro, coincides with security concerns in Mexico's north. Safran has two wiring plants in the state of Chihuahua, whose northern border area is plagued with drug gang violence.

"We have done everything that is necessary and we hope the country will resolve its difficulties as quickly as possible," Safran Chief Executive Jean-Paul Herteman said when asked whether extra measures had been taken to protect operations.

MEXICO EYES INNOVATION

Suspected drug hitmen killed an American employee of the U.S. consulate, and her American husband, in the northern border city of Ciudad Juarez, in Chihuahua, on Saturday. A Mexican man married to another consulate employee was also shot dead.

Calderon, the target of angry protests when he visited Ciudad Juarez this week, flew into Queretaro by helicopter amid tight security on Wednesday.

"We ask people to pay attention and recommend expatriates live in compounds, but this was already the case and we have not taken extra measures because of (Saturday's incident)," said Real Gervais, head of a nearby aircraft components and sub-assembly plant owned by Canada's Bombardier Inc (BBDb.TO).

Some 125 miles (200 km) north of Mexico City, Queretaro is relatively safe. It aims to capture foreign investment in high-technology jobs in electronics, automobiles and aerospace and feed into an increasingly global supply chain for aviation parts.

Although Western aerospace executives say it will be some time before Mexican factories implement their own designs, Calderon said Mexico wanted to do more than manufacture parts for foreign companies.

"We don't want to be a low-cost country, but a country of innovation," he said.

China, Russia and Japan are also challenging the duopoly held by EADS unit Airbus and Boeing in the market for passenger jets with more than 100 seats, while Canada and Brazil have long-established regional and business aircraft industries.

Safran is co-owner with General Electric Co (GE.N) of the world's No. 1 supplier of civil jet engines, CFM International. Its engines power all Boeing's 737 short- to medium-haul jets and about half of the competing Airbus A320 fleet.

The new plants will make parts for CFM engines and components for undercarriage systems to be installed on Boeing's next-generation 787 Dreamliner. (Reporting by Tim Hepher; editing by Andre Grenon)

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