Potential Opportunities for Investment in Space Technologies in Latin-America: a Case for Mexico

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Scientific paper

Student, Master of Space Studies. International Space University. Strasbourg Central The objective of this paper is to analyze the possible commercial benefits that the global manufacturing space industry could obtain by investing in Latin-American countries. Spacecraft manufacturers have recently been complaining about small margins. They claim that customers demand technological advancement at the same time as they push for quick delivery and competitive prices. They also argue that operators (their main customers) do have great profits. Thus, manufacturers would like to raise the prices of their spacecraft (SpaceNews. January 7, 2002. P.17). This may sound logical, but it would be interesting to analyze if the industry could find alternative ways of saving money while remaining competitive. Mexico is a good example of a Latin-American country that has received foreign investment for establishing manufacturing and assembly plants for different industries. This has been mainly due to two special characteristics of the Mexican manufacturing workforce: low labor costs and qualified, reliable human resources. As a result, Mexican manufacturing industry has acquired a solid reputation worldwide. A similar story can be told about other industries such as electronics, computer assembly, clothes, etc. It is probably worth to make an analogy with a labor-demanding industry that already has experience in the Mexican market: the car industry has found a formula to keep manufacturing costs low while maintaining production and quality levels. Mexico currently manufactures and assembles cars for European, Japanese and American companies for the international market. If the same success story could be repeated for the spacecraft manufacturing industry, the benefits would be enormous. Manufacturers could consider relocating their plants to Mexico to manufacture and test parts or entire spacecraft. This would help reduce the cost of human labor, especially because of the long periods of time required for manufacturing, assembling and testing. Evidently, such and endeavor requires a successful transfer of technology as well as many other considerations. In 1997 Mexico signed a Free Trade Agreement with the European Union and in 2000 a similar agreement with Israel. As of today, Mexico has trade agreements with USA, Canada, and many Latin-American countries. Additionally, some important companies of the aerospace industry met recently in Monterrey, Mexico with the purpose of evaluating whether investment in manufacturing plants for aircraft parts was feasible. A logical judgement indicates that the high rates that have to be paid to US workers and the small tax restrictions in the commercial activities between the two countries make it very attractive to start such operations in Mexico. Although USA and Canada could be, apparently, the most benefited countries with spacecraft assembly and manufacturing outside their territories, it will also make sense for many European countries if low transportation costs are obtainable. On the other hand, there are a number of factors to consider before attempting serious investment. Just to name a few, the transfer of sensitive technologies, security of the long-term investments, potential local investors, political issues, legal considerations, etc; are topics that have to be taken into account by interested enterprises. This paper analyzes most of these topics trying to derive a broad scenario for potential investors, and to serve as the frame of a future business plan.

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