The development of aerospace clusters in Mexico

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Nov 18, 2013 (3 years and 7 months ago)

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1



GLOBELICS



Working Paper Series

No. 20
10
-
03

ISBN:

978
-
970
-
701
-
963
-
8


T
he development of aerospace clusters in Mexico



By


Javier Martínez Romero









The Global Network for Economics of Learning, Innovation, and
Competence Building System


www.globelics.org


2



GLOBELICS



T
he development of aerospace clusters in Mexico




Javier Martínez Romero

(
PhD
candidate, Associate researcher at the Canada

Research Chair on the Management of Technology,
Université du
Québec à Montréal, martinez_romero.javier@courrier.uq
am.ca)



Abstract

Introduction:
High technology companies tend to cluster around knowledge
-
producing
institutions (Braunerhjelm and Feldman, 2006). Aerospace follows this pattern, and there are
well known examples of aerospace clusters located around large
prime contracting aerospace
producers (Niosi and Zhegu, 2005). A recent trend that is taking momentum is the setting up of
manufacturing facilities by leading aerospace companies in Mexico.
Objectives
: The objective
of this study is to investigate the att
racting factors of Mexican clusters and to examine some of
the country policy measures to incentive the aerospace sector, in order to assess the potential of
Mexico to be a relevant part in this world
-
class high technology industry.
Methods
: A survey
appli
ed to selected aerospace firms in Mexico and interviews with regional governments are the
information source.
Results:
Agglomeration forces in Mexican aerospace clusters are strongly
related with manufacturing advantages. In addition, policy measures seem
insufficient to
encourage firms to undertake more complex activities.
Conclusions
: Even though advantages
not related with innovation may explain the presence of firms in Mexico's aerospace clusters,
these advantages should not be minimized given the tough
quality standards of the aerospace
industry, and if properly managed they may form the base for future development.

3



1. Introduction

High technology economic sectors are often associated with economic success. Particularly, a
common claim is that high
-
t
echnology sectors are the main driving force of industrial growth in
an advanced economy. These are thought to be economic engines able to positively impact other
more traditional technology sectors. Thus, the importance of a high technology sector is not
just
its own contribution to GDP, employment, revenue or exports, but the way it impacts other
industries in the economy. Given the importance of high
-
technology sectors, scholars are
interested in uncovering the economic, institutional and social dynamics
that characterize their
functioning, while policy makers are eager to obtain practical knowledge related to these
dynamics in order to set policy measures able to foster the creation and growth of this kind of
activity.


The opening of a manufacturing pla
nt by the Canadian aerospace firm Bombardier at Querétaro,
Mexico, was a highly publicized event by Mexican government officials. National and regional
politicians announced the entry of Mexico into the world aircraft manufacturing industry. The
fact is th
at Bombardier took a step that had already been taken by some other foreign aerospace
firms: namely, transferring part of their activities to Mexican soil. It seems that this
delocalization trend is gaining momentum. Apparently this implies that Mexico has
the ability to
enter a high technology industry and enjoy the benefits of that kind of sector. Nevertheless, high
technology companies have requirements that are not easily met by developing countries.
Specifically, high technology companies tend to clust
er around knowledge
-
producing institutions
(Braunerhjelm and Feldman, 2006). This is the case in ICT, biotechnology and other knowledge
-
intensive sectors. Aerospace is no exception to this phenomenon, and there are well known
examples of aerospace clusters
like Montreal in Canada, Toulouse in France, and Everett (WA)
in the United States (Niosi and Zhegu, 2005). These aerospace clusters exhibit particular
characteristics, like for instance, the presence of large prime contracting aerospace producers that
ac
t as anchor tenants (Niosi and Zhegu, 2010); in other words, they are a magnet for other
aerospace firms.


This trend of foreign aerospace companies setting up manufacturing facilities in Mexico, and the
4


promotion by national and regional governments of th
e localities where these firms establish as
aerospace clusters arise the question about the possibility of a developing country like Mexico to
develop a high technology industry like aerospace. Since aerospace activity tends to cluster, and
requires specia
lized inputs and a strong government support, it is important to uncover if those
conditions are met in the Mexican case, and if they seem to be conductive to master aerospace
technology. The purpose of this paper is precisely to know if those conditions e
xhibit similarities
with what happens in countries with an important aerospace industry. The specific questions
addressed in this paper are: 1) Do Mexican aerospace clusters exhibit similar centripetal forces
found in other well known aerospace clusters? 2
) Are there firms that might be considered
anchor tenants?
3) Are there differences among
Mexican localities
,
regarding their attraction
factors? And 4) Do
es
Mexican government policy towards the sector
,
exhibit similar measures
taken by other successful c
ountries? We think these questions will give us some understanding
about the potential of Mexico's aerospace clusters to be a relevant part in the value chain of this
world
-
class high technology industry.


A survey applied to selected aerospace firms in M
exico, interviews with regional governments,
and government publications are the information source of this study. The rest of the paper goes
as follows: Section 2 reviews the characteristics of clusters, agglomeration forces, and policy
measures prevalent
in successful countries in the aerospace sector. Based on the previous
discussion and the conditions of Mexico's innovation system, general and empirical hypotheses
are proposed. Section 3 shows data, methodology, and the results obtained. Finally, Sectio
n 4
presents conclusions and some policy implications.


2. Theoretical framework

Several approaches have been used to analyze aerospace clusters. For instance, Beaudry (2001)
studied the firms' rate of entry and the complementarities among these firms in a
erospace
clusters in England. Niosi et al (2005) put the accent in the institutional support given by the
government in Canada in order to foster innovation capabilities to transit from a cluster into an
innovation system in the case of Montreal. Others li
ke Smith and Ibrahim (2006) propose a
typology of aerospace clusters in the case of Wales in England. Using the notion of technological
knowledge, Ehret and Cooke (2009) analyze the outsourcing patterns in British aerospace
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clusters. More recent works like
Niosi and Zhegu (2010) use the concept of anchor tenant to
explain the rise and fall of aerospace clusters in the United States. Benzler and Wink (2010)
advocate that in the near future, relocation of aerospace activity will be influenced by the
presence
of technological platforms in existing or potential clusters.


There are at least two basic concepts underlying these approaches: first, the concept of cluster as
an entity that is capable to attract and improve the performance of firms (Beaudry, 2001; Smi
th
and Ibrahim, 2006; Niosi and Zhegu, 2010); and second, the notion of technological knowledge,
in the sense of a complex learning process that requires specialized inputs (Niosi et al, 2005;
Ehret and Cooke, 2009; Benzler and Wink, 2010). The approach ta
ken here is to use the cluster
concept as a guide, and couple it with other relevant approaches related to technological
knowledge and innovation. In order to do so, we are going to briefly present the deconstruction
of the cluster proposed by Martin and S
unley (2003) and how the resulting analytical dimensions
can be enriched by coupling other concepts related with technological knowledge and
innovation.


Based on the deconstruction of the cluster concept made by Martin and Sunley (2003) it can be
argued t
hat any concept that attempts to understand the agglomeration of economic activity
should include at least three relevant dimensions: 1) industrial boundaries, 2) geographical scope,
and 3) the socio
-
economic dynamics that take place in the agglomeration.
However, given that
we are dealing with a high technology sector in a developing country, we propose to transform
those analytical dimensions in the following way: 1) technological characteristics of the firms, 2)
agglomeration forces, and 3) innovation an
d technology policy (ITP), and the institutional
environment. Literature review regarding these analytical dimensions is presented in next three
subsections.


2.1. Technological characteristics of aerospace firms

This subsection has three objectives: 1) to
discuss the identification of aerospace firms; 2) to
classify these firms according to the technological intensity of their activities; and 3) to
characterize aerospace clusters depending on the type of firms within them.


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In terms of industrial classific
ation, the aerospace industry has clear criteria. Firms that are
registered with codes of aerospace activity are considered as aerospace firms. Nevertheless, it is
important to note that sometimes firms are active in other industries besides aerospace. Thi
s
situation is common for small metal shop firms that are suppliers to a range of industries. It is
also possible to have system and sub
-
system integrator firms active in other sectors, like for
instance, the Canadian firm Bombardier who is also involved i
n terrestrial transportation
equipment, or the American General Electric, who has a wide range of product outside of
aerospace turbines. However, most integrator firms have clear aerospace divisions.



Source: Niosi and Zhegu (2005: 8)


In terms of the te
chnological intensity, the aerospace pyramid (see Figure 1) classifies all these
aerospace firms in layers, the highest of which consists of the systems integrators (the ones that
assembly the whole aircraft), the most important firms in the industry in te
rms of technological
intensity
1
. As firms go down in the pyramid their technological intensity is expected to diminish.



1

These subsystems are also call
ed modules.
According to Brusoni and Prencipe (2001), Niosi and Zhegu (2005)
and Frigant and Talbot (2005), the aircraft is a complex system in which the system is the whole aircraft and it is
made up of different subsystems or modules arranged in a hierar
chical fashion. These subsystems are in turn
made up of other subsystems.

7


Although this classification is very useful, attention should be paid when classifying subsidiaries
in foreign countries. The mere exist
ence of a modular architecture implies the standardization of
interfaces. While it is true that new technological developments have been taking place in the
production of airplanes (Benzler and Wink, 2010), it is also true that some of the processes are
st
andardized and well understood (Esposito, 2004; Kehayas, 2007). According to the logic of the
Product Life Cycle,
-
pioneered by Vernon (1966)
-
when standardization occurs it opens the
door to re
-
localization of activities to cost
-
efficient locations. Pro
ximity to the US, a leader in
aerospace industry, plus the manufacturing experience and infrastructure of Mexico, makes it a
likely candidate for foreign firms to relocate their most codified processes. For this reason, it is
important to take care when cl
assifying foreign subsidiaries; two situations could arise. First, the
subsidiary may indeed be property of the parent company, but its activities may pertain to
products or activities located in a lower Tier level compared to the parent's products and
act
ivities. Indeed, Ehret and Cooke (2010) stress that even if outsourcing to third parties has been
introduced in the aerospace sector, some big firms, like Airbus, continue to manufacture many
components that are “non
-
core” and “non
-
strategic” (p. 312). Th
e other situation is when the
subsidiary is in fact engaged in products related with the Tier of the parent company, but while
the latter is concentrated in knowledge
-
intensive activities (like R&D) the former is concentrated
in manufacturing.


Therefore,
it will be misleading to consider a subsidiary as a Tier 1 firm, just by the sole fact of
the parent company to be so. For this reason, it is mandatory to introduce a knowledge related
concept like the anchor tenant developed among others by Philips (2002)
, Feldman (2003), and
Agrawal and Cockburn (2003). According to the last authors, the anchor tenant is “a large,
locally present firm that is (1) heavily engaged in R&D in general and (2) has at least minor
absorptive capacity in a particular area” (p. 122
9). Niosi and Zhegu (2010) apply that concept to
explain how aerospace clusters in the US have flourished or banished depending on the ability of
their engine firm or firms to act as anchor tenant. These authors show how the acquisition of
Lear Jet (Locate
d in Wichita, Kansas, US) by Bombardier, meant the transfer of R&D activities
to Montreal, Canada; deprived from R&D
-
intensive activities, the system integrator was no
longer able to exert the function of anchor tenant as it used to (p. 272).


8


The presence
of an anchor tenant firm heavily influences the type of firms that may establish in
an aerospace cluster. Niosi and Zhegu (2010) found that there was a high correlation between the
existence of an anchor tenant and the presence of other innovator firms in
the cluster (p. 274).
Also, the specialization of these other innovator firms may be influenced by the anchor tenant
firm (Niosi and Zhegu, 2010). It is important to mention that different sub
-
system or modules of
the aircraft (like wings, fuselage, turbi
nes, avionics, etc) require different capabilities. Thus,
when a cluster has an anchor tenant firm dedicated to a specific aircraft module, these other
cluster firms may be specialized according to the type of module the anchor tenant produces. The
anchor
tenant has influence not just in attracting to the cluster other innovator firms and their
respective specialization, it actually can promote the creation of research laboratories and
university programs dedicated to aerospace (Niosi et al, 2005)


2.2. Agg
lomeration forces in aerospace clusters

This subsection has two objectives: 1) to describe the nature of the more prevalent centripetal
forces at play in aerospace clusters; and 2) to discuss the spatial scope of these forces, or in other
words, the geogra
phical limits of an aerospace cluster.


The idea that some economic activities derive a number of benefits from being geographically
concentrated is not new. A pioneering formulation of the phenomenon was made by the British
economist Alfred Marshall. Acco
rding to Marshall (1890), there are three main agglomeration
economies that firms operating in one sector achieve by locating together: the first one has to do
with attracting of specialized suppliers; the second with attracting specialized workers; and th
e
third with the creation of an “industrial atmosphere” in which innovative ideas are easily
transmitted among local agents. Implicit in the argument is that these economies would not be
attained if firms were geographically scattered. According to Niosi a
nd Zhegu (2005), the
creation of a labour pool by an anchor tenant firm is the main Marshallian agglomeration force in
aerospace clusters.


Contrary to the idea put forward more recently by Italian scholars working on industrial districts
(e.g. Brusco, 19
90; Pyke and Sengenberger, 1990), and the work of Michael Porter (1990; 2000)
in clusters, on which firms within a cluster are complementary to each other in terms of the
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product, the aircraft modular architecture allows firms working on different modules
to be
located in different clusters. In this way, while the final assembly of an Airbus aircraft takes
place in Toulouse, France, the different modules (like wings) can be (and actually some of them
are) produced in other places. Therefore, the idea of fir
ms profiting from knowledge spillovers
just by the fact of being located in a cluster is flawed in the case or aerospace, or for that matter
for any other sector. As Giuliani (2007) underlines, even for technological mature sectors, the
ability of a firm t
o profit from spillovers depends on its absorptive capacity. Also, it is important
to differentiate between business and knowledge networks. The former are the normal links that
a firm establishes to exchange inputs and outputs, while the latter are channe
ls by which
knowledge may flow. Giuliani and Bell (2005) argue that big firms with a developed absorptive
capacity usually are the gatekeepers of the knowledge networks. This means that they mediate
between the cluster external knowledge and the way in whi
ch that knowledge diffuses within the
cluster. Thus, within a cluster, different firms have different abilities to profit from knowledge
spillovers. This is more so given that a lot of business and knowledge flows take place among
firms located in differen
t clusters (Niosi and Zhegu, 2005).


Therefore, the main attracting forces in aerospace cluster have to do with the presence of a
specialized labour pool and the presence of big firms. These are the ones that generate critical
knowledge and the ones that
are able to bring to the cluster external knowledge. Moreover, like
the anchor tenant concept suggests, these firms are able to influence suppliers and research
laboratories by means of their sophisticated demands.


In terms of geographic scope, limits ar
e a difficult issue in aerospace. The works of Beaudry
(2001), Smith and Ibrahim (2006) and Cooke and Ehert (2009) are very revealing of this respect.
According to the second authors, there are five aerospace clusters in the UK (they cite as a
source a 200
1 report from the Department of Trade and Industry): North West, South West, East
Midlands, North Ireland, and Wales (pp. 362
-
363); yet Cooke and Ehret (2009) argue that there
are two aerospace agglomerations in Wales alone, one in the north and one in the
south (pp. 554
-
555). To make matters more complex, Beaudry (2001) in her study of cluster effects on
aerospace firms’ growth, proposes counties as the relevant regional dimension.
2
This author



2

Beaudry (2001) uses the European NUTS (Nomenclature des Unités Territoriales Statistiques) as the
10


identifies 5 counties in Wales

Clwyd, Powys, Mid Glamorgan, S
outh Glamorgan, and West
Glamorgan
-
with aerospace activities (p. 434), from which only three

Clwyd, Mid Glamorgan,
and South Glamorgan
-
were identified as having a strong fixed effect (pp. 417, 436), thus,
presumably considered as clusters.


None of the
authors mentioned, made completely clear why they chose a determined geographic
unit. It seems that the criterion followed by Smith and Ibrahim (2006) is based on broad regional
political administrative divisions
3
(let’s remember that Wales is in itself a
country) that
ultimately may have the political and economic resources to support clusters. In the case of
Cooke and Ehert (2009) it seems that their choice is based on mere geographical proximity
4
.
Since these authors are concerned with learning and local
systems, it may be that they consider
proximity as a condition to interact. For Beaudry (2001) the approach is different. This author
doesn’t assume clusters as given. On the contrary, she explored which of the counties do have a
positive impact on firms’
growth. Once that exercise done, just some of the counties were
identified as having a fixed effect. In the description about how Montreal came to be an
aerospace cluster and later an aerospace regional innovation system, Niosi et al (2005) adopt the
metr
opolitan region as a unit of analysis. At the same time, he recognizes both national and
provincial government (outside the metropolitan area) intervention to foster innovation in
Montreal.


As Niosi et al (2005) stress, one of the main agglomeration forc
es at play in the case of
aerospace is specialized labour. Thus, it seems that the scope of the cluster has to be delimited in
some way by the possible mobility (or absence of mobility) of this specialized work force. In this
sense, the metropolitan area m
ay provide an adequate geographical scope for clusters in
aerospace.








geographical unit. According to this author the UK had 65 NUTS at level 3 (the m
aximum disaggregation level),
and for Wales alone, the number is of 8, from which 5 had aerospace firms.

3

Smith and Ibrahim (2006) explain that if “[a] region had more people employed in that industry [in this case
aerospace] that one would expect given
the size of the region in terms of its labor force” it can be considered a
cluster in that industry (p. 362). Nevertheless, how the regions are pre
-
defined has an impact on final results. In
this case it seems that the whole of Wales was taken as a region,
and as such it prevented further divisions within
Wales itself.

4

Cooke and Ehret (2009) do not give an extensive explanation for their claim of two agglomerations. Instead,
they show a map of Wales in which the agglomerations are visually identified.

11



2.3. Innovation and technology policy (ITP), and the institutional environment

This subsection 1) sketches the policy measures taken by once newcomer countries to the
aerospace sector, a
nd 2) briefly describes the innovation system conditions in Mexico.


For the case of Canada, it is interesting to see how military procurement was at the base of its
aircraft capacity building. Overhaul and maintenance, and later the licensing of British a
ircraft
military models by British subsidiaries marked the beginning of that industry in Canada (let’s not
forget that Canada was a part of the British dominion) (Niosi et al, 2005). Other countries with
conditions more similar to Mexico, like Brazil and A
rgentina developed their aircraft industries
based on military impulses too, although only Brazil was successful (Hira and De Oliveira,
2007). These countries also started by acquiring licenses to produce foreign planes. Whatever the
historical reasons for
the absence of a military aircraft industry attempt in Mexico, the fact is that
the country starts with only a very limited experience, based in the overhaul and maintenance of
military and civil aircraft bought from foreign countries. One may add that ex
perience in the
manufacturing of motor vehicles and auto
-
parts are also important assets.


The countries mentioned above could learn from licensing old military and civil aircraft models.
However, that possibility is not clear for Mexico. As it was said, M
exico is not interested in
developing a domestic military aircraft sector (at least apparently), which left out the possibility
of licensing military aircraft production. Thus, the country has to depend on the civil sector
alone. These historical examples
bear one implication: All countries that in one moment
attempted to developed the aerospace sector had to rely at the beginning in the transference of
foreign technology by leading firms.


The next issue is what kind of technology is more appropriate to se
ek. According to Goldstein
(2002): “the traditional trajectory for a developing domestic aerospace sector is a three stage
process: first, countries begin with co
-
production agreements; second, as the industry develops, a
viable set of subcontractors devel
ops and finally, the domestic industry is capable of putting all
the pieces together and become a final assembler of complete aircraft.”
5
Nevertheless, the recent



5

Here quoted from McGuire et al. (2010: 368).

12


Japanese example shows that pursuing just one (or some) part of the plane could be a good
str
ategy, instead of trying to build the whole aircraft. The Japanese firm Mitsubishi is now a
world player in the design and construction of wings, thanks to the deal made with Boeing. With
the high degree of modularity (see section 1.2) and high costs, it i
s inconceivable for one firm or
a new comer country to master all the knowledge and technologies needed to build a new plane.
Therefore, concentrating in just one of those modules could be a good strategy.


All the countries mentioned above have one charac
teristic in common; in the early moments of
the development of their aircraft industry, there were local
-
owned firms supported by the state.
For instance in the case of Brazil, Embraer was a state enterprise, and was privatized later when
it had already ac
hieved a good technological degree. The Canadian firm Bombardier has
benefited from government program supports at different moments of its life. Therefore, two
implications are drawn in this case; first, government support is an indispensable condition si
nce
high costs make new attempts unprofitable; and second, national
-
owned enterprises seem to be a
necessary condition for the further development of capabilities within the industry.


Summarizing so far, we have four important historical implications for
the development of an
aircraft industry in a new comer country: 1) in a first phase, technology have to be licensed or
transferred from abroad; 2) in an early moment of the development (perhaps not at the
beginning) a national
-
owned firm should enter the
industry; 3) this national
-
owned firm (or
firms) should be specialized in one of the main modules of the plane (or in the assembly of the
whole plane, although this option is more difficult); 4) state support has to be present in the
different phases of de
velopment.


For its success, an ITP depends not just in taking the right steps at the right time; it depends also
on the well functioning of the innovation system. The national innovation system approach
(Freeman, 1987; Lundvall, 1992) and more recently th
e regional innovation system (Cooke and
Morgan, 1998) and the sectoral innovation system (Malerba, 2002) put the emphasis on
organizational and institutional patterns needed in order to innovate. This means that firms don’t
innovate in isolation, on the co
ntrary, there are numerous external factors that contribute either
13


directly or indirectly to this innovation effort, and in some cases innovation is originally
conceived and realized through collective effort.


Although some advances can be seen in innovat
ion activities in Mexico, recent assessments of
Mexico’s innovation system reveal its still low level of development. In a comprehensive study
about Mexico's innovation system, Dutrénit et al (2010) show the low tendency of Mexican firms
to do innovative a
ctivities in a sustainable fashion (p. 86
-
88). Also, when these efforts occur they
are more oriented to adapt foreign technologies than to create new ones (Dutrénit et al, 2010:
87). In the same token, links among firms and other relevant agents are limite
d. The 2009 OCDE
report on Mexico also shows low indicators and lack of adequate measures to tackle innovation
problems. For instance, the OCDE report shows that the investment in R&D as a percentage of
GDP is at 0.5% (where business R&D plays a particular
ly small role), versus an OCDE average
of over 2% (p. 17). Therefore, we have a scenario in which investment in innovation is weak,
relationship between higher education institutions, research centers and industry is poorly
developed, and the main focus of
government is on regulatory and infrastructure issues, with
little attention given to knowledge
-
related factors (OCDE, 2009: 15).


Other important aspects are the regional and sectoral issues of the innovation system in Mexico.
While there are some effort
s at the state level to foster innovation, the fiscal scheme of Mexico
concentrates resources at the federal level; thus, efforts by states are conditioned to a great extent
on federal funding (OCDE, 2009: 15). An important issue regarding state support is
the duplicity
of efforts. Since any public program claiming to support a high technology industry requires
important financial resources, it is unlikely that Mexican states, and the federal government
itself, could sustain such an industry in several stat
es at the same time. In terms of support for
specific economic branches, the 2007
-
2012 Sectoral Economic Program of the Mexican
Economic Ministry doesn’t contain a specific program for the aerospace sector. It only mentions
the desirability for the Mexican
economy to upgrade to a high value added sector like aerospace
and aeronautics, among others (p. 50).


2.4 Research hypotheses

14


Based on the discussion of the three previous sections, we propose a series of general hypotheses
and then some empirical hypoth
eses regarding the questions posed in the introduction section.


General hypothesis 1:
The relatively high codification of the technological knowledge base of
the aircraft is reflected in part in the high degree of modularity that exhibits the production o
f
this artefact. This is true also for the different sub
-
systems that made up the aircraft. Given this
modularity, a modified version of the PLC for aerospace, predicts that system and sub
-
system
integrators have the possibility to transfer some of their s
impler activities to low
-
cost locations
while keeping integration activities in their home locations.


General hypothesis 2
: Initial conditions in countries with underdeveloped innovation systems
(like Mexico) cannot procure all relevant capabilities, know
ledge and infrastructure needed to
sustain the production of complete aircraft systems, sub
-
systems or R&D activities.


General hypothesis 3
: Given the low technological profile of aerospace activities (at least in an
initial state) more likely to be trans
ferred to a low
-
cost country like Mexico, the main decision
factors for firms looking for a place to establish there, are related to traditional manufacturing
advantages rather than to Marshallian agglomeration forces.


General hypothesis 4
: Given the stri
ngent standards of the aerospace sector, the potential
transfer of activities (as simple as they may be) by foreign firms to their subsidiaries requires
certain degree of capabilities and infrastructure in the host locality.


Question 1:
Do Mexican aerospa
ce cluster exhibit similar centripetal forces found in other well
known aerospace clusters?


Hypothesis 1
: Aerospace firms are attracted to Mexican clusters because of reasons
related with low cost operations, and the manufacturing capability of the countr
y.


Question 2:
Are there firms that might be considered anchor tenants?


15


Hypothesis 2
: New to the world innovation in aerospace firms located in Mexico will be
minimal in the short and medium term. However, new to the country processes and
products will c
ertainly be introduced.


Hypothesis 2a:
When innovation does occur, complementary ideas and capabilities may
be related to foreign sources of knowledge.



Hypothesis 3
: Being part of a corporate company, subsidiaries in Mexico have more
supply and demand l
inks with their corporate location than with local agents.


Question 3:
Are there differences between Mexican localities regarding their attraction factors?


Hypothesis 4
: When some local input links do occur, firms located in inland cities may
exhibit mor
e input links when compared to firms located in border cities. This is because
the ampler industrial base observed in inland cities.


Question 4:
Do Mexican government policy towards the sector exhibit similar measures taken
by other successful countries?


Hypothesis 5:
The lack of a sectoral program dedicated to the sector and the
underdeveloped innovation system of Mexico, makes unlikely the appearance in the near
future of:



The development of a specialized infrastructure that encourages foreign
firms to
take the risks to transfer more complex activities to their subsidiaries.



The targeting of selected aeronautic technologies on which firms seem to
be more capable of learning.



The concentration of support in just certain clusters.



The creation of a nation
al
-
owned firm in the top Tiers of the pyramid.




16


3. Empirical research


3.1 Data

Prior to the field application of the Questionnaire that was carried on from May 25
th
to June 28
th

of 2009 at 30 aerospace firms in five cities located in four states; the M
inistry of Economy had
identified 161 companies distributed in 15 Mexican states giving employment to approximately
20,000 people. Attempting to cover all the localities and companies was neither necessary nor
practical. Since the focus of this research is
on the agglomeration forces and characteristics of
aerospace clusters, the approach taken here was to concentrate

on localities that exhibit some
features that qualified them as a potential cluster.


As

was explained in section 1.3, the analytical dimens
ions for this study are:
1) firms’
technological characteristics

2) agglomeration forces
and
3) ITP and the institutional
environment.
Based on those dimensions, three criteria were used to select the locations for the
field research. The first step in ana
lyzing

the structure of a cluster is the mere existence of such a
structure. Given that firms are the most important organizations in aerospace clusters, the
1)

total
number of aerospace firms
that a

location hosts is the first criterion. The aerospace ind
ustry is
organized in layers of system integrators, sub
-
system integrators, and numerous specialized
suppliers. As we climb

the layers, the firms are supposed to be more knowledge intensive. That
knowledge generation serves as an attractor to other firms,
and as such it becomes an
agglomeration force. A system integrator firm is characterized for being a knowledge intensive
organization. This system integrator firm can have several facilities scattered around the world. It
is important to note that the tech
nological content of the activities carried on in those different
facilities can vary broadly. Nonetheless,
a priori
, the reputation of the firm is taken as a signal of
its technological level
.
Therefore
2) the reputation of the aerospace firms
in the loca
tion is the
second criterion. In other parts of this text it was explained that the aerospace sector requires a
strong commitment from government. Since it is a high technology sector it requires support at
the financial,

infrastructural and educational le
vels. Thus,
3) the institutional support in terms of
policy, infrastructure, and education,
that characterize the location in general and the aerospace
industry in particular, is the third criterion.


17


Regarding the number of firms, TABLE 1 shows the distri
bution of the aerospace firms in 15
Mexican states.

TABLE 1. Aerospace firms by state

State

# firms

State

# firms

Baja California

49

Distrito Federal

6

Sonora

26

Jalisco

5

Nuevo León

19

Estado de México

5

Chihuahua

14

Aguascalientes

2

Tamaulipas

10

Puebla

2

Querétaro

8

Yucatán

2

Coahuila

6

Guerrero

1

San Luis Potosí

6

Total

161

Source: Promexico
6

(2009) PowerPoint presentation with data from the Ministry of Economy


There was no unique criterion to set apart the states which
(
by their number of f
irms
)
could
eventually be identified as an aerospace cluster. However, it seemed intuitive to set the lower
threshold by including either Tamaulipas or Querétaro (10 and 8 firms respectively). Given the
attention Querétaro was receiving at that moment we d
ecided to set the lower limit to include
Querétaro. Therefore, initially we selected Baja California, Sonora, Nuevo León, Chihuahua,
Tamaulipas and Querétaro.


In terms of the reputation of the aerospace firms the issue was somehow clear. Based on the data

of Promexico (2009), Baja California stood first with the presence of companies such as
Honeywell Aerospace, Gulfstream, Lockheed Martin Aeronautics, Rockwell Collins, and GKN
Aerospace. In a second group, the states of Querétaro and Chihuahua counted wit
h firms like
Bombardier, Messier Services and ITR in the former, and Honeywell Aerospace, Labinal, and
Cessna in the latter. Following the list, the states of Sonora and Nuevo León had within their
borders companies like ESCO turbines and Goodrich in the f
ormer, and MD Helicopters and
Frisa Wayman Gordon in the latter. At the time of this evaluation there was little information
about the state of Tamaulipas, but recent accounts reveals only one medium profile company like
Chromalloy. This information

leads
us to explore the institutional environment prevailing in the
states of Baja California, Querétaro, Chihuahua, Sonora, and Nuevo León.





6

Promexico is an office dependent of the Ministry of Economy, which is in charge of both, promoting Mexico as
a recipient of foreign investment, and helping Mexican firms that want to go international.

18


By means of their web pages, regional development offices in Baja California, Querétaro, and
Nuevo León were the ones th
at stood up with more information about the firms, institutions and
activities related

to the aerospace sector. The three regional development offices of these states,
were promoting three specific aspects of their respective clusters: 1) existence of a bu
siness
chamber grouping aerospace firms, 2) the setup of education and training programs targeted to
the sector in universities and technical schools, and 3) the support of state government in
attending and promoting the sector. Information about Chihuahua
and Sonora was scanty.


With just the preliminary information mentioned so far, Baja California and Querétaro were the
states that have the highest potential for developing an aerospace cluster. Accordingly, those two
states were automatically selected t
o be included in the field work. Even if there was scanty
information regarding the institutional support and

promotion of the regional development office
in Chihuahua, we decided to keep it for the research because of the important firms established
there
, and because of the importance of the state in the national economy in general. If the
contribution of Chihuahua to the national economy is important, the Nuevo León contribution is
even greater; also, the educational institutions in that state are consid
ered among the best in the
country
.
Therefore

we included Nuevo León in spite of the lack of big names located there. The
few high profile firms in the state of Sonora, plus the scanty evidence about the infrastructure
targeted to support the sector were f
actors for not including it in the research.


Once the four states were selected, the second step was to select the cities. In Baja California two
cities accounted for the majority of firms, Mexicali (the state capital) and Tijuana (which,
together with C
iudad Juárez is the most important border city in terms of manufacturing). In the
state of Querétaro, some firms were scattered around and others were within the capital city of
Querétaro. Choosing the city was not a problem. The metropolitan area of Monte
rrey that is
comprised of several counties is where the aerospace activity takes place in Nuevo León.
Although no firm is located in the actual city of Monterrey, all of them are accessible

by car

from Monterrey. The state of Chihuahua has two main cities
and industrial centers, Chihuahua
(the state capital) and Ciudad Juarez. Although preliminary information showed that Ciudad
Juarez had some aerospace activity, it turned out that some firms were mislabelled as aerospace
and the others were only partially
involved in aerospace. The city of Chihuahua is both the host
19


of important aerospace firms, and the target of state government support. All firms in the city of
Chihuahua were located within the city.


Once the cities of Mexicali, Tijuana, Querétaro, Monte
rrey, and Chihuahua were chosen, the
next step was to choose the firms. For Mexicali and Tijuana, the information the regional
development office provided regarding the firms was very complete
.
The interest of the research
is centered on big firms with a s
ubstantial activity in aerospace. For that reason we targeted firms
with more than 100 employees and with a major

involvement in aerospace activity. All firms
with those characteristics contained in a report of the Baja California government were asked to
participate in the research. In the end, 15 firms agreed to respond to the questionnaire
;

8 from
Mexicali and 7 from Tijuana. The process was similar for Monterrey, in which 4 firms took part
in the study. It turned out that most of the firms in Monterrey
were suppliers that were involved
in other sectors as well, thus not a segment in our priorities. For Querétaro, the process was
similar and 5 firms agreed to respond

the questionnaire. Finally, thanks to the guidance of the
regional development office of
the state of Chihuahua we contacted 6 important firms that were
not initially contemplated
.
After my arrival, the regional development offices of the four states
were cooperative and provided

guidance about

which firms were worth of asking to participate.
Thanks to that information, some smaller firms with a very high involvement in the industry
were also included. In the end, 30 firms distributed in five cities answered the questionnaire in a
face
-
to
-
face interview (see map below).



20


MAP 1. Five selected
cities in four Mexican states.



3.2. Method

The “Global outsourcing and R&D best practices in the aerospace industry Questionnaire”
7
is
the main information source of this research. This tool was designed to gather information
directly from aerospace fir
ms in Mexico. Professor Jorge Niosi (research director), Professor
Majlinda Zhegu and I collaborated in the elaboration of the questionnaire. The ample experience
in the aerospace sector of Professors Niosi and Zhegu was of great help in identifying the cl
uster
issues which firms in this sector face. The questionnaire and the research itself is part of an
ampler research project that seeks to compare the development of the aerospace industry in
different developing countries. Part I of the Questionnaire ask
s for general information about the
size, ownership, markets and products of the firms. Section II.1 is about the firms’ innovation
and the sources of ideas for those innovations. Additionally, Section II.2 asks for the incentives
that firms have had to lo
cate in the places where they are currently located. Part III is about the
role of the firm in the industry, and aspects of communication.





7

Th
e Spanish version that was actually used is called “Cuestionario acerca de las prácticas de subcontratación e
investigación y desarrollo de la industria aeroespacial en México”.

21


Other primary data sources include four semi
-
structured interviews with the four regional
development offices in ch
arge of promoting the aerospace industry in the four selected Mexican
states

Baja California, Querétaro, Nuevo León, and Chihuahua
-
. Secondary data sources
include aerospace publications of the Mexican Ministry of Economy.


Since most of the questions inc
luded in the Questionnaire represent categorical statistical
variables, descriptive statistical tools are used to illustrate the clusters characteristics. When
using cross tabulation, the chi
-
square test for independence of two variables
8
is presented. Giv
en
the size of the sample, in some cases the expected count in some cells is lower than the
recommended (usually 5 counts). For this reason, the Yates correction for continuity statistic
9
, a
non parametric test, is also shown. This non
-
parametric test retu
rns a p
-
value using a Monte
Carlo simulation (Verzani, 2005).


3.3. Results

There are two pieces of information in the survey that are relevant to answer question 1 of this
paper. First, there is a question that lists possible local advantages, and asks f
irms if they benefit
from those advantages or not. Second, there is an open question about why the firm chose that
specific cluster to establish in the first place; the diverse reasons given by the respondents were
compared and grouped.


TABLE 2. Local ad
vantages

Advantages

Answer

Counts

Column %

No

4

13.30%

Labour

Yes

26

86.70%

No

5

16.70%

Industrial Areas

Yes

25

83.30%

No

29

96.70%

Suppliers

Yes

1

3.30%

No

28

93.30%

Clients

Yes

2

6.70%




8

The statistical software used to obtain this statistic was SPSS.

9

The stati
stical software used to obtain this statistic was PSPP and verified with the R program (both free
programs).

22


No

11

36.70%

Policy

Yes

19

63.30%

No

15

50.00%

Co
-
location

Yes

15

50.00%

No

2

6.70%

Infrastructure

Yes

28

93.30%

No

7

23.30%

Universities and Research Centers

Yes

23

76.70%

No

28

93.30%

Financial advantages

Yes

2

6.70%

No

19

63.30%

Incentives

Yes

11

36.70%


TABLE 2 captures the local advantag
es that firms consider they have by being located in a
Mexican aerospace cluster. From the ten local advantages listed, six were identified as such by
more than 50% of the firms. The local advantage most cited with 93.3% of positive answers is
the Infrastr
ucture. This means that almost all surveyed firms considered that the infrastructure of
the locality provided an advantage. By Infrastructure the questionnaire makes reference to the
transportation and telecommunications infrastructure. The existence and q
uality of Industrial
Areas was considered by 83.3% of the firms as an advantage. The third most cited advantage was
the Labour Force with 86.7%. Respondents usually complemented their answer by adding that
the workers were skilled and accustomed to the fac
tory environment. The fact that the locality
host universities and research centers was the fourth most cited advantage with 76.7%. It is
important to mention that almost all the affirmative answers to this question did so because of the
university and not
because of the research centers. The fifth advantage was the existence of
policy measures with 63.3%. Virtually all the respondents were thinking about the
maquiladora

program
10
when answering positively to this question. This policy measure can be conside
red as
a horizontal policy because is not specifically targeted to any sector in particular. The sixth most
cited advantage was to be Co
-
located with other aerospace firms. Half of the firms answered yes
while the other half said they did not find any adva
ntage of being close to other aerospace firms.
The items that received less positive answers were Incentives, Clients, Financial Aid, and



10

The
maquiladora
is a fiscal regime established in Mexico back in the 1960s that allows duty
-
free inputs under
the condition of subsequent export.

23


Suppliers. Particularly the last three items have a negligible percentage of positive answers.


TABLE 3. Former attra
ction factors

Attraction factors

Answer

Counts

Column %

No

15

50.00%

US proximity

Yes

15

50.00%

No

23

76.70%

Low labour costs

Yes

7

23.30%

No

24

80.00%

Low operation costs

Yes

6

20.00%

No

24

80.00%

Owner's region origin

Yes

6

20.00%

No

22

73.30%

Experienc
e in industrial sectors

Yes

8

26.70%


Another important piece of information is TABLE 3, which shows the original attraction factors
that firms took in account before establishing in Mexico. This was an open question in which
similar answer
s were grouped (This may explain the lower percentages compared to TABLE 2).
From the several answers given to this question we are going to present the five most prevalent.
Of all surveyed firms, 50% declared that Proximity to the United States was among
the reasons
for establishing in Mexico. This is the attraction factor with major prevalence in aerospace firms
in Mexico. The previous Manufacturing Experience of the Mexican localities was the second
most cited reason with 26.67%. It is important to note
that this experience is not necessarily
related with aerospace. The Low Cost of the Labour Force was the third most cited attraction
factor with 23.33%. Low Operation Costs and Owners original location follow with 20% each.


As hypothesis 1 suggests, the c
entripetal forces that Mexico’s aerospace clusters exhibit, are
related to manufacturing advantages. Specifically, the advantages more valued by aerospace
firms are related to the 1) industrial infrastructure, 2) the skilled labour force, and 3) the low
op
eration costs. Regarding the first aspect, it is clear that the transport and telecommunication
infrastructure [TABLE 2, 93.3%], AND the presence of industrial areas [TABLE 2, 83.3%],
procures firms with the facilities needed to carry on manufacturing acti
vities, and gives the
overall impression that Mexican localities have a relevant experience in manufacturing [TABLE
24


3, 26.7%]. On the second aspect, the presence of a labour pool that in addition to be cheap
[TABLE 3, 23.3%] is it considered skilled [TABLE
2, 86.7%], makes possible the undertaking
of manufacturing processes that sometimes demand technological sophistication. The presence
of universities in these localities adds to this capacity [TABLE 2, 76.7%]. In addition to the two
mentioned aspects, the
presence of the
maquiladora
policy [TABLE 2, 63.3%] keeps operation
costs on low levels.


In order to answer question 2 of this paper, the survey has information related with the new
products' degree of novelty (world, country, firm), as well as the knowl
edge links that in some
way helped to developed that novelty. There is also information about the inputs and outputs
flows of the firms, which will be very useful to explore their degree of connectedness to the local
environment.


TABLE 4. Novelty degree
of new products

Degree of the novelty introduced

Counts

%

None

1

3.33%

Firm

21

70.00%

Country

2

6.67%

World

6

20.00%


TABLE 4 shows that almost all firms produced at least one new product in the last three years.
Only 20% of the firms declared that t
he new product they manufactured was a world novelty.
This does not mean that these firms conceived and design the product. The participation in the
world novelty of these firms was due to either creating a novel process to manufacture a product
designed (
and even manufactured) elsewhere, or by manufacturing for the first time a prototype,
in other words a product that had not been manufactured before. According to some personal
communications with interviewees, this is the result of optimization strategies
followed by
foreign firms, in which the subsidiary is in charge of not just manufacturing, but also of the
design of the process, while the parent company gets more concentrated in design, testing and
prototyping. We have to wait to know if this trend con
solidates or not. It is important to note that
the design of the manufacturing process requires certain advanced skills.


25


TABLE 5. Sources of knowledge external to the firm that had an impact
in the new products introduced

External source

Counts

%

Local
research institute

6

20.00%

Local university

1

3.33%

Local consultant

1

3.33%

Local firms

0

0.00%

Local suppliers

3

10.00%

Country research institute

1

3.33%

Country clients

1

3.33%

Global Head Quarters

21

70.00%

Global clients

14

46.67%

Global re
search institute

0

0.00%

Global university

1

3.33%

Global consultant

3

10.00%

Global competitors

4

13.33%

Global firms

1

3.33%

Global suppliers

6

20.00%


Regarding the knowledge links needed to bring about those novel products, TABLE 5 shows the
diff
erent sources. It is completely clear that Head Quarters are the main sources of novel ideas
for the aerospace firms in Mexico with 70% of the firms declaring that to be their main
knowledge provider. The second most cited source of ideas are clients locat
ed outside the
country with 66.67%. Global suppliers were mentioned by 20% of the firms. The only relatively
important local source of knowledge was local research institutes with 20%. All other factors
received a response of less than 20%.



26






Regard
ing the inputs
-
outputs links, there is a clear pattern that can be seen in GRAPH 1 and
27


GRAPH 2. When asked about the origin country of their critical inputs, in GRAPH 1 it can be
seen that more than 80% of the firms declared that the US was one of their so
urces of specialized
inputs. If we take Europe as a whole the percentage was 15%. The next source of specialized
inputs is Canada with 10% of the firms. Finally, few firms sourced inputs from Asia and Latin
America. In the same token, in GRAPH 2, a very si
milar pattern in terms of geographical
importance can be seen when looking at the destination of the Mexico's aerospace firms’ outputs.
One difference is that in this case the percentages were higher. This means that the number of
countries to which firms
send their outputs is bigger than the number of countries from which
they receive their inputs. This also seems to suggest that the US continues to be a leading source
of specialized inputs.


Since innovation in the strict sense
11
is almost completely absen
t in Mexican aerospace firms, it
is difficult to claim that a firm can act as an anchor tenant. Also, as TABLE 2 and TABLE 3
showed, virtually no firm was attracted to a cluster by the presence of a specific firm. The pattern
of both, the knowledge links a
nd the business links, reveals that firms have very little contact
with firms or organizations located in the cluster or even the country.


Other important point in this paper has to do with the differences among clusters. For this
analysis the firms were
divided into two groups, inland clusters and border clusters, each one,
coincidentally with 50% of the observations. Mexicali and Tijuana were grouped into the border
clusters, while Querétaro, Monterrey and Chihuahua were grouped into the inland clusters.
There
are two reasons for this partitioning. The first one is that Mexicali and Tijuana are literally
border cities whose dynamics are extremely linked with their US counterpart. Although
Chihuahua and Monterrey are located in states that border with the
US, their distance from the
border prevents these localities to exhibit the amount of links usually found in border cities. The
second reason has to do with the experience in the
maquiladora
program. Although that program
is now extensive to the whole coun
try, initially it was implemented in the border. For this reason,
the border localities have a longer tradition in the
maquiladora
program compared to inland
cities.




11

This is if we consider innovation as the whole uncertain and serendipitous process that begins with the
conception of a new product or technology, goes through R&D, continues to manufacturing and ends in
successful introduction on the market.

28


TABLE 6. Differences between border and inland clusters regarding local advantages

Locality


Advan
tages


Answer

Border %

Inland %

Chi
-
square p
-
value

Yates correction for
continuity p
-
value

No

20.00%

6.70%

Labour

Yes

80.00%

93.30%


0.283
a


0.59

No

26.70%

6.70%

Industrial Areas

Yes

73.30%

93.30%


0.142
a


0.33

No

93.30
%

100.00%

Suppliers

Yes

6.70%

0.00%


0.309
a,b


1.00

No

100.00%

86.70%

Clients

Yes

0.00%

13.30%


0.143
a,b


0.46

No

33.30%

40.00%

Policy

Yes

66.70%

60.00%


0.705


1.000

No

80.00%

20.00%

Co
-
location

Yes

20.00%

80.00%


0.001
*


0.00

No

13.30%

0.00%

Infrastructure

Yes

86.70%

100.00%


0.143
a,b


0.46

No

40.00%

6.70%

Universities and Research
Centers

Yes

60.00%

93.30%


0.031
a,*


0.08

No

100.00%

86.70%

Financial advantages

Yes

0.00%

13.30%


0.143
a,b


0.46

No

86.70%

40.00%

Incentives

Yes

13.30%

60.00%


0.008
*


0.02

a. More than 20% of cells have an expected count less than 5. Chi
-
square results may not be valid.

b. Minimal expected count is inferior to one. Chi
-
square results may not be valid.

*. Chi
-
square statistic is significant at 0.05
.


Applying a standard test of independence of variables reveals differences between inland and
border firms regarding some of the variables related with advantages obtained by being in a
cluster. TABLE 6 shows that those variables are co
-
location, univers
ities and research centers,
and incentives. This means that firms in inland clusters value the fact of being co
-
located with
other aerospace firms, while firms in border clusters usually do not consider that to be an
advantage. The existence of universitie
s was valued by both, but inland firms showed a higher
acceptance. Again, inland clusters valued more the incentives provided by governments than
their border counterparts.


Although more information is needed, it seems that hypothesis 4 is confirmed. Two
factors might
29


explain the notorious difference in the Co
-
location and Incentive variables. One may be that
more policy measures have been implemented in inland cities, and the other factor might be that
the institutional environment in terms of the presenc
e of research institutes and skilled labour is
richer in these cities compared to border cities. Therefore, even if in general the Mexican
innovation system is underdeveloped, some regions show different conditions than others.


Interviews with regional g
overnments and a report from the Ministry of Economy will allows to
have good insights about the policy measures taken to support the aerospace sector. So far,
government support has been stronger in the Querétaro cluster. Specifically, a dedicated
aerospa
ce university was created and an aerospace industrial park was built adjacent to the city's
airport. In terms of creating an institutional environment akin to the aerospace sector, those have
been the biggest efforts. Baja California, Chihuahua, and Nuevo
León have also training centers
and universities with some programs related with aerospace, but none of them were created
expressly to that end. Although fiscal incentives are present, these are the same that are offered
to firms irrespective of the sector
of activity. The same is true for innovative projects. The
support of Regional governments is mainly concentrated in helping firms to meet financial needs
related with labour training, certifications, and promotion issues. They also orient firms in
obtain
ing federal government fiscal incentives, and in logistic and legal issues.


The report called
“Plan de Vuelo Nacional”
(National Flight Plan) made by the Ministry of
Economy do mention some issues of technological specialization and cluster targeting.
Specifically, the report identifies the clusters of Baja California and Querétaro as Strategic Poles
of Innovation. According to the report, these two cluster are under the area of influence of
aerospace corridor of western US (Washington state and Califor
nia) and the aerospace corridor
of eastern Canada and US (Montreal, Washington D.C. Area, Georgia, Texas, Kansas, etc)
respectively. As the report itself says, this designation is based more on the potential than the
current state of technological capabili
ties. As was mentioned above, for some reason, Querétaro
has become the
de facto
recipient of federal aid. The designation of Baja California seems to be
due to the number of firms, that one may add, established there more because of US proximity
than beca
use of government aid. Nevertheless, the report does not mention which special
treatment and policy measures these two clusters will receive as a result of that designation.

30



Regarding specialization in a specific aeronautical technology area, the report
mentions the
following specializations for the clusters: Baja California, Electrical
-
Electronics; Chihuahua,
Electrical
-
Electronics and engine components; Querétaro, Engine components and sub
-
assembly,
and heat and superficial treatment; Nuevo León, overha
ul and maintenance. These profiles seem
to be based on the type of products currently manufactured by the more important firms in the
respective clusters. However, apparently there are not signs that a technological platform (like
dedicated research labora
tories, or the creation of specialized suppliers) is in place to support
those specializations.


Regarding ownership, there are national
-
owned firms, and their importance cannot be
downplayed. However, at least for the national
-
owned firms surveyed, none
of them carry on
system or subsystem integration. The report also mentions FDI attraction as a way to gather a
critical mass of firms. Thus, presumably the creation or the strengthening of national
-
owned
firms is not in the priorities.


4. Conclusions

Som
etimes the word cluster evokes images associated with the Italian industrial districts and the
Porter's concept of cluster. Nevertheless, while it is true that some firms gain advantages by
being in clusters, the reasons behind those advantages vary greatl
y depending on the knowledge
base underlying the activities of those firms. In this sense, aerospace cluster differ greatly from
that traditional image of clusters. For instance, the image of a collection of complementary firms
working in a loosely hierarc
hical relationship
-
industrial districts
-
towards the same productive
goal
-
Porter
-
does not correspond to the fact that different aircraft subsystems can be produced in
different parts of the world and latter assembled by a final assembler in yet another
part of the
world (Niosi and Zhegu, 2005; Frigant and Talbot, 2005). As we have discussed, in aerospace
clusters, a key agent is the anchor tenant firm, usually a final assembler or a system integrator of
an important module (Niosi and Zhegu, 2010). Nevert
heless, for this system integrator to be
considered as an anchor tenant, it should carry on considerable R&D activities (Agrawal and
Cockburn, 2003; Niosi and Zhegu, 2010). The creation of a skilled labour pool is the main
Marshallian agglomeration force (
Niosi and Zhegu, 2005) of this anchor tenant.

31



Since the activities carried on by aerospace firms in Mexico's aerospace clusters are more related
with manufacturing and very little to R&D, it is very unlikely that a firm be playing the role of
anchor tenan
t. Therefore, the presence of an aerospace specialized labour pool and a dedicated
technological platform are not expected to be attraction factors of Mexican clusters. Instead, the
agglomeration forces found in Mexican aerospace clusters are related with
manufacturing
advantages, specifically, 1) the presence of an industrial infrastructure, 2) skilled labour force
(not necessarily in aerospace), and 3) the low operation costs (
maquiladora
program). Also, the
lack of an aerospace technological platform exp
lains that most of the knowledge
-
links come
from outside the clusters. In this sense, given that both business
-
links and knowledge
-
links come
from outside, it can be argued that Mexican agglomerations need to enforce some policy
measures in order to upgrad
e the technological content of their activities and to develop a
dedicated technological platform.


Even though advantages not related with innovation may explain the presence of firms in
Mexico's aerospace clusters, these advantages should not be minimize
d given the tough quality
standards of the aerospace industry, and if properly managed they may form the base for future
development. Additionally, a potential trend may favour the accumulation of technological
capabilities of these firms. The optimization
strategies of some leading firms give a lot of
responsibilities to their manufacturing subsidiaries. This has lead to the undertaking of
innovation (at some level) in the manufacturing process. However, a more ambitious and
strategic innovation policy sho
uld be developed to encourage aerospace firms to carry on more
complex activities like R&D and integration of systems and subsystems. The set
-
up of world
-
class research infrastructure seems mandatory to this end (Benzler and Wink, 2010) given the
inclusion
of new technologies in new plane models.


The Ministry of Economy has identified Querétaro and Baja California as potential Strategic
Poles of Innovation. Nevertheless, the reasons behind that identification are not well explained.
Whether these particula
r states should be the chosen ones or not, requires a more thorough
evaluation. Particularly, one of the criteria should be the capacity of the location to develop an
effective technological platform, and not just the number of firms. As it was shown, bord
er cities
32


have more firms within them, but these firms do not feel much support from being in a cluster. In
any case, even for those states that have been designated, policy measures have been modest.
Also, the policy should take in account possible venues
regarding aeronautic specialization in
some important module of the aircraft. The profiles of the different clusters given so far, seems
insufficient as a technological guide; they are the result of what firms are doing in this moment,
and not the result
of a technological prospective. Regarding the creation and/or support of a
national
-
owned firm active in the integration of an important aircraft module, it seems that it is
not a priority in the policy so far.


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