Latin America’s relatively steady economic growth suggests that the regional demand for aviation coatings will more than double GDP expansion, predicted by the World Bank to be 1.0 percent this year and back to a more normal 2.3 percent next year.

Boeing projects Latin American airlines will need 3,050 new airplanes valued at $350 billion in the next two decades, tripling the region’s current fleet size. “Over the long term, Latin American economies will grow faster than the rest of the world,” said Donna Hrinak, the president of Boeing Latin America. “This growth will create increased passenger traffic in the region and drive Latin American airlines to expand and compete for business that has traditionally been dominated by foreign operators.” 

The CAVOK 2015-2025 Global/Regional Fleet Forecast for Latin America predicts that the region will have an 8.0 percent share of the global commercial aircraft fleet, expanding at 4.7 percent per year, to a value of $27.8 billion in 2025, up some $5 billion from last year, according to Tom Cooper, the executive vice president of the Atlanta-based division of Oliver Wyman.

Similarly, Latin American air traffic will grow by a projected 4.7 percent annual rate over the next 20 years, compared with a projected 4.6 percent global average, according to one analysis.

Not surprisingly, the region’s $3.2 billion Maintenance, Repair and Overhaul (MRO) aviation market is estimated to grow even faster, at 7.3 percent, according to Cooper. “Improvements in corrosion control at the factory and at the MROs are reducing coatings consumption in airframe repair,” he said. “The intervals between inspections is increasing, and then they find less corrosion. Now most airliners are repainted only every five to six years.”

A paint job for a Boeing 777 might require 40 gallons of primer and 46 gallons of topcoat paint, depending on the color scheme, noted Chris G. Athansopoulos, the director of global sales for the Aerospace Division, of Hentzen Coatings. Multiple colors can readily double the price of re-painting, others point out.

With a back-of-the-envelope estimated cost of painting a new multi-color commercial aircraft at around $150,000, the 3,000 new aircraft Latin America will purchase over the Boeing 10-year forecast period includes some $450 million worth of coatings; at an average rate of 100 deliveries per year, the component cost of coatings would be $15 million per year. Many of the components for new aircraft are manufactured in Mexico, where some 300 companies are active. Boeing alone imports $1 billion worth of parts from Mexico every year.

If these new aircraft are painted every six years, the MRO coatings the region consumes maintaining the new aircraft will be worth some $75 million per year. Given the current regional commercial aircraft fleet of about 1,750 now, MRO coatings every three years on the existing fleet will continue to cost about $45 million per year. So total MRO coatings may represent some $120 million per year in Latin America moving forward. Adding the coatings component of new aircraft purchases (from calculation in prior paragraph), the region may consume a grand total of some $135 million worth of aviation coatings per year.

The market positions of the major coatings suppliers to Latin America seem to vary greatly. In a 2014 presentation by Michael H. McGarry, PPG executive vice president, the company estimated that aerospace coatings represent a $1 billion market led by PPG, and followed by Akzo-Nobel. Mark Cancilla, the global director for aerospace coatings at PPG in Sylmar, CA, reckons that Latin America represents about 10 percent of the global market. “Latin America, and especially Mexico, is exciting for us. There are a lot of sub-suppliers there and more customers relocating there,” he noted.

Axalta Coating Systems is another player in the region, but focuses more on the smaller aircraft segment of the market: “We only sell aviation coatings into the small and executive aircraft OEMs,” noted Matthew Winokur, the vice president of corporate affairs for the Philadelphia-based company.

Similarly, “BASF Aerospace activities related to aerospace coatings typically involve pigments and additives, as opposed to directly supplying finished coatings to the air framers or MRO companies,” notes Paulo Springmann, the aerospace business development manager for BASF Canada, based in Mississauga, Ontario.

Sherwin-Williams distribution hubs for its aviation products, through Hawker Beechcraft Services, are in Monterrey and Toluca.

Among OEMs selling aircraft into Latin America, Boeing is one leader. Marc Allen, Boeing international’s president, was recently quoted in local press indicating that the company had an order of 100 aircraft from Mexico. Aeromexico, the largest airline in Mexico, expects to expand its fleet this year by five aircraft, including both Boeing aircraft and Embraer equipment. The airline now owns roughly 40 percent of Mexico’s total aircraft fleet.

Brazil’s aviation market, unlike Mexico’s highly diversified industry, is concentrated primarily in the ex-state company Embraer, which has become a global leader in the executive and small jet (under 130 seats) industry. Embraer sales last year hit $1.6 billion, and deliveries in first quarter of 2016 included 44 jets, up 37.5 percent compared to the prior year quarter. The company also reported a backlog worth $21.9 billion as of the end of first quarter this year.

A year ago, PPG Industries completed a $40 million expansion of its Sumaré, São Paulo, coatings manufacturing facility. Resin produced at the facility will be used to manufacture PPG’s electrocoat products to meet growing demand from automotive OEMs and industrial coatings customers in the region, including the aerospace segment.
Brazil’s economy is expected to continue to retract at about -1.7 percent this year before returning to a positive growth rate of 2.4 percent next year, according to the World Bank.
The highly diversified Mexican aerospace industry has been growing at an average 17 percent per year since 2004, according to the Federacion Mexicana de la Industria Aeroespacial (FEMIA), the Mexican association of the aerospace industry. The major OEMs are backlogged for years, so sub-contractors for parts have plenty of work available, noted Athansopoulos.

Industrial surface finishing, including aviation and automotive sectors, will grow at double the rate – over five percent – of the national growth rate this year, predicts Marcelo Álvarez Martínez, the president of the Asociación Mexicana de Industriales de Acabados Superficiales (AMAS), or the Mexican association of surface finishing industries, speaking at his groups latest annual meeting, Surface Finishing México (SFM) 2016, in Querétaro.

Mexico’s GDP is forecast to grow by 2.8 percent this year, up from 2.5 percent in 2015, and to continue expanding by an additional 0.2 percent per year through 2018, according to the World Bank.

Mexico’s Secretario de Economía, Ildefonso Guajardo, estimates that aerospace exports by Mexico in 2015 reached $7.2 billion. Exports by the industry are expected to exceed $12 billion by the end of this decade.

Some $2 billion have been invested in Mexican aerospace over the past three years, according to a statement by Gerardo Ruiz Esparza, the El Secretario de Comunicaciones y Transportes (SCT), or transportation minister. The aerospace industry in Queretaro State, southeast of Mexico City, alone attracted a total of $200 million in investment last year, according to a press statement by Marco Antonio del Prete Tercero, the Secretaría de Desarrollo Sustentable del Estado de Querétaro (SEDESU), or minister of sustainable development.

French aerospace giant Safran recently opened a new facility in Querétaro, Snecma America Engine Service, for the repair parts for CFM International’s CFM56 engine, destined for the U.S. market. This is the 10th Safran plant in Mexico, and it also will become part of the global supply chain for the LEAP engine used in the Boeing 737 MAX. The plant also will begin to supply parts to China’s Commercial Aircraft Corporation of China (COMAC), later this year.

Another state that has become a major aviation parts power is Coahuila, which shares its northern border with the middle of Texas’ southern border, about 150 miles from San Antonio, Texas. Alcoa, for example, is increasing its total investment in Ciudad Acuña to $30 million, including metal finishing, according to the Mexico-Now Aerospace Bulletin. Alcoa unit Howmet de Mexico is supported through a Del Rio, Texas office.

Similarly, General Electric subsidiary Unison Industries recently opened a $2 million new plant in Saltillo, Coahuila, for accessories and control systems will be produced. GE has also opened a new on-wing repair facility in Rio de Janeiro.

Other key aerospace manufacturing centers in Mexico are located in Baja California, Chihuahua and Nuevo León States.

Regarding other aviation manufacturing and service hubs, Cooper forecasted that the global Maintenance, Repair and Overhaul market would grow from $67 billion in 2015 to $100 billion by 2025. By section, the airframe represents 17 percent of all MRO service by value, engines about 47 percent, other components 19 percent and line service 18 percent. Latin America’s share of the MRO market is now about $3.2 billion, with a 7.3 percent growth rate, the forecast indicates.

Among other MRO service hub locations in Latin America is El Salvador. Canada’s Aeroman built $60 million worth of new hangars in Comalapa, Chalatenango Department, over the past few years to service six aircraft simultaneously. Ernesto Ruiz, the company CEO, told local press that Aeroman’s plans include additional capacity for aircraft maintenance over the next five years. The company estimated that it would hit two million man-hours at aircraft frame maintenance last year.

Similarly, AvioTrade, based in Miami, in September 2015 opened its first engine repair facility in the San José Aviation Cluster, in the Zaragoza, La Libertad Department, El Salvador, to repair the PT6 engine common in private aircraft. With commercial clients said to include Avianca, Aeroman, Latam, Copa, VRG, and American Airlines, the company now has plans for initial facilities in Brazil and Mexico.

And in Colombia, Avianca is building out its Avianca Aeronautical Center next to the José María Córdova International Airport in Rionegro, within the Antioquia Department of Colombia. The facility will handle two wide-body aircraft simultaneously.