Washington. The closure of factories in Mexico due to COVID-19 pandemic is hurting US defence firms and the Pentagon is urging that country to reopen vital suppliers.
As Mexico has not designated its aerospace and defence sector as essential, it’s disrupting the supply chain for the American defence industrial base, particularly aircraft manufacturers. Though little known, Mexico’s defence exports to the US and beyond grew mightily over the last 15 years as defence firms large and small opened production facilities there.
Speaking to reporters at the Pentagon, Under Secretary of Defense for Acquisition and Sustainment Ellen Lord said she discussed the problem with US Ambassador to Mexico Christopher Landau. She was planning a letter to Mexican Foreign Affairs Minister Marcelo Ebrard, she said, to ask that he, “help reopen international suppliers there.
“These companies are especially important for our US airframe production,” she said.
The pandemic has raised broader questions about America’s dependence on global supply chains, particularly its reliance on China for key medicines and supplies. A Pentagon task force set up to monitor COVID-19′s impact on military suppliers found “several pockets of closure” linked to “international dependencies,” Lord said.
“Mexico right now is somewhat problematical for us but we’re working through our embassy, and then there are pockets in India as well,” Lord said.
More broadly, only small fractions of the Pentagon’s suppliers in the US have closed due to the new Coronavirus and distancing measures imposed to fight its spread, but the aviation, shipbuilding and small space launch subsectors have been hardest hit by disruptions from the virus, Lord said.
The Pentagon is using US$250 million from last month’s emergency stimulus funding to bolster defence firms, and it will funnel another US$750 million to medical resources.
The Department of Defense is also working with the White House budget office to request “billions and billions” of dollars in future fiscal packages to cover schedule delays, accelerated progress payments and other costs, Lord said.
A Pentagon spokesman declined to provide details about the products and companies impacted by the Mexican factory closures, and said Lord’s letter to Ebrard was not being shared publicly because it contained sensitive information.
Mexico’s growth was fueled by its lower manufacturing costs, duty-free access to markets through the North American Free Trade Agreement, a Bilateral Aviation Safety Agreement with the US and by Mexican government subsidies and workforce development efforts.
According to the Mexican Federation of Aerospace Industries, or FEMIA, Mexico’s aerospace exports rocketed from US$1.3 billion in 2004 to US$9.6 billion last year. Lizcano said Mexico manufactures everything from avionics, to landing gear and fuselages, and it’s in the top 10 overseas suppliers to the US aerospace and defence sector.
Mexico’s Labour Department said this month that the country had lost 346,748 jobs since mid-March due to the economic impact of the new Coronavirus.
