The aeronautics industry has a longhistory in Morocco. In the late 1950s, the national carrier Royal AirMaroc (RAM) established a maintenance business that laid thetechnological foundation for aeronautical parts processing. Yet it wasonly in the late 1990s that the sector started to develop into asignificant contributor to economic growth and employment, as a numberof leading French aeronautical companies identified Morocco as adestination to establish new production centres.
This trend has recently accelerated,with investment in the sector totalling some Dh900m ($103m) between2002 and 2005, resulting in the creation of 4300 jobs.
As a result of the intensifyingcompetition between the major global airplane producers, primarilyAirbus and Boeing, pressure has been put on suppliers to reduce costs.Competition is moving down the supply chain. To stay in the race,suppliers typically commit to a cost reduction of 2% to 3% per year intheir contracts with main airplane producers.
As a result, equipment suppliers arefollowing the global trend of locating their new production units inlow-cost regions. Suppliers from the EU, who chose to relocate, aremoving to destinations mostly around the Mediterranean and in easternEurope. One such company, the Safran group, an internationalhigh-technology outfit with 58,000 employees in over 30 countries andannual revenues exceeding $12bn, has established new businesses inMorocco, where it currently has some 1000 staff in five subsidiaries.
According to Hamid Benbrahim, Safran'snational executive for Morocco, the kingdom's competitive advantage canbe summarised in what he calls "the three Ps", whereby P stands forproximity.
From the point of view of theFrench-based producer, Morocco combines geographical proximity withlinguistic and cultural proximity - three crucial factors, especiallyfor medium-sized suppliers that do not have the necessary resources toadapt to different business and legal environments. Morocco is hencefocusing on attracting French suppliers, although officials insisteverybody is welcome.
In this respect, Benbrahim emphasisesthat beyond objective, rational criteria such as labour andtransportation costs, the decision to establish a business in a givencountry is based on a subjective appreciation of how practical,reliable and stable the location will be in the medium to long term.
In addition, with Morocco's authoritiescurrently focused on attracting foreign investment and expertise todevelop high value-added industries, savvy investors are finding veryfavourable conditions in the kingdom.
As an example of this, it took Aircelle,a subsidiary of the Safran group with annual turnover of around $1bn,no more than six months to launch its first production centre inMorocco. Aircelle drafted its business plan in January 2005, concludedthe investment convention with the government in March, and thenlaunched actual production in July.
Aircelle is investing a total of $23m inthe first stage of the project, phased over 2005-09, including $7.5m tobuild the plant and another $15m for cutting-edge equipment. Thecompany hopes to achieve export revenues of $38m by 2009.
Benbrahim underlined that Aircellebenefited from government incentives aimed at promoting strategicindustries, in the form of subsidies from the Hassan II Fund foreconomic and social development for the construction of the plant andthe training of local staff.
Other key players in the development ofthe Moroccan aeronautics industry include some 40 companies, amongwhich Labinal - another Safran subsidiary, which produces electriccables for both Boeing and Airbus - as well as EADS, Creuzet, DaherLhotellier, and the list goes on.
The industry has achieved a turnover of around Dh2bn in 2005 ($233m), and should reach Dh2.5bn ($292m) in 2006.
Morocco is sparing no effort to boost the sector's development, withthe creation of a dedicated 70-ha industrial park in Nouasser, next toCasablanca's Mohamed V international airport.
The park already features a trainingcentre in civil aviation, which is gearing up to develop aeronauticsengineering training, and is set to include a services zone, as well asa four-star hotel and restaurants.
Despite the favourable conditionsoffered by Morocco, players are pointing out that the long-term successof the sector will rest on the country's ability to train largernumbers of competent aeronautics engineers, while maintaining lowlabour costs. In this respect, while the development of specialisedtraining at the Nouasser technopark is seen as a positive initiative,it seems clear this will not be sufficient in the medium to long term,with insiders insisting on the need for Morocco to adapt its scientificand technical education system to the actual needs of the market.
While Morocco has made great strides increating favourable conditions for the development of the industry, itfaces the challenge of meeting the human resources demands of thisgrowing sector in tandem with maintaining a competitive cost base.
Source: Oxford Business Group
This trend has recently accelerated,with investment in the sector totalling some Dh900m ($103m) between2002 and 2005, resulting in the creation of 4300 jobs.
As a result of the intensifyingcompetition between the major global airplane producers, primarilyAirbus and Boeing, pressure has been put on suppliers to reduce costs.Competition is moving down the supply chain. To stay in the race,suppliers typically commit to a cost reduction of 2% to 3% per year intheir contracts with main airplane producers.
As a result, equipment suppliers arefollowing the global trend of locating their new production units inlow-cost regions. Suppliers from the EU, who chose to relocate, aremoving to destinations mostly around the Mediterranean and in easternEurope. One such company, the Safran group, an internationalhigh-technology outfit with 58,000 employees in over 30 countries andannual revenues exceeding $12bn, has established new businesses inMorocco, where it currently has some 1000 staff in five subsidiaries.
According to Hamid Benbrahim, Safran'snational executive for Morocco, the kingdom's competitive advantage canbe summarised in what he calls "the three Ps", whereby P stands forproximity.
From the point of view of theFrench-based producer, Morocco combines geographical proximity withlinguistic and cultural proximity - three crucial factors, especiallyfor medium-sized suppliers that do not have the necessary resources toadapt to different business and legal environments. Morocco is hencefocusing on attracting French suppliers, although officials insisteverybody is welcome.
In this respect, Benbrahim emphasisesthat beyond objective, rational criteria such as labour andtransportation costs, the decision to establish a business in a givencountry is based on a subjective appreciation of how practical,reliable and stable the location will be in the medium to long term.
In addition, with Morocco's authoritiescurrently focused on attracting foreign investment and expertise todevelop high value-added industries, savvy investors are finding veryfavourable conditions in the kingdom.
As an example of this, it took Aircelle,a subsidiary of the Safran group with annual turnover of around $1bn,no more than six months to launch its first production centre inMorocco. Aircelle drafted its business plan in January 2005, concludedthe investment convention with the government in March, and thenlaunched actual production in July.
Aircelle is investing a total of $23m inthe first stage of the project, phased over 2005-09, including $7.5m tobuild the plant and another $15m for cutting-edge equipment. Thecompany hopes to achieve export revenues of $38m by 2009.
Benbrahim underlined that Aircellebenefited from government incentives aimed at promoting strategicindustries, in the form of subsidies from the Hassan II Fund foreconomic and social development for the construction of the plant andthe training of local staff.
Other key players in the development ofthe Moroccan aeronautics industry include some 40 companies, amongwhich Labinal - another Safran subsidiary, which produces electriccables for both Boeing and Airbus - as well as EADS, Creuzet, DaherLhotellier, and the list goes on.
The industry has achieved a turnover of around Dh2bn in 2005 ($233m), and should reach Dh2.5bn ($292m) in 2006.
Morocco is sparing no effort to boost the sector's development, withthe creation of a dedicated 70-ha industrial park in Nouasser, next toCasablanca's Mohamed V international airport.
The park already features a trainingcentre in civil aviation, which is gearing up to develop aeronauticsengineering training, and is set to include a services zone, as well asa four-star hotel and restaurants.
Despite the favourable conditionsoffered by Morocco, players are pointing out that the long-term successof the sector will rest on the country's ability to train largernumbers of competent aeronautics engineers, while maintaining lowlabour costs. In this respect, while the development of specialisedtraining at the Nouasser technopark is seen as a positive initiative,it seems clear this will not be sufficient in the medium to long term,with insiders insisting on the need for Morocco to adapt its scientificand technical education system to the actual needs of the market.
While Morocco has made great strides increating favourable conditions for the development of the industry, itfaces the challenge of meeting the human resources demands of thisgrowing sector in tandem with maintaining a competitive cost base.
Source: Oxford Business Group