Aeronautical industry growing in Morocco

The Moroccan aeronautical industry has made significant strides over the past decade, with its industrial base growing from around 10 companies to over 100 today. The sector generated $1bn in turnover in 2013 and was the main source of employment for 10,000 people. Aeronautics exports accounted for 6% of total exports in 2013, up from 0.5% a decade earlier, and the list of major manufacturers present now includes Safran, Bombardier, Boeing and Airbus.

As one of the six key segments targeted for development under the 2008-15 National Pact for Industrial Emergence (Pacte National pour l’Emergence Industrielle, PNEI), the industry has emerged as one of the primary benefactors of the strategy. To encourage higher-value-added manufacturing, the government launched a new sectoral strategy in April 2014, known as the Industrial Acceleration Plan 2014-20 (Plan d’Accélération Industrielle, PAI). As a successor to the PNEI, the PAI will therefore have a direct impact on the future of the aeronautics sector and aims at forming productive ecosystems, or sectoral clusters. This will help to create synergies between subcontractors, suppliers and component providers.

Governance

Sectors that have experienced similar growth patterns in recent years, notably the automotive industry, also partly owe their performance to improved governance and organisation. In the case of aeronautics, the private sector industry group Moroccan Association of Aeronautics and Aerospace (Groupement des Industries Marocaines Aeronautiques et Spatiales, GIMAS) has played a significant role – in collaboration with the public authorities – in shaping the policies that govern the sector.

With more than 90 members, the association has helped lobby for favourable policy changes, while the government has provided support ranging from funding and land to infrastructure. “If we take the case of Midparc, for instance, the state makes land available, but it is up to sector operators, via the GIMAS, to develop and manage the area,” Adnane Loukili, partner at consultancy Mazars, told OBG. “This ensures operators better cost management.”

Midparc is a dedicated offshore industrial zone, inaugurated in Nouaceur, near Casablanca airport, in 2013. Spread over a surface area of 128 ha, the zone, estimated to have cost Dh900m (€97.9m), is designed to develop the local aeronautics industry. Fiscal incentives offered within this zone include a 100% tax exemption during the first five years of operations and a reduced rate of 8.75% over the following 25 years. Combined with a staunch commitment to develop local skills, these steps constitute some of the determining factors of the sector’s success.

Local Procurement

“Morocco needs to capitalise on the current opportunities that are favourable to the sector’s expansion,” Maria El Filali, managing director at GIMAS, told OBG. “Plane orders, whether to renew existing air fleet or to construct new aircrafts, have reached a historical peak.” An estimated 30,000 new aircraft are expected to show up in international order books through 2030.

Expanding the existing production capacity of domestic firms, both organically and through acquisitions, will be vital for Morocco to increase its share of trade, while new capacity will also need to be brought on-line. This will require the promotion of industry abroad through trade fairs such as the UK’s Farnborough Airshow and France’s Salon du Bourget. Maroc Export has also initiated the concept of supplier events, which are dedicated to a specific supplier with the aim of boosting local procurement. The first such event took place in June 2014 and was devoted to Safran, with two more expected to take place for each Boeing and Aerolia. “Major manufacturers are increasingly requesting more local integration in a bid to secure higher levels of procurement domestically,” El Filali told OBG.

The main purpose behind this is to eventually establish and access the entire value chain locally, by encouraging more suppliers to set up shop within Morocco, therefore reducing the need to import inputs and cutting handling, transport and warehouse costs.

Among those looking to build up their local activities, is Matis Aerospace, a joint venture between Boeing and Safran specialising in aeronautical cabling. In 2014 the firm announced plans to invest $6m in its Casablanca unit and grow its business by 40%, adding 400 jobs over the next three years. Astema, a subsidiary of French Exxelia, is investing €500,000 to raise its production capacity by setting up a new cable manufacturing unit in Casablanca. Airbus’s subsidiary Aerolia signed an agreement in July 2014 with the government to invest €40m to establish a production unit in Midparc for sub-assemblies. Moreover, the merger of Aerolia and Sogerma, also a Moroccan Airbus subsidiary, gave rise to Stelia Aerospace, which specialises in both aerostructures and fuselage equipment.

Newcomers

Newcomers include French AEMI which inaugurated a new aircraft component unit in Ouled Salah, 20 km from Casablanca, and a joint venture between French STTS (49.9%) and Royal Air Maroc (50.1%), which has seen the establishment of a new unit specialising in aircraft painting in Casablanca. The most prominent arrival in recent years, however, is that of Canadian Bombardier in 2013. “The arrival of Bombardier has broadened the opportunities for further collaboration with Canadian investors as well as other foreign suppliers worldwide, notably US-based UTC Aerospace Systems,” El Filali told OBG.

While French firms, established either as subsidiaries or joint ventures with Moroccan investors, retain the lion’s share of business, with media reports claiming that as many as 90% of foreign players in the sector are French, El Filali reckons this has dropped of late with the advent of other foreign brands.

Bombardier, which has set up shop in Midparc, plans to invest up to $200m by 2020. US-based Alcoa Aerospace also announced in July 2014 that it would invest some €4.6m in a production unit in Midparc specialising in fastening systems for the aerospace industry.

Nevertheless, further investment in attracting more sophisticated professions and developing technology sophistication in key segments such as defence, security and on-board electronic equipment would enable Morocco to cultivate more of a competitive edge. “The country will need to assert itself as a major player in composite materials and electronics, two segments which are likely to drive future demand,” El Filali told OBG. “To that end, Morocco will need to establish an environment conducive for business, notably through its commitment to form productive ecosystems under the PAI.”

Training 

Morocco has also taken steps to improve the quality and sustainability of its labour pool. The Moroccan Aerospace Institute (Institut des Métiers de l’Aéronautique, IMA) was established in Nouaceur in 2011 by GIMAS in partnership with the French Union of Metal Industries, the Moroccan government and the French Development Agency.

So far, the institute has trained up to 1500 people in activities as diverse as composites, sheet metal work and electronic systems. Training cycles usually last between six and nine months, and 99% of trainees are hired upon the completion of their courses. “Access to institutes such as IMA offers enterprises the opportunity to focus on developing their business, seek new markets and optimise their operations,” Loukili told OBG. “The sector owes part of its success to the development of such support mechanisms, which are highly attractive to potential investors.”

However, with a burgeoning industry and plans to double sector turnover by 2020, the need to expand capacity is pressing. Expansion plans, estimated to cost a total of around €2.5m, are under way and will bring the institute’s training capacities from its current 400 students to 800, and incorporate new specialties into its training programme. The country’s main public provider of professional training, the Bureau of Professional Training and Employment Promotion (Office de la Formation Professionnelle et de la Promotion du Travail, OFPPT) also embarked on specialised training in aeronautics in 2013.

In partnership with the national carrier Royal Air Maroc, the bureau launched the Specialised Institute for Aeronautics and Airport Logistics (Institut Spé cialisé des Métiers de l’Aéronautique et de la Logistique Aéroportuaire, ISMALA) in Casablanca at the end of 2013 to offer training in aeronautical maintenance. Estimated at a total cost of Dh72.2m (€7.86m), ISMALA saw its first intake of students graduate in June 2014. The OFPPT also invested in another training institute in 2013, the Specialised Institute of Applied Technology, this time based in the Tangiers Free Zone. Efforts by established sector players to partner with universities and engineering schools are also gaining traction, to the benefit of both students and employers.

In addition to this, Safran signed an agreement in June 2014 with the Ministry of Higher Education and Scientific Research and Rabat’s Académie Hassan II des Sciences et Techniques to allocate €1m over the next five years to develop technological research.

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The Report: Morocco 2015

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