On strengthening and localising operations in the aerospace sector To what extent is domestic steel production intended for the industry?
CHEIKH: Aeronautical operators that have established themselves in Morocco, such as Bombardier, Stelia and Safran, normally buy steel abroad. Even though the steel sector in Morocco largely recovered from dumping and is set to produce nearly 200,000 tonnes, aeronautical materials – whether they relate to aluminum or steel – are not composed of ordinary products, but rather of ionic steel that manufacturers still purchase abroad. By contrast, locally manufactured steel products are envisaged for the real estate sector and manufacturing industries.
We are aware that the value chain of our industry needs to be as integrated as much as possible with complete processes and know-how for its consolidation and sustainability. This is why in the Industrial Acceleration Plan we signed with the Ministry of Industry we agreed to target in priority companies that can fulfill the holes in the supply chain. Among these holes, we identified the need for an aluminum distributor. This would further prevent our operators from buying abroad because of the delay and the volumes, as well as the need to avoid operators’ stock. On the other hand, a material supplier installed in Morocco would enable operators to buy required materials on the spot, which would be much more convenient from a logistical perspective. Also, take the example of titanium suppliers, which are globally insufficient.
Nonetheless, installing a material supply base dedicated to the aeronautics sector is a prerequisite to growth. Thanks to the support of the government we were able to address a number of material suppliers, and Thyssen Krupp recently announced its decision to set up a facility in Morocco for material distribution, which will be operational September 2018.
What is your overall evaluation of the performance of the aeronautics sector?
CHEIKH: The aerospace industry is still evolving very slowly even though investors are increasing. The activity volumes have risen because the Moroccan aeronautics platform has become very competitive. The quality of its human resources is extraordinary and the sector is set to employ about 40,000 people by 2030. On a global scale, we can now observe three operating platforms: the Mexican platform for the US, Malaysia for Asia and Morocco for Europe.
At the same time, the more international aeronautics players arrive, the more the sector will be characterised by innovation. Hexcel, for instance, has brought back the composite model and is now installed in Casablanca. Thales has set up the group’s unique 3D facility in Morocco. With more than 115 aeronautics companies having settled in Morocco, we have become highly credible for the European platform and very competitive. Platforms, such as Bombardier or Stelia, apparently help to galvanise the sector and the installation of small and medium-sized enterprises (SMEs) has resulted in four aeronautics ecosystems in Morocco. Historically, ecosystems mostly revolved around manufacturing and assembly, including engine wiring, aircraft, maintenance, engineering or repair. In the aeronautics sector, Boeing now boasts the biggest ecosystem because of a deal signed with the Moroccan government. Today, aeronautics exports total $1bn and grew by 14% up to the end of August 2017, against 15% in 2015.
In 2018, following a decision made by Moulay Hafid Elalamy, the minister of industry, trade, investment and digital economy, we aim to focus on value-added activities and the installation of three new ecosystems, one for engines, one for composites and one for embedded electronics. Instead of changing the sector’s strategic direction, we are focusing on expanding Morocco’s new ecosystems, as they are bringing much higher value as well as integrated technologies. Aircraft today is increasingly electric and made with composites. In fact, we are creating an aerospace cluster dedicated to the environment as well as research and development, in order to support all sorts of innovative projects. After 2020 we aim to triple the number of jobs, double sectoral turnover and then double the rate of local integration to support Moroccan SMEs in order to attract nationals to invest in aeronautics.
How do you assess the incentives framework for aeronautical companies?
CHEIKH: Those who settle in Morocco are an anchor, given the capital system. Investors, however, generally do not invest only because they are given incentives. Such motives help, but are not the real reason for their anchoring. In fact, they are trying to find well-trained resources and an added value for their activities. The connectivity too, in terms of logistics, plays an important role and so does a country’s political stability. Morocco offers all of that and the inflation rate is balanced, so investors will not encounter any surprises from a financial point of view. Hence, financial incentives are not the main reason companies are attracted here, but rather the global business climate.
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