PANAMA CITY, Panama—Aviation Week Network’s MRO Latin America event here came on the heels of recent U.S. policy changes that could significantly impact both regions’ aftermarket dynamics, such as proposed tariffs on Mexico, a crackdown on immigration to the U.S., and an FAA requirement for non-U.S. repair stations to perform drug and alcohol testing.
Regional stakeholders’ perspectives on potential impacts ranged from serious concern about business disruption to cautious optimism about how the shifting dynamics could provide certain benefits to MRO providers in the region.
On Feb. 3, the day before the conference began, the Trump administration agreed to pause its planned tariffs on Mexico for 30 days following a talk with Mexican President Claudia Sheinbaum. During a session on Feb. 4 about developing a stronger MRO market in Latin America, panelists were asked their perspectives on how tariffs and drug and alcohol testing requirements would affect business.
“I think it’s a bit too early to tell,” said Carl Glover, AAR’s senior vice president of sales and marketing for the Americas. “My Sunday afternoon was a pretty exhausting set of ‘what if’ scenarios being shared amongst the leadership and it was still too early to call. I think yesterday [Feb. 3] changed things again.”
U.S. stakeholders such as the Aeronautical Repair Station Association have argued against the FAA’s final rule that requires drug and alcohol testing in non-U.S. repair stations approved to work on U.S. aircraft, pointing out that “it is the right of every nation to set standards for its citizens” and calling the rule “a congressionally mandated solution to a problem that doesn’t exist.” However, some Latin American MROs seemed unfazed by the new policy, with Aeroman, Coopesa and Soisa Aircraft interiors all noting that they already perform regular drug testing.
Rafael Gomez Miaja, CEO of Mexican company MRO Iberoamerica, tells Aviation Week Network that he believes enforcing high standards such as this will help the region’s MRO market develop further. “I’m all for whatever practices improve safety and security, and that’s one of them,” he says. “As an owner and CEO, I believe that actually helps me increase that standard, because I stop being the bad guy, and it’s more of a regulation and compliance thing that we all need to do. So, technicians that don’t like [the new requirements] won’t have any options moving to the next shop.”
The U.S.’s recent crackdown on immigration, however, could shift labor dynamics. In recent years, MROs in regions such as North America and Europe have opted to tap Latin America’s qualified labor market to address workforce shortages. When the head of MRO at one Brazilian airline mentioned this trend during an MRO Latin America panel, his counterpart at a Panamanian airline joked that “Trump was taking care of that,” which received a hearty laugh from the audience.
Rimsky Buitrago, CEO of Costa Rican MRO Coopesa, said the U.S. exporting mechanics from Latin America is not sustainable, “especially now.” He added that Canada and Europe have systems in place to make it easier for highly skilled migrants to work there, “but the U.S. doesn’t have that, especially now [due to the political situation],” so it will be risky for Latin American workers and will likely stop, at least for a while.
Miaja says Latin American technicians legally working in the U.S. typically only stay for a few years due to the high cost of living, but he believes increased U.S. hostility toward the Latino community may drive more to leave—particularly any illegal immigrants working in lower-skilled jobs such as painting. “I think that’s going to worsen the labor shortage in the U.S. if they get deported or sent back to Mexico,” he says.
Miaja also expects that potential U.S. tariffs on Mexico will exacerbate the labor shortage. While he believes tariffs would likely have a higher impact on parts manufacturing than on MRO, “if the Trump administration is going to pull back some manufacturing activity into the U.S., I think that might worsen the labor shortage of technicians, because those jobs are going to compete directly with aviation technician jobs,” he says. “If those manufacturing facilities or jobs are getting frozen and pulled back into the U.S., there’s going to be more competition for those same people ... so that might be bad news for the MRO market.”
Jacobo Mesta, chief growth officer at Chihuahua, Mexico-headquartered Soisa Aircraft Interiors, tells Aviation Week Network that “the impact [of tariffs] is going to be huge.
“Whoever imports is the one that pays the tariff, so we’ve been in discussions of whether this tariff is tax deductible, if it’s not tax deductible, if it goes into the cost of goods or if it doesn’t,” he says. “There’s still a lot of debate on what happens with that 25% [tariff]. The biggest debate is what’s going to happen with the U.S. companies’ reaction to the Mexican companies to say, ‘We’re going to have to pay 25% of tariff. What are you going to do to mitigate that rate?’ Most companies don’t even make a 25% margin, so it’s not like you can just reduce 25% of your price.”
Mesta stresses that mitigating impacts on the aftermarket will require collaboration between companies. “Right now, we’re doing a lot of lobbying with the aerospace cluster and with the Mexican Federation of Aerospace Industry,” such as writing letters to U.S. congressmembers to explain “how many people are going to be hurt by this, what our sales are to the U.S., and how big the impact is going to be on sales and workforce,” he says.
Beyond the aerospace industry, Mesta notes that tariffs could also significantly hinder U.S.-Mexico trade from Mexico’s large mining, agricultural and automotive industries. “We should be focusing on how we can make the supply chain better. How can we reduce the prices instead of increasing them and increasing the inflation?” he says. “We are both our biggest commercial partners. I have no idea how [the Trump administration] thinks that inflation is not going to go up by doing this.”
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