Mexico's Aerospace Industry Conference, May 2013

Mexico – The Logical Choice for Aerospace
Soft Land Your Project with a Shelter
Las Vegas, Nevada
May 24, 2013
Tony Vernaci

Setting Up Today’s Discussion
• A Strategy Based on Growth Objectives
 Chasing Low Cost is Not a Strategy…It’s
an Initiative
• Identify & Break Down the Critical Pieces
• Understand Your Core Competencies
• How to Have a Successful Execution
• Community Consideration
• Pitfall to Avoid
Copyright Global Advantages 2013
Strictly Private & Confidential
Making the Strategic Decision for Mexico

Development of a Strategy
Identify the Critical Pieces & Sequence of Events

Key Considerations
Business
Model
Operation
Labor
Suppliers
Import/Export
Ability to Support
Business
Environment
Regulatory
Business Incentives
Tax & Duties
Legal Entity
License & Permits
How We Compete
Where Will Our Intellectual Property be Safe?
Market
Regions
Customers
Products
Channels
Where We Compete

Looking at the Big Picture
Regions
Customers
Products
Channels
Market
Where We Compete

Key Players in the Market
Regions
Customers
Products
Channels
Market
Where We Compete
Proximity to the Customer Significantly Enhances Your Opportunity

Commercial Aircraft
Regions
Customers
Products
Channels
Market
Where We Compete
12030
7760
7290
3270
2510
1140
2012-2031 Commercial Aircraft
Demand = $4.5 trillion
Asia-Pacific
Europe
N. America
M.East - Africa
L. America
CIS
Source: Boeing
New aircraft 2012-2031 deliveries in the 20-
149 seat segment will reach 12,800 units
generating $630 billion in sales revenues.
Embraer 2012-2031 market outlook projects
6,800 new jet deliveries of the 30-120 seat
segment valued at $315 billion in sales

General Aviation
Regions
Customers
Products
Channels
Market
Where We Compete
49.7%
11.5%
18.1%
15.2% 5.4%
2012 General Aviation Sales
N. America
L. America
Europe
Asia-Pacific
M.East - Africa
Source: GAMA
Valued @ $18.9 billion
US Built = 70% ≈ $13.2 billion
Tremendous Aftermarket Opportunity - 223,000 Aircraft
Based in US w/25 Million Annual Flight Hours Source: GAMA

Labor Benefits
“A report by a chief economist for Bank of
America Merrill Lynch this week estimated that
Mexico's labor costs are now 19.6% lower than
China's.” Source: USA Today – April 5, 2013
“Mexican workers typically produce more per
hour than Chinese workers, and the proximity
to the U.S. means companies can ship faster
and often at a lower cost to American
customers.”
Source: The Wall Street Journal – September 16, 2012
Operation
Labor
Suppliers
Import/Export
Ability to Support
How We Compete

Cost of Labor Comparison
Source: US Bureau of Labor Statistics – December 19, 2012
Operation
Labor
Suppliers
Import/Export
Ability to Support
How We Compete
Wage + Benefits + Social Costs

Demographic Comparison
Mexico
0-14 years: 27.4%
15-24 years: 18.1%
25-54 years: 40.7%
55-64 years: 6.9%
65 years and over: 6.9%
Median Age: 27.7
USA
0-14 years: 20%
15-24 years: 13.7%
25-54 years: 40.2%
55-64 years: 12.3%
Median Age: 37.2
Mexico Has a Young & Talented Workforce
An Investment in Mexico is an Investment in the Next Generation
China
0-14 years: 17.2%
15-24 years: 15.4%
25-54 years: 46.7%
55-64 years: 11.3%
Median Age: 36.3
Source: CIA World Factbook

Source: Congressional Research Service
Movement of Goods
Operation
Labor
Suppliers
Import/Export
Ability to Support
How We Compete
• North American Free Trade Agreement
• Mexico has 12 Trade Agreements with 44 Countries
 93% 2011 Exports Went to FTA Countries
Solid Business Infrastructure
Pan American Hwy

Ease of Management
Operation
Labor
Suppliers
Import/Export
Ability to Support
How We Compete
Travel & Conduct Business in the Same Day
Direct Flights to Mexico from US & Canada

Policy Advantage
Business
Environment
Regulatory
Business Incentives
Tax & Duties
Legal Entity
License & Permits
How We Compete
• No local partner rules
• Resident Foreign Companies Retain 100%
Control
• Bilateral Aviation Safety Agreement (BASA)
• Tax Incentives Available
• Training Subsidies
• Favorable Land Deals
A Government Truly Working for Business

Cooperation
A Unique Collaboration That Does Not Exist Everywhere
Academia
Government
Industry

How to Execute…
Business
Environment
Regulatory
Business Incentives
Tax & Duties
Legal Entity
License & Permits
How We Compete
It Is Critical to Understand Your Core Competencies

Benefits of a Shelter
Rely on Professionals to Handle This So You Can Dedicate Your Time
& Resources to the Customer & Operations
Occupational
Health
Human
Resources
Payroll &
Benefits
Employee
Logistics
Coordination
Supplier Due
Diligence
Building Lease
& Maintenance
Import &
Export
Utilities
Operation
Tax & Fiscal
Compliance
Business
Permits
Environmental
Permits
Regulatory

What We Do
We Become an Extension of Your Team Filling the Void(s)
Provide executive support and resources to companies as they establish new
operation(s) or tackle large projects domestically or internationally. Such as…
Our
Process
Your
Voids
Pre-discovery
Executive
Visits
Locale & Site
Selection
Identify &
Apply for
Local
Business
Incentives
Site
Consolidation
Greenfield &
Brownfield
Construction
Obtain
Required
Permits &
Licenses
Set Up Legal
Entity & Bank
Accounts
Overall
Project
Management
Supplier
Identification
&
Qualification
Operationalize
Facility &
Business
Infrastructure
Hiring
Assistance for
Initial Team
Your
Operation

How It Works…
• Only required resources are deployed to your project as needed
• Fee structure is personalized to your specific needs and not loaded with
costly overhead
Resource Resource Resource Resource Resource Resource
Global Advantages
Suite of Resources
Low Overhead = Competitive Solution

Why Global Advantages
• Strong Network of Qualified On-Demand
Resources
• Avoid Permanently Staffing Up Internally for
Projects that are Temporary in Nature
• Alternative to Expensive Expatriate Costs
• Projects Managed on a Condensed Timescale
• Mitigate Conflicts with Competing Business
Priorities
• Recoup Global Advantages’ Fee Through
Business Incentives & Project Efficiencies
Conceptually Easy – Difficult to Execute on Your Own

Community Outreach
Making the world a better place, one project at a time.
100% of our projects connect with social needs around
the world wherever our work takes us. Such as…
Serving Community is Simply Ingrained Into the DNA of What We Do!
Disaster Relief
Building Hospitals
Building OrphanagesFresh Water Wells
Support can be provided
through -
• Financial Aid
• Business Mentoring
• Working on the Ground
• Awareness Campaigns
• Plus…

In Closing…
Be Careful Not to Get Caught Up In Analysis Paralysis!
Do Not Talk Yourself Out of Making the Right Decision

In Closing…
Thank You!
Tony Vernaci
President
Office: 248-266-5998
Web: www.globaladvantages.co
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Mexico's Aerospace Industry Conference, May 2013

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Mexico's Aerospace Industry Conference, May 2013