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Morocco Targets High-Tech Inward Investment

Robert Bailey

Tuesday, 03 August 2010 10:51

Morocco is spreading its wings in order to attract more foreign inward investment into expanding opportunities in a range of industrial and service sectors. High technology enterprises, aerospace companies in particular, are being targeted as potential investors.

The government is keen to emphasise the country’s improving economic environment. These efforts were boosted in March this year when the Kingdom was upgraded to investment grade by rating agencies Fitch and Standard & Poors.

Fathallah Sijilmassi, general manager of the Moroccan Agency for Investment Development, told Global Arab Network that the number of aviation sector companies attracted to Morocco is increasing rapidly. More than 100 aeronautical companies now have a presence in Rabat, Casablanca, Tangier, Mohammedia, Bouskoura and Nouasser.

There are big economic advantages for a foreign company locating to Morocco and not just at the low-technology end of the market, Sijilmassi believes. He says that his country is competitive throughout the supply train with costs as low as one third those in Europe.

There has been growing interest from European aircraft manufacturers in Morocco since promotional efforts started at the Paris Air Show in 2009. These continued at Farnborough’s International Air Show in July this year.

EADS, Boeing, Snecma, Creuzet Indraero, Aircelle, Daher, Souriau, Labinal, Zodiac Aerospace, Safran Engineering and Le Piston Francais are among the aerospace companies that have located operations in Morocco.

Ahmed Reda Chami, Morocco’s Minister of industry, trade and new technologies who attended Farnborough told Global Arab Network that a European company with 10,000 employees, ranging from clerical workers to senior directors, would save about $363 million a year by moving its operation to his country.

The benefits of establishing factories in Morocco include lower labour costs and the proximity to European markets. Chami said his figures took into account labour costs, taxes and transportation.

Morocco is just nine miles from Europe across the Strait of Gibralter enabling just-in-time deliveries to European countries. Logistics infrastructure is being steadily improved with Tangiers port poised to become the largest transportation hub in the Mediterranean.

Most of Morocco’s aerospace companies set up in the last five years Growth has been rapid. The various enterprises had a turnover of more than $500 million in 2009 and now employ more than 8,000 people. Chami expects that the new sector will provide around 15,000 jobs by 2015.

The Moroccan Space and Aeronautical Industries Group (GIMAS) says that production and assembly of equipment and systems, wiring, electronics, production of composite structures and provision of engine and aircraft maintenance, tooling and machining and other engineering services is being steadily extended.

The country’s bourgeoning aerospace sector is likely to be enhanced by the creation of the Moroccan Aeronautical Institute later this year. The institute is designed to provide a steady stream of qualified technicians, operators and middle management personnel. It is being established with support from the French metal industries organisation Union des Industries et des Metiers de la Metallurgie (UIMM).

Morocco also offers investors located in its free zones a five-year break from corporation tax thereafter after the rate is fixed at 8.75 per cent. Grants are also available for up to 10 per cent of investment costs from Morocco’s King Hassan 11 Fund. Crucially, the government promises comprehensive legal guarantees for investors’ intellectual property warranties

Europe’s aerospace manufacturers are also being attracted to other parts of North Africa. Tunisia now has some 43 plants employing 2,400 workers serving the sector. French engine components manufacturer Figeac Aero is outsourcing lower-value manufacturing to a new subsidiary in Tunisia, which will begin production in September and expected to be employing 250 people by 2012.

The company is among a cluster of aerospace enterprises that have been attracted to operate around a plant opened by Airbus’s subsidiary Aerolia in the M’Ghira aeronautical zone near Tunis. Aerolia, which produces nose fuselage sections for the full range of Airbus aircraft, has invested $10 million in its Tunisian operation.

Figeac Aero founder and president Jean-Claude Maillard told Global Arab Network “with Tunisia we are planning to have the best production organisation. It is a global industry and most of my competitors can deliver the right product at the right time. We want to do it at the right price too.”

Morocco’s investment chief Sijilmassi acknowledges that other low-cost locations including those in Eastern Europe, Mexico and some Asian countries are likely to provide keen competition.

However, he believes that Morocco’s winning card is his country’s availability of a skilled and motivated workforce and not least its close proximity to key aerospace markets in Europe. These are advantages that can be built upon, he believes.

Global Arab Network

Robert Bailey is Global Arab Network consulting editor and writer specialising in the Middle East issues.

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Last Updated on Tuesday, 03 August 2010 11:35

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