AT A GLANCE

  • The United States represents the largest aerospace market in the world, followed by France, U.K., Germany, and Canada
  • The top 20 U.S. aerospace and defense companies had combined revenue of $266.2 billion, an increase of 1.5% from the year before
  • The U.S. aerospace industry directly employs over 500,000 workers in scientific and technical occupations, and supports more than 700,000 jobs in related fields

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Dec 01, 2014

Industry Highlight: Aerospace Index

The United States represents the largest aerospace market in the world, followed by France, U.K., Germany, and Canada. In 2012, the U.S. aerospace industry contributed $118.5 billion in export sales to the American economy. The American economy dominates in commercial aircraft manufacturing, with exports of civil aircrafts, engines, avionics, and related components representing 88 percent of all aerospace exports.

The top 20 U.S. aerospace and defense companies had combined revenue of $266.2 billion, an increase of 1.5 percent from the year before. According to a study by the U.S. Department of Commerce, aerospace exports directly and indirectly support more jobs than the export of any other commodity. The U.S. aerospace industry directly employs over 500,000 workers in scientific and technical occupations, and supports more than 700,000 jobs in related fields.

Aerospace Employment, 2013

Aerospace Employment, 2013

Source: AIA

The DCR TrendLine Aerospace Employment Index reveals that the aerospace industry employment as a whole has an interesting trend of a two-year cycle of ups and downs since 2006, excluding a steep dip in mid-2008 due to major events. Examining the current trends reveals that for the next two years, aerospace employment will continue to increase by six to eight index points. The Aerospace Industry Association (AIA) also expects sales to increase by 12 billion dollars for 2014.

DCR TrendLine Aerospace Employment Index

DCR TrendLine Aerospace Employment Index

Workforce Challenges for the Aerospace Industry

The Aerospace Industry Association (AIA) says that American aerospace workers are among the most highly productive and skilled workers in the world. The growing global market for aerospace production requires a large supply of workers in science, technology, engineering, and math (STEM) disciplines, and workers with specific manufacturing skills.

The industry faces challenges in filling job openings due to this high reliance on workers with the right technical skills. Currently, approximately 300,000 U.S. students graduate every year with bachelors or associates degrees in STEM fields, a figure that needs to be raised by one-third to meet industry needs.

Further exacerbating the workforce challenge is the aging population of aerospace industry workers. The AIA found that in 2007, almost 60 percent of U.S. aerospace workers were aged 45 or older, and currently 9.6 percent of the industry is eligible to retire. Experts predict that by 2017, 18.5 percent of the industry will be eligible to retire. A study of the aviation workforce in 2012 by Aviation Week found that the U.S. aerospace and defense industry had lost 56,000 employees in 2012, yet only hired 28,000.

“If we look at the demographics of our workforce across Boeing and much of the aerospace industry, about 50 percent of our top engineers and mechanics will be eligible to retire over roughly the next five years.” ~Dennis Muilenburg, President and COO of Boeing Co.

The AIA is also concerned about the lack of diversity in the industry, stating that the industry is trying to develop programs to address hiring and retention of women and minorities.

The Global Aerospace Market

According to a recent outlook report from The Boeing Company, there will be a global demand for 35,280 new jet aircrafts from 2013 to 2032 at a value of $4.8 trillion. This accounts for an average of over 1,700 new aircrafts per year, a 40 percent leap from production in 2012.

Much of this growth is due to demand in the Asia Pacific region, with the CAPA Centre for Aviation forecasting that the area will take delivery of 12,820 new airplanes in the next 20 years. By 2031, experts estimate that 32 percent of global airplane passenger traffic will be from Asia Pacific.

Global Aircraft Demand, 2013 to 2032

Global Aircraft Demand, 2013 to 2032

Source: The Manufacturing Institute

Emerging aircraft manufacturing industries in China, Canada, Brazil, Russia, and Japan, are expected to increase their share of the global commercial aviation industry.

”For the time being, foreign aircraft programs still need Western products. As more joint ventures and outsourcing occurs in emerging markets, with technology transfer, in five to 10 years we’ll see more intense global competition. So, we need to get serious on all the fronts – including innovation and talent – to maintain our global leadership.” ~Karl Hutter, COO of Click Bond, Inc.

Global Aerospace Employment

Global Aerospace Employment

Source: World Economic Forum

The Impact of Aircraft Manufacturing on the U.S. Economy

An analysis by Deloitte on the aerospace industry found that a new aircraft assembly plant has the potential long-term annual impact of up to $1 billion on a local economy. A new aircraft assembly plant is expected to add $400 million to $600 million in annual net value by itself, and to increase employment with a projected 1,000 annual direct hire employees and 1,500 annual indirect employees, for an annual employment payroll of $147 million. Deloitte also predicts a $300 million to $400 million annual net increase in demand for local goods and services due to a new plant. Finally, construction of a new assembly plant would create a demand for approximately 3,000 construction jobs.

Aerospace Manufacturing Plant Hourly Earnings

Aerospace Manufacturing Plant Hourly Earnings

Source: AIA

Boeing’s Move

Boeing recently announced plans to shift the majority of its defensive services and support work out of the state of Washington to other U.S. locations. The company plans to move as many defense jobs as possible to its booming commercial operations. The transition of approximately 2,000 jobs is expected to take three years to complete, and most of the work will be relocated to Oklahoma City and St. Louis, with a smaller share of work going to Jacksonville, Florida, and Patuxent River, Maryland. In response to declining U.S. defense spending and increased competition, Boeing is looking to remove $2 billion in costs from its defense business.

The state of Washington received a $4.3 million grant to help defense suppliers transition to other industries.

“The decision to consolidate these activities was difficult because it affects our employees, their families and their communities. However, this is necessary if we are going to differentiate ourselves from competitors and stay ahead of a rapidly changing global defense environment.” ~Chris Chadwick, CEO of Boeing Defense, Space and Security.

“We do not have a robust pipeline of young people with the right skills and training coming into the workforce.” ~Marion Blakey, CEO of AIA

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