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Aerospace Is In For A Bumpy Ride 

winter 2013, cover image jet

By Mark Kleszczewski

Economic partners are primed to assist companies in managing the fluctuations.

Despite economic difficulties, one bright spot over the last year has been the aerospace and aviation industry, where total sales for 2011 reached $218 billion, marking the eighth consecutive year of growth. However, due to downward economic pressures and budget uncertainties, not all market segments are expected to do as well in 2012 as they did last year. Military aircraft, space exploration and new program starts are expected to decline and light and medium jets remain an area of concern, though civil aviation focused on large commercial aircraft will likely enjoy an upswing. Many communities and regional clusters are actively targeting the sector, but the most successful ones are pursuing opportunities with a variety of strategies.

“Our industry is a leading job creator, a technical innovator — think GPS and the Internet — and provides the critical advantage to our nation’s security,” notes Marion C. Blakey, president and CEO, Aerospace Industries Association (AIA), in a recent public statement. “It’s important to realize that the decisions made in Washington have an enormous impact not only on our national security but on the bottom line and ultimately on the livelihoods of thousands of families across the country.”

Fasten Your Seat Belts, Turbulence Ahead

According to the AIA’s analysis, the U.S. aerospace industry’s positive trade surplus of $57.4 billion is the largest of any manufacturing industry. Thanks to strengthened civil exports, it contributed $87 billion in export sales to the U.S. economy, up 12 percent, after falling the previous two years. However, while the military aircraft sector expanded by nearly 6.7 percent from 2010, with sales estimated at $66.51 billion, domestic purchases are predicted to drop by $1.5 billion and space sales by about $1 billion. Yet civil aircraft sales are expected to increase from $49.7 billion to $51.7 billion, notes Blakey, driven in large part by rising commercial air traffic and high fuel prices, which continue to spur world airlines to replace older, less fuel-efficient aircraft with newer models.

Like the automotive industry, aerospace employs a significant portion of the U.S. workforce base, yet its reach goes even deeper. Deloitte Development LLC places total direct employment by aerospace and defense companies at more than 1 million workers, while Barr Group Aerospace estimates that aerospace and defense supports 2.9 million jobs.

Although the industry and its robust workforce are indeed a vital contributor to the economy, the AIA cautions that sequestration cuts — stemming from the failure of the deficit reduction supercommittee — could cost the industry dearly in the years ahead, with projected job losses in the hundreds of thousands and more than a million jobs at stake in the broader economy.

To bring attention to the issue, the trade group launched a new campaign last September to provide information about the industry, potential job losses and national security risks while budgets are being eyed for sweeping reductions. The campaign, titled Second to None, is a public education initiative aimed at ensuring that the U.S. aerospace and defense industry continues to lead the world.

Those in the field are also sensitive to these concerns for 2012 and beyond. “The big challenge if you have a defense industry is that you’ve got to be on your toes because of the cuts coming down from Washington,” says Barry Broome, president and CEO, Greater Phoenix Economic Council. “Just in Greater Phoenix alone we have several hundred companies in the aerospace, defense, avionics and aircraft space. We also do a lot in the maintenance, repair and overhaul sector and the interface between electronics and satellite technology is something we’re putting a lot of energy into as well. Defense contracts and national security are important drivers to this industry and I think we have to put a big focus on supporting and maintaining that.”

Pushing Forward

Despite the current uncertainty and challenges facing much of the industry, opportunities still abound and communities are ambitiously following suit, some literally from the ground up.

“When we started, we said that within 10 years we would have roughly 1,000 aerospace jobs,” says Joe Max Higgins Jr., CEO, Columbus Lowndes Development Link. “Today we have the Global Industrial Aerospace Park and an aerospace cluster anchored by Stark Aerospace, American Eurocopter and Aurora Flight Sciences, with more closings and announcements to come this year. Very few communities have the ability to offer as much as 7,500 acres where you could master plan a major industrial park, so we’re not limiting ourselves to just aerospace. We’ve also been working on $3 billion in prospects in everything from metals, composites and chemicals to automotive.”

Over in Arizona, where Greater Phoenix is home to nearly 300 aerospace companies including Boeing, General Dynamics, Orbital Science and Honeywell, long-standing ties to the industry are taking on new directions.

“We’ve been developing an Air Force lab in the city of Mesa and building a very compelling research strategy around the state university and the polytechnic institute, but we’re also starting to see a lot of interface between the aerospace sector and renewables, for example, in things like biofuels and jet fuel made of algae,” Broome explains. “There are going to be some very interesting technology exchanges ahead between our elite positions in the solar renewable and aerospace markets.”

Regions better known for other industries like oil and gas are also managing to prosper in the sector. A case in point is southwest Louisiana where industry heavyweight Northrop Grumman Corp. has a significant presence and aviation and aerospace is the fastest growing segment of the economy. The area is also an operational base for notable firms such as Era Helicopters LLC, the oldest commercial helicopter company in the country, and Aeroframe Services LLC — the largest Airbus maintenance repair and overhaul facility in North America, servicing the likes of US Airways, FedEx and Frontier Airlines. Part of their success is bolstered by skilled workers educated at Sowela Technical Community College, which offers workforce development and customized training in more than 26 preparatory programs.

In the Virginia to Florida aviation and aerospace corridor, areas such as northeastern South Carolina are growing in importance to industry companies, underscored by Boeing which chose North Charleston as its location for final assembly of the groundbreaking 787 Dreamliner.

“We sell into fixed wing and rotary aircraft manufacturers and see South Carolina as very accommodating and receptive to aerospace,” says Jay Tiedemann, COO, The InterTech Group Inc., parent company of TIGHITCO, Inc. “We see a lot of growth coming here on all fronts and are preparing for it accordingly.”

Last September, the company announced plans to locate a new manufacturing facility in Charleston County, with the initial phase slated for completion by later this year. Backed by training funds, job development credits and tax incentives, the $30 million investment is expected to generate 350 new jobs. Besides having a headquarters already in the area, the fact that the company’s customers are in proximity made it a natural fit, Tiedemann notes.

At the forefront of targeting the sector are groups such as the North Eastern Strategic Alliance (NESA), which markets a nine-county region in South Carolina and its competitive land and labor costs, extensive infrastructure and the nearby ports of Charleston, Wilmington, Georgetown and Savannah.

Local workforce initiatives such as readySC, a world-class training program offered through the state’s technical college system at no cost to employers, also allow the NESA region to service companies throughout the corridor spanning from Spirit AeroSystems in North Carolina, to the aviation companies in and around Washington, D.C., and into the Space Coast in Florida.

Preparing For Takeoff

“What you want from these companies is to make capital investments and create jobs and that requires a highly specialized set of tactical exercises when a company makes that decision,” Broome says. “There’s a real strong natural culture here for supporting this industry. So we do a lot of little things right that when we add them all up, it leads to a big impact.”

“We believe in aerospace,” Higgins says, “and think it’s one of the core industry sectors that are relevant and will continue to grow, especially when we come of out this funk at the federal level.”

Mark Kleszczewski is president and CEO of GoBusiness Group LLC and a freelance writer on critical business topics. He can be reached at mark@gobusinessgroup.net.

For complete details on the organizations featured in this article, visit:

Aerospace Industries Association


Columbus-Lowndes (Miss.) Development Link


Greater Phoenix Economic Council


North Eastern (S.C.) Strategic Alliance


Southwest Louisiana Economic Development Alliance


TIGHITCO, Inc. (The InterTech Group Inc.)


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About the author: Mark Kleszczewski

Mark Kleszczewski is president and CEO of GoBusiness Group LLC and a freelance writer on critical business topics. He can be reached at mark@gobusinessgroup.net.

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