“Thrilling” is the word KPMG uses to described the aviation market in its Global Aerospace & Defense Outlook report for 2016. “Change is everywhere – in new technologies and automation, in new markets and sectors, in new business models and connected platforms,” says Doug Gates, KPMG global head of aerospace and defence.
Consulting firm PwC ranks the top aerospace manufacturing locations in descending order as the US, Canada, the UK, Singapore, Switzerland, Denmark, Hong Kong, China, the Netherlands, Ireland and Finland.
Sweet home Arizona?
PwC ranks Arizona as the number one US state. The city of Tucson has experienced an increase in activity through the arrival of Raytheon Missile Systems, which relocated from Huntsville, Alabama. In addition to this, ballooning company World View Enterprises has contracts with two US federal agencies to launch satellite equipment and measure wind speeds from Tuscon’s Spaceport. In October, Vector Space, a micro-satellite space launch company comprised of new-space industry veterans from SpaceX, Virgin Galactic, McDonnell Douglas and Sea Launch, announced plans to locate its manufacturing facility at the 2000-square-metre Pima County Aerospace, Defense and Technology Business & Research Park in Arizona.
“While Vector’s eyes are focused on the stars, our home is in Arizona because we believe in its potential as a competitive tech hub,” says Vector Space founder Jim Cantrell.
Elsewhere in the US, growing numbers of global aerospace companies, such as Zodiac Aerospace, Airbus Helicopters, Finmeccanica, Rolls Royce and SpaceX, are calling Mississippi home. The reasons behind this are its low operating costs, a minimal tax burden, easy access to the rest of the US and international markets, and proximity to important military installations.
The Federal Aviation Administration (FAA) has selected Mississippi State University (MSU) as the location for its Unmanned Aerial Systems (UAS) Center of Excellence. MSU will lead 13 other universities in helping the FAA to research methods to integrate UAS into the national airspace.
Oklahoma has seen investments from a growing number of international aerospace companies over the past eight years, including ASCO Industries (Belgium), Rolls Royce Engines (UK), Lufthansa Technic (Germany), Ferra Engineering (Australia) and Mitsubishi (Japan). The state has also hosted more than 15 aerospace-focused trade delegations. In September 2016, it signed a memorandum of understanding with South Korea’s South Gyeongsang province based around collaboration and trade.
Contributing to Oklahoma’s success is its innovative workforce development programmes and Aerospace Engineering Tax Credit, which is the only tax credit of its kind in the US.
Florida is seeing a big boost in aerospace activity, the result of the US government ending the space shuttle programme. “Privatisation took hold and this led to rapid expansion and competition within the industry for the best talent,” says Destin Wells, business development manager at Enterprise Florida.
Among Florida’s strengths is its education push with regard to the science, technology, engineering and mathematics (STEM). Colleges such as Embry-Riddle Aeronautical University, the University of Central Florida and others provide a constant stream of STEM talent to the industry. “This talent is quickly snapped up by these businesses,” says Mr Wells.
Florida has seen a number of aerospace FDI projects of late. In 2016, French multinational Thales announced a $6.5m expansion in Orlando. In February, UK-based GKN Aerospace announced plans to locate a new $50m manufacturing facility in Bay County.
Also in 2016, OneWeb Satellites, a joint venture between OneWeb and Airbus Defense and Space, announced plans to build a $85m high-volume satellite manufacturing factory in Exploration Park outside NASA's Kennedy Space Center. Set to open this year, it will begin to deliver satellites in late 2017 and early 2018. The project received $20m in Florida state incentives. OneWeb founder Greg Wyler says the company chose Florida for its spaceport and the state's “deep bench of aerospace and engineering talent”.
OneWeb Satellites has launch contracts with Virgin Galactic and Arianespace. Some are expected to be fulfilled at the Kennedy Space Center, beginning in 2018.
Launch activity is also revitalising Florida’s Space Coast. Blue Origin, founded by Amazon CEO Jeff Bezos, has broken ground on a new rocket manufacturing facility and engine test centre in Exploration Park. Operations are expected to begin in December 2017.
Thanks to Virgin Galactic, Florida could realise economic opportunities with the UK's aerospace sector. A spaceflight bill is before the UK parliament regarding industry regulations.
UK figures suggest the country’s space industry is worth more than £13.7bn ($17.6bn), but that the country lacks the infrastructure for satellite launches. Virgin Galactic supports the spaceflight bill, and has successfully worked with US regulators.
Should the UK spaceflight bill be passed, Mr Wells believes many Florida businesses will be open to investment in the UK. “We would first likely see a number of smaller contractors accepting work with UK-based businesses, before any major moves take place. But these things can often spiral quickly,” he says.
Elsewhere in the US, significant M&A activity continues within the sector. In February, Sonaca Group, headquartered in Gosselies, Belgium, entered into a merger agreement with Gulfstream supplier LMI Aerospace of Savannah, Georgia. LMI will continue its operations in Savannah. Sonaca Group CEO Bernard Delvaux says the addition of LMI supports Sonaca’s vision of expanding its capabilities in the US.
Canada’s aerospace sector is comprised of about 700 companies. These include Promethean Labs, which recently located in Edmonton International Airport (EIA) as part of the Alberta Aerospace and Technology Centre (AATC). Promethean Labs will help Alberta’s 'smart economy' by supporting the forestry, mining and agriculture industries, as well as measuring greenhouse gas emissions with precision satellite data. Promethean Labs will launch its first satellite in late 2018.
The AATC is a joint venture by Canadian Helicopters, Canadian North, Edmonton Economic Development Corporation, the government of Alberta and EIA. As part of the AATC, Canadian North operates a 737 training simulator in the airport’s Cargo Village, HNZ Topflight operates a helicopter training simulator in the main terminal building, and the Alberta Motor Transport Association will begin construction of a new educational facility in the north part of EIA.
Thailand on the up
Singapore may be the leading aerospace hub in the Asia-Pacific region, but Thailand is establishing itself for full-service avionics. The country has realised $78bn in investments across five separate projects.
Bridgestone is investing $150m in constructing two new manufacturing plants in Thailand: one to produce new aircraft tyres, and one to produce retread aircraft tyres. Production is scheduled to begin in December 2019. Airbus is looking at U-Tapao airport as a future regional hub.
The Thai government recently approved its 15-year Aviation Industry Development Plan as part of its Thailand 4.0 economic development efforts to further develop the country’s aerospace sector and strengthen its position as a south-east Asian aviation hub. The plan offers investors incentives that are valid until 2032.