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Industry Trends

INDUSTRY FOCUS: Aerospace

Security, Customization and Cost-Effectiveness Are Critical in Aerospace Supply Chain

* By Sheryl S. Jackson *

The global aerospace and defense sector revenues grew by 2.4 percent to $674.4 billion in 2016, slightly above the estimated global domestic product growth of 2.3 percent, according to a report by Deloitte. Although commercial aerospace manufacturers have been the major driver in industry growth for several years, the defense sector is trending upward.1

“Defense spending has been suppressed in recent years with sequestration and spending caps set by the government,” explains Trevor Waddell, director of strategic research for the Aerospace Industries Association (AIA). “The next several years will likely see positive growth as Congress recently increased budget limits for defense spending.”

There is also a robust international marketplace for U.S. defense systems that will continue to increase as other countries seek to modernize and expand their defense capabilities, says Waddell. “Overall, the outlook for commercial aerospace and defense is positive.”

The U.S. aerospace industry employs 2.4 million people with 1.6 million of those employees working in the supply chain. According to AIA, exports going to foreign customers total $142 billion, with 58 percent of sales representing parts and components for maintenance, repair and overhauls.

Workforce challenges exist in all industries, but the aerospace industry relies on highly trained engineers and researchers to develop products as well as skilled employees to work on the manufacturing floor or to manage the supply chain.

“There are not enough engineering graduates to fill the needs of all industries, and there are not enough students who are interested in aerospace and defense manufacturing,” says Rusty Rentsch, vice president for technical operations at the AIA. “As other industries grow, there are more opportunities for students and it is increasingly competitive to attract qualified employees to aerospace and defense.” Even when candidates are available, aerospace has a requirement that other industries may not. “For many positions in our industry, there is a requirement for security clearances. Currently there is a backlog of processing clearance, making it even more difficult for our industry to attract recent graduates” he explains.

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Leading manufacturing and supply chain executives agree that technology is the key to future success. As they digitize their supply chains they are generating more data than ever before, giving them the power to leverage that data to see their businesses in new ways and to make better decisions. These early adopters are creating real and measurable competitive advantage. When it comes to technology investment start small but think big. Build on your successes and learn from your failures. By investing wisely, you’ll create additional value in your supply chain and widen your advantage over the competition.

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