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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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According to the recently released 2018 MHI Annual Industry Report, “Overcoming Barriers to NextGen Supply Chain Adoption,” eight out of ten survey respondents believe these supply chains will be the predominant model within just five years. However, the report found that the adoption of some of these technologies was slower than originally reported when MHI started the annual report in 2014. The report cites three top barriers to adoption of these technologies: 1. Making the business case for NextGen supply chain investments. 2. Tackling the supply chain skills gap and workforce shortage. 3. Building trust and security in digital, always-on supply chains. This issue of MHI Solutions focuses on the adoption of these digital solutions, from best practices in robotics and artificial intelligence to blockchain and innovations in last mile delivery.

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