Aerospace industry shifts manufacturing investment to US
Seattle
THE aerospace industry is shifting more manufacturing investment to the US after a decade in which production jobs in the sector flowed to China and other emerging economies, according to a new study.
Consultancy ICF International analysed more than 2,000 investment transactions made since 2000, and found 28 manufacturing investments in the United States from 2012 to 2013, compared with eight each in China and Mexico, and four in Brazil. A decade earlier, Mexico led the pack with 10 investments, compared with just six investments in the US.
ICF said that its data show a strong flow into China, India, Brazil, Mexico and other emerging markets until 2012. In the last three years, investment has shifted towards the US.
"The US at this point in time has become the hot spot in aerospace manufacturing," Kevin Michaels, a vice-president at ICF, said at the annual Pacific Northwest Aerospace Alliance conference this week. "Comparative advantage is a fleeting thing. Three years ago, it looked like everything was heading to China. Now that's changed."
Commercial aircraft manufacturers are under intense pressure to reduce costs within the supply chain to offset falling inflation-adjusted prices for plane tickets.
US aircraft manufacturer Boeing is moving more production inhouse to US plants, reducing the outsourcing used for the 787 Dreamliner. Rival Airbus is building an assembly line in Mobile, Alabama.
For example, Boeing found that a 787 air duct made near Seattle was being shipped to Italy, reboxed and shipped to the 787 factory in Charleston, South Carolina, to be installed.
"We unwound that," Kent Fisher, vice-president of supplier management at Boeing, said at the conference on Wednesday. "Now we have a direct relationship, and the part ships directly to Charleston."
Labour cost savings that prompted work to move offshore have narrowed as wages have risen overseas and companies in developed countries installed robots to automate production and reduce touch labour.
Different regions of the US are stepping up efforts to win aerospace investments. This year, for the first time, a north-west Florida economic development group is the primary sponsor of the Pacific Northwest Aerospace Alliance conference. Florida wants to recruit companies to build the aerospace industry in Florida, said Jennifer Conoley, economic development representative for Gulf Power Co.
"It was a way to get in front of the audience," Ms Conoley said of the US$15,000 sponsorship from Florida's Great Northwest, an association of groups representing the Florida panhandle.
The Florida panhandle region is surrounded by five major aircraft facilities, including Boeing, Airbus, Gulfstream and two Embraer SA plants, has 60,000 aerospace and defence workers, numerous military bases and more than 500 aerospace and defence companies.REUTERS
