The Aerospace Industry Partners Meeting March 29, 2016 Which Costs - - PowerPoint PPT Presentation

The Aerospace Industry

Partners Meeting March 29, 2016

Which Costs More?

Boeing 747 Lockheed Martin F-22 Raptor $378 million $412 million

How Many Chevy Cruzes For One GE-90 Engine?

Approximate Cost: $20,000 1,200 Chevy Cruzes Approximate Cost: $24 million

Meeting Overview

• Aerospace Industry Overview
• Aerospace in NEO
• Aerospace Trends
• Opportunities for NEO

Meeting Objectives

• Become more knowledgeable about the aerospace

industry

• Learn about new technologies that can keep a

company competitive

• Be able to talk to a company about aerospace
• pportunities and how to get into the industry
• Learn about resources to connect aerospace

companies to in order to help them grow

Aerospace Value Chain

Determinants of Demand

Determinants of Demand

Commercial Aircraft Demand Expected to Increase

• Passenger demand is expected to

double in next 20 years

• Boeing and Airbus have a backlog of

12,400 orders for aircraft estimated to be 9 years worth of production

• Commercial production will increase

30% over next decade

Global Military Aircraft Demand Shrinking US Market but Global Growth

• Department of Defense is projecting $86

billion in cuts from 2016-2019 for military aircraft

• U.S. companies are relying more on exports

with domestic demand shrinking

• Military demand will be steady outside of the

U.S.

• Tensions in Asia are leading to growth in

Asian air defense forces

Growth in Emerging Markets

• Asia expected to be the largest air travel market
• ver the next 20 years

Strong Projected Production Growth

Production also Influenced by Replacement Need

Changing Economics of Commercial Air Travel

• Fuel efficient aircraft like the

Boeing 787 are changing the economics of air travel making new flights viable

• The best ways for airlines to

bring in more customers is to create new routes and provide more frequent departures

The Aerospace Industry

Ohio and Northeast Ohio

Aerospace in

• 1st ranked U.S. supplier state to Boeing and Airbus
• 1st Industry size ranking for 2015 (PwC)
• 3rd Aerospace Manufacturing Attractiveness Ranking 2015 (PwC)
• 26,521 Aerospace workforce (private)
• 528 Aviation and Aerospace firms

JobsOhio Strategy

• Manufacturing Focus

– Unmanned aerial systems – Systems, components, and parts manufacturing – Commercial space – Airline Services, MRO

• Technology Focus

– Additive Manufacturing – Advanced Materials – Automation/Internet of Things/Intelligent Machines

• Aerospace Sales and Outreach

– Aerospace sales campaign – Attend major international aerospace shows – Strategic BRE outreach to top aerospace companies in Ohio

Aerospace in NEO

• NEO Aerospace Employment: 9,745

– (3.6% of manufacturing workforce)

• NEO Aerospace GRP: $2.5 billion

– (6.1% of manufacturing output)

• 180 NEO Aerospace Manufacturing Companies:

Aerospace in NEO

5,405 5,479 5,529 5,258 4,946 5,137 5,473 5,286 5,182 5,791 5,527 3,731 3,831 4,023 4,069 3,748 3,932 3,812 3,911 3,953 3,954 3,962

1,000 2,000 3,000 4,000 5,000 6,000 7,000 2006 Jobs 2007 Jobs 2008 Jobs 2009 Jobs 2010 Jobs 2011 Jobs 2012 Jobs 2013 Jobs 2014 Jobs 2015 Jobs 2016 Jobs

Aerospace Employment in NEO 2006-2016

Navigational, Measuring, Electromedical, and Control Instruments Manufacturing Aerospace Product and Parts Manufacturing

Aerospace in NEO

1,422.2 1,679.6 1,444.7 1,424.7 1,297.5 1,403.6 1,228.4 1,338.6 1,470.1 1,541.2 1,603.0 622.2 730.6 842.8 551.6 625.8 577.9 747.9 784.7 769.5 884.7 941.0

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ Millions

Aerospace GRP NEO 2006-2016

Aerospace Product and Parts Manufacturing Navigational, Measuring, Electromedical, and Control Instruments Manufacturing

Aerospace Supply Chain in NEO is 3x as Large as the National Average

Industry 2015 Location Quotient

Plastics Product Manufacturing 2.5 Iron and Steel Mills and Ferroalloy Manufacturing 4.2 Alumina and Aluminum Production and Processing 2.7 Foundries 3.8 Forging and Stamping 4.8 Architectural and Structural Metals Manufacturing 1.2 Spring and Wire Product Manufacturing 1.3 Machine Shops; Turned Product; and Screw, Nut, and Bolt Manufacturing 2.9 Other Fabricated Metal Product Manufacturing 3.6

Aerospace in NEO NEO Aerospace Companies

Alcoa 50,000 Ton Press

• $100 million rebuild completed in 2012
• Produces parts for aircraft including the F-35 Joint

Strike Fighter

Aerospace in NEO Nextant Aerospace

• More than 40 400XTIs remanufactured
• Nextant’s backlog for the 400XTI represents a

quarter of the available fleet of about 600 jets

• Nextant is planning future models

Aerospace Workforce Top 20 Occupations

Occupation 2015 Jobs Median Hourly Earnings Northeast Ohio Median Hourly Earnings United States Wage Difference NEO vs USA 2015 Location Quotient

Aerospace Engineers 895 $51.02 $51.57 ($0.55) 0.92 Electrical Engineers 1,853 $36.99 $44.65 ($7.66) 0.76 Electronics Engineers, Except Computer 1,028 $39.77 $46.80 ($7.04) 0.54 Industrial Engineers 3,946 $35.94 $39.79 ($3.85) 1.19 Mechanical Engineers 4,002 $33.92 $40.36 ($6.44) 1.05 Engineers, All Other 2,613 $40.56 $46.07 ($5.50) 1.46 Electrical and Electronics Engineering Technicians 1,042 $25.45 $28.71 ($3.26) 0.55 Engineering Technicians, Except Drafters, All Other 1,397 $28.62 $29.93 ($1.31) 1.46 First-Line Supervisors of Production and Operating Workers 11,517 $25.48 $26.99 ($1.51) 1.40 Aircraft Structure, Surfaces, Rigging, and Systems Assemblers 93 $23.83 $23.92 ($0.09) 0.17 Electrical and Electronic Equipment Assemblers 3,258 $13.25 $14.62 ($1.37) 1.14 Electromechanical Equipment Assemblers 1,010 $15.21 $15.97 ($0.75) 1.55 Team Assemblers 21,796 $14.50 $13.95 $0.55 1.37 Assemblers and Fabricators, All Other 6,638 $12.58 $12.95 ($0.37) 1.98 Computer-Controlled Machine Tool Operators, Metal and Plastic 5,855 $17.15 $17.84 ($0.69) 2.85 Cutting, Punching, and Press Machine Setters, Operators, and Tenders, Metal and Plastic 8,426 $14.93 $14.98 ($0.04) 3.22 Machinists 11,340 $18.04 $19.38 ($1.34) 2.09 Multiple Machine Tool Setters, Operators, and Tenders, Metal and Plastic 5,037 $15.30 $16.50 ($1.20) 3.75 Tool and Die Makers 4,355 $25.63 $24.27 $1.36 4.10 Inspectors, Testers, Sorters, Samplers, and Weighers 10,600 $16.75 $17.27 ($0.52) 1.55

106,701 $20.20 $23.53 ($3.34) 1.90 Total

Engineers Production

NEO Aerospace Education

• Case Western Reserve- Aerospace

Engineering

• Cleveland State- Mechanical Engineering

including Aerospace

• University of Akron- Aerospace Systems

Engineering

• All three universities also have strong programs

in materials used in aerospace

Aerospace Resources in NEO

NASA Glenn

• 1568 Civil servants and 1560 contractors in Cleveland
• NASA Plum Brook- 6500 acres and 115 employees
• $567 million budget in 2014 with 50% dedicated to

aerospace

• NASA is pushing its scientists to look for more technology

transfer and commercialization opportunities

NASA Glenn Core Competencies

Glenn Service Offerings to Non-NASA Community

Ohio Aerospace Institute

• Mission: Enhance Ohio’s aerospace

competitiveness through research and technology development, workforce preparedness, and engagement with global networks for innovation and advocacy.

• Services:

– Technology Roadmapping – Assessment tools – Proposal development – Project management Contact Ann Heyward Executive Vice President Phone: 440.962.3030 Email: AnnHeyward@oai.org

The Aerospace Industry

New Technologies and Opportunities for NEO

Aerospace Technology

OEMs are Pushing Suppliers to Invest in New Technologies

• Aircraft OEMs are demanding high standards of

production from their suppliers and companies that can not innovate and keep up with new technology will not be able to compete

• Competitive pricing pressures make the

competition fierce among suppliers

Aerospace Industry Trends Fuel Efficiency

• Fuel accounts for 30-40% of airline operating expenses
• Reducing weight and increasing engine efficiency are the

two main strategies used to reduce fuel consumption

• Low fuel prices recently have had an effect on fuel

efficiency driven sales but airlines are making long term decisions when purchasing aircraft and lowering fuel consumption is still important

Aerospace Opportunity for NEO Lightweight Materials

• Aircraft manufacturers

are increasingly using advanced lightweight materials like carbon fiber composites to reduce fuel consumption

• The Boeing 787 airframe

is made up of 50% composite materials

Aerospace Opportunity for NEO Increase Exports

• Ohio exports $5.3 billion worth of

aerospace goods each year

Country Aerospace Exports 2015

France $1,300,555,977 Canada $554,897,101 Brazil $451,445,425 United Kingdom $416,771,913 China $375,178,694 South Korea $196,883,569 Mexico $190,101,464 Germany $176,807,461

Aerospace Opportunity for NEO Increase Exports

Aerospace Opportunity for NEO Unmanned Aerial Vehicles

Aerospace Opportunity for NEO Unmanned Aerial Vehicles

• Predicted to double over the next decade (AIA)
• Still confusion over integrating UAVs into national air system
• Regulation of UAVs having trouble keeping up with technological

advancement

• There will be opportunities in airframe design but most opportunity

will be in software

Aerospace Opportunity for NEO Unmanned Aerial Vehicles Support Network

Aerospace Opportunity for NEO Commercial Space

• NASA is Focusing on deep

space missions and leaving the private sector to lead low earth

• rbit missions
• The goal is to build a strong

commercial space sector in the United States

• Leading commercial space

companies include Boeing and SpaceX

Aerospace Opportunity for NEO Additive Manufacturing

• Additive Manufacturing is helping aerospace

companies make parts lighter to meet fuel efficiency targets

• Aerospace is the perfect market for additive

manufacturing because of weight requirements, low production volumes, and high precision manufacturing

• Additive manufacturing using metal is most

applicable to aerospace but can be expensive to implement (Machine cost can be $1 million and up)

• Additive manufacturing can help a company

break into the aerospace supply chain

Aerospace Opportunity for NEO Additive Manufacturing

Help Companies Become a Part

• f the Aerospace Supply Chain
• The Quality management system for automotive (ISO/TS 16949:2009) is

similar to the Aerospace system (AS9100C)

• Companies must be certified AS9100C to supply to tier 1 and tier 2 aerospace

suppliers

• A revision is underway to the new AS9100D standard. This should be

complete in the next few months.

• NADCAP (National Aerospace and Defense Contractors Accreditation

Program) may also be required for certain parts as well as individual manufacturer standards

• MAGNET can help companies implement these Quality Management Systems

and achieve certification

Aerospace Summary

• Aerospace is projected to experience strong and steady

growth over the next two decades

• Ohio and NEO have a robust aerospace industry with many

leading companies and research institutions

• New technologies and emerging sub-industries are creating
• pportunities and challenges for aerospace companies.
• Economic developers have many resources available to help

companies overcome their challenges and take advantage of

• pportunities