The global aerospace manufacturing industry is expected to grow at a healthy rate with the majority of the manufacturing work shifting toward the Asia Pacific region. Today Asia Pacific represents more than one-third of global composites manufacturing work. Countries in this region have increased their share in the global aerospace manufacturing market and the figure is expected to reach up to half of the total revenues by 2013.
New analysis from Frost & Sullivan (aerospace.frost.com), The Changing Face of Asia Pacific Aerospace Manufacturing Market, finds that the market earned revenues of over $45.12 billion in 2009 and estimates this to reach $84.26 billion in 2016.
"Attracted by low labor costs, global aerospace and defense manufacturers and contractors are shifting their manufacturing activities to China, India, Malaysia, Singapore and other Asian countries," says Frost & Sullivan Consultant Kunal Sinha. "Even after accounting for transportation and others costs associated with managing the supply chain, total savings of 20 to 30 percent can still be achieved."
The escalating cost pressures have forced the western aerospace manufacturers to shift majority of the labor intensive work to the low cost Asia Pacific countries. Offset policy which mandates the western manufacturers, from which majority APAC countries buys equipment, to set up shops in APAC countries, has fashioned new manufacturing space. Both these factors have resulted in the creation of wider range of aerospace manufacturing opportunities in the Asia Pacific region.
Although the outlook for the market is upbeat, there are some impediments reining in market progression. The complex aerospace global supply chain is impeding the growth of the aerospace industry. Numerous suppliers involved in the entire aerospace supply chain are dispersed throughout the globe. Inefficiency in supply relationship management has caused cost and time overruns, resulting in losses.
Additionally, the Asia Pacific aerospace manufacturing market is facing tough competition from the Latin American region, primarily Mexico and Chile. To reduce the supply chain risks, many North American aerospace giants have established their low-cost bases in Latin America. Unless the Asia Pacific countries provide substantial advantages through tax breaks or other concessions, this may prove to be a key restraint for future growth.
The performance of the aerospace manufacturing industry in APAC clearly shows that the engine and the component manufacturing businesses hold the maximum share of the revenues. Growing environmental consciousness has introduced new challenges in terms of efficient airframes and engines, and pressure has been intensifying on engine manufacturers to roll out more fuel-efficient and environment-friendly engines.
"Several countries in the Asia Pacific region have developed high expertise in the engine manufacturing segment," says Sinha. "Countries such as Singapore, China, and Japan are already in the top rung of the OEM ladder. Hence, more focus should be laid toward this segment to enhance the competitiveness of the aerospace manufacturing industry in Asia Pacific."
Airframes manufacturing is more labor-intensive compared to engines manufacturing, which is predominantly technology intensive segment. Hence, Asia Pacific countries must pay more attention to the airframes manufacturing segment, as it requires less expertise. Some of the other emerging areas in aerospace manufacturing are fleet recycling and conversion, green manufacturing, smart mergers and acquisition, particularly among the med-sized companies. Frost & Sullivan has noted an increasing trend in the aerospace industry to be vertically integrated to reduce supply chain risks and improve productivity.
Future business growth in APAC will be largely determined by the ability of manufacturers to offer excellent product quality and performance. Technical excellence must be at par with international standards. Striking partnerships will facilitate the seamless transfer of technological know-how and will put companies on the fast track to progress.
If you are interested in more information on this study, please send an email to Donna Jeremiah, Corporate Communications, at djeremiah[.]frost.com, with your full name, company name, title, telephone number, company email address, company website, city, state and country.
The Changing Face of Asia Pacific Aerospace Manufacturing Market is part of the Aerospace & Defense Growth Partnership Services program, which also includes research in the following markets: Asia Pacific human resource value chain analysis, Asia Pacific general aviation market, Asia Pacific critical infrastructure protection market, and Asia Pacific Aerospace procurement trends. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
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The Changing Face of Asia Pacific Aerospace Manufacturing Market / P3B8