This is marketing research on the Aerospace industry and can include information on the background, market structure, definitions, competitors, trends and developments of aerospace and is related to other topics such as aviation, airlines, defense and flight.

Table of Contents

[edit] Background

Industry experts anticipate that the number of aerospace manufacturers will decline over the next few years through continued consolidation of companies. Key factors that will influence future global growth are rates of productivity, technological innovation, international competition, investment in research and development, improvements in aviation infrastructure, levels of defense spending, and support by governments for their aerospace industries. The high level of world sales and deliveries of aircraft and aerospace products in the late 1990s is expected to decrease to a more normal level after 2000 and remain stable over the period 2001–2004.

Fluctuations in the global economy affect the U.S. aerospace industry because of the importance of the large civil aircraft sector to that industry. (Large civil aircraft account for about a quarter of the total aerospace industry’s output.) Changes in passenger travel historically have been proportional to changes in GDP, and demand for large civil aircraft is directly proportional to demand for passenger travel (often with a lag of 3 to 4 years).

[edit] Market Structure

Consolidation among major aerospace and defense companies has proceeded more rapidly in the United States than it has in other regions of the world, such as Europe. After numerous mergers and acquisitions, three very large companies — the Boeing Company, Lockheed Martin Corporation, and the Raytheon Company — have come to dominate the U.S. aerospace sector. This consolidation has placed enormous pressure on aerospace component suppliers. As those suppliers reposition themselves, they are being forced to improve economies of scale and reduce costs. Recent mergers among major suppliers include Honeywell–AlliedSignal and Hamilton–Sundstrand. Consolidation has been a two-edged sword. On the one hand, it has boosted the U.S. aerospace industry’s international competitiveness, better enabling U.S. companies to win contracts overseas. On the other hand, it has increased pressure to eliminate duplicative jobs. Several merged companies have announced layoffs.

Consolidation of the European aerospace industry is accelerating as national governments and aerospace manufacturers acknowledge the need to integrate their defense and commercial aerospace sectors to reduce operating costs and become more competitive with their U.S. counterparts. European aerospace companies are adopting strategies to streamline processes and increase their flexibility in outsourcing aircraft components.

The number of aerospace manufacturing establishments decreased during the period 1997 to 2002. This was a consolidation period for industry players and occurred during the slump after the events of 9/11.

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Employment rates also suffered during this time as manufacturers refrained from adding new workers during this period. By 2002, aerospace employment had dropped below 400,000, but has since increased as aircraft orders increased mid-decade.

As indicated above, this is a highly concentrated industry. The business is not only capital intensive from a production standpoint, but requires significant investment in research and development to bring new aircraft types to market.

Concentration of Revenue by number of firms in the industry is as follows:


Total Number of firms       Revenue as % of all firms in the industry

     4 largest                              62.0%
     8 largest                              77.5%
    20 largest                              89.4%
    50 largest                              93.8%

[edit] Industry Definitions

• Airframe: Assembled structure of an aircraft, together with the system

components that form an integral part of the structure and influence strength, integrity, or shape.

• Avionics: Aeronautical electronics, including communications and

navigation equipment.

• Big LEO system: Satellites working together as a system in low earth

orbit that will provide all the services of Little LEO systems as well as mobile voice and fax capabilities.

• Block buys: A strategy used by satellite manufacturers in which they

purchase numerous launches at one time to reserve access to space and receive a price discount based on the volume of launches purchased. FAA Stage 3 regulations: Requirements that aircraft meet more stringent (lower) noise levels than Stage 2 aircraft as they approach and take off from airports; similar to Chapter 3 of the European Union’s regulations.

• General aviation aircraft: Fixed-wing aircraft used for regional airline

service, business transportation, recreation, specialized uses (such as ambulances and agricultural spraying), and pilot training.

• Geo-stationary earth orbit (GEO): The altitude (22,230 miles) at

which a satellite appears to be fixed at a specific spot above the earth.

• Global Positioning System (GPS): A system using 24 satellites, all of

which report precise time signals, along with location keys. Eight satellites are in each of three 63 degrees-incline-plane circular orbits at 11,000 nautical miles of altitude; the system is used for navigation and to determine positions exactly.

• Little LEO system: A system of low earth orbit satellites that will

provide mobile data messaging and position determination services on a global level.

• Low earth orbit (LEO): For the purposes of this chapter, any orbit

lower than geostationary earth orbit.

• Payload: The satellite, instrument package, or equipment carried into

space by a launch vehicle.

• Rotary-wing aircraft or rotorcraft: An aircraft that delivers lift from

a system of rotating airfoils; includes helicopters and the tiltrotor aircraft in the vertical mode.

• Unmanned aerial vehicle (UAV): An aircraft, whether fixed-wing

or rotary-wing, that is directly controlled [remotely piloted vehicle (RPV)] or programmed to do certain operations and return to base.

[edit] Market Metrics

The aerospace industry has recently recovered. As airlines returned to profitability after 2001, they placed significant new orders with manufacturers. Boeing has also been recently boosted by new orders for the 787 Dreamliner which will start deliveries in coming years. Other aerospace manufacturers have been assisted by continuing high defense expenditures.

Overall Industry

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Revenues for aircraft manufacturers has been erratic. The years for 2005 onwards have been strong as noted above, as airlines take deliveries of new aircraft from Boeing and other major manufacturers.

Aircraft Manufacturers

[edit] Industry Players

These are major players in this market, but it is not an exhaustive list of all key firms.

Revenues, Net Income and Market Capitalization are expressed in US$ Millions.

[edit] Recent Trends and Developments

The largest military aviation development program is the multi-role Joint Strike Fighter (JSF), which will be produced for the U.S. Air Force and Marines and the U.S. and British navies. Three thousand JSFs are planned for manufacture over several years to replace aging F-16s and other aircraft. Competition for the role of primary contractor for the JSF has been narrowed to Boeing and Lockheed Martin as the program enters the prototype and testing stages. With the United States accounting for 46 percent of the world’s inventory of tactical combat aircraft, the export potential of the JSF is envisioned to be high, although it may not be available for exportation before the year 2010.

Foreign competition would come largely from the newly developed Eurofighter Typhoon, Dassault’s Rafale or Mirage, and Russia’s MiG and Sukhoi combat aircraft. Other aircraft in various stages of development include Lockheed Martin’s multi-billion-dollar F-22 Raptor program to replace F-15s, large transports to replace the C-130s, and new bombers, helicopters, and refuelers.

[edit] Sources

• Most current US government sources

[edit] Related ResearchWikis

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