Industry Focus: The Aerospace Industry

The numbers in the aerospace industry speak volumes:

Aerospace manufacturers produced $162 billion worth of gas turbine-powered aircraft in 2013, according to Peter Zimm, a principal with ICF International, a consulting firm that works in the aviation industry.

Zimm anticipates continued growth of 2.3 percent per year over the next decade.
The industry’s dominant manufacturers—Boeing and Airbus—each have eight-year production backlogs.

Passenger travel has increased 396 percent since 1981, according to Deloitte’s 2014 Global Aerospace and Defense Industry Outlook.

To be fair, the numbers are not quite as bright for the defense portion of the aviation sector. It has seen declines of about 2 percent annually since 2011. Taken as a whole though, aerospace is in the midst of significant changes thanks both to demand and new technologies. And neither will leave material handling untouched.

“Really high fuel prices are ensuring a lot of demand on the part of airlines to re-fleet with aircraft that are more fuel-efficient,” Zimm said. “At the same time, you’ve got historically low interest rates enabling the airlines to purchase the aircraft.”

So significant is this re-fleeting effort that ICF International anticipates about 40 percent of new aircraft production will go toward replacing old planes over the next decade. That’s double the historical average.

It’s not hard to see why: Deloitte reports that fuel costs now account for 31 percent of the total cost of operation of an aircraft—up from 13.6 percent in 2001. Newer planes are about 15 percent more fuel efficient than aging aircraft.

Replacement aircraft account for a significant portion of the increase in production, but not all. Increasing populations as well as the rise of the middle class—particularly in Asia—are making travel more accessible, which creates the need for more planes to fly more routes.

As production demands have increased, new facilities have been opened to help meet the demand. When Boeing opened its 787 assembly facility in Charleston, S.C., MHI member American Crane and Equipment Corporation (ACECO) installed a new crane there. Increased demand for the Boeing 777 brought an ACECO crane to new production lines in Everett, Wash. “Increased commercial airline production at existing facilities has resulted in many crane upgrades on existing systems to provide increased production capability and reliability,” said Bob Myers, ACECO’s project manager.

Click here to read the full article in MHI Solutions.

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