The Aerospace Industries Association (AIA) has released its 2019 Facts & Figures: U.S. Aerospace & Defense report, which highlights an eight-year trend of sustained growth. This culminated in 2018 sales in excess of $929 billion and a trade surplus of nearly $90 billion. The industry trade group noted that this success was further underpinned by innovative manufacturing, which was felt across the industry’s supply chain. The aerospace and defense (A&D) sector grew to $459 billion in output, a 4% increase over the previous year.
Currently more than 2.5 million people make up the A&D workforce, and this includes 881,000 direct jobs as well as 1.67 million supply chain jobs.
“Our industry helped families and friends worldwide better connect by fulfilling the growing need for U.S.-built commercial aircraft,” said Eric Fanning, president and CEO of AIA, via a statement.
“We helped keep America and our allies safe by meeting the rising global demand for U.S. defense systems,” added Fanning. “We helped bolster American space exploration by building and supplying the space systems that allow both commercial and government space efforts to flourish.”
Industry Output
The AIA report noted how over the past decade numerous events have impacted international markets, including political gridlock in Washington, lack of budget agreements, and government shutdowns. Despite these “market-altering forces,” A&D’s total sales have still increased steadily each year. The trade group attributed this to a number of factors unique to the industry, including a rise in geopolitical threats resulting in increased spending on a global scale, and U.S. allies in foreign markets continuing to procure cutting-edge American technology.
Last year’s total sales of $929 billion was a 4.17% increase from the previous year, and this growth was substantial for the nation’s gross domestic product (GDP), with A&D contributing more than $375 billion to the United State’s GDP – representing 1.8% of the total GDP. More than $208 billion of A&D’s total contribution came as the result of the industry’s supply chain, which includes many components that make up final products.
A&D exports in 2018 amounted to $151 billion, which was an increase of 5.81% from the previous year, and while civil aerospace accounted for the majority of the exports, defense products still accounted for $19.5 billion. Overall, the American A&D industry saw a positive trade balance of $89.6 billion, with 2018 being the second highest year on record. Since 2010, A&D has also generated a steadily increasing trade surplus even as the overall U.S. trade deficit has expanded.
Research and Development on the Decline
R&D was cited as a key driver of A&D industry growth by the AIA, and historically the United States has been the world leader in R&D spending. Defense-related R&D accounted for more than one-third of global expenditures in 1960, and in the six-decades since, the U.S. government’s investment in R&D has steady declined. The Budget Control Act (BCA) of 2011 only exacerbated the issue, the AIA noted.
The law, which was designed to limit spending and lower the federal budget deficit, capped discretionary, non-military personnel related defense spending, and this has resulted in a spending decline from $81.8 billion in 2010 to $67 billion in 2015. However, America’s global rivals have actually significantly increased their respective R&D investments, and AIA noted China’s 72% increase in R&D expenditures since 2012.
Congress did reach a deal to avoid the BCA-mandated budget cuts in FY 2019 and FY 2020, and as a result the Department of Defense’s R&D budget did see growth of 29.1% from the previous year.
Job Opportunities in A&D
The AIA report highlighted how American A&D industry employment can offer both challenging and meaningful work and high wages.
The average wage and benefits for an A&D worker was $92,742. That is significantly higher than the average American worker salary of $49,389. For 2017, the industry paid nearly $237 billion in wages and benefits, which was a 7.72% increase from 2016.
In 2018, the A&D industry supported more than 2.5 million American jobs throughout the supply chain, and this was a 3.7% increase from 2017. There has also been a steady increase over the past decade, and A&D now accounts for nearly 2% of the nation’s total employment base, as well as 20% of the nation’s manufacturing workforce. Even in times of economic decline and recession, the A&D industry remains a positive and fundamental economic driver.
The AIA also forecast a strong showing for 2019, and noted that the end of sequestration would help provide a sense of stability for companies. A&D companies plan to hire 55,000 to 75,000 people or more in 2019, according to AIA, including traditional manufacturing, software, and models-based engineering.
Those in the A&D industry are also likely to stay with their employers more than those in the general U.S. workforce, and the report found that the industry’s attrition rate decreased to just 5.4%, compared to a national average of around 8%. In addition, young professionals working in the A&D industry reported a positive view of their job and industry, with 81% recommending an A&D industry career to friends and relatives.
One issue that the industry is seeking to overcome is that diversity has remained static, but the AIA found that there are now significant opportunities to increase diversity, as 55% of black students, 49% of Hispanic/Latino students and 48% of female students have expressed interest in a career in A&D. The industry is now taking steps to recruit for the workforce of tomorrow, and 83% of interns have accepted full-time offers, but internships could be offered sooner. A total of 72% of sophomore college students surveyed expressed an interest in A&D opportunities.
“Strengthening and expanding our industry’s workforce is and always will be a top priority,” added Fanning. “We must continue to find new ways to tap into all the country’s available talent and keep them in our industry if we want to remain the world’s leader and meet the challenges of the future.”
