Aerospace Industry: Is the Aerospace Industry Growing?
The aerospace industry is growing at a pace seen pre-COVID. Healthy stimulation within the industry sustained by commercial after-sales saw a full recovery of the industry after COVID-19. Currently, the global aerospace and defense industry’s size stands at an astonishing $856 billion. The aerospace industry’s growth will be sustained through trending technology for the years to come. Aerospace and defense manufacturing will bolster growth through the stabilization of the supply chain. Diversification of raw material suppliers coupled with digitization will bring the industry closer to surpassing pre-COVID growth.
This article will look at why the aerospace industry is growing, current trends, supply-chain issues, and how the industry recovered post-pandemic.
Why Is the Aerospace Industry Growing?
The aerospace industry is growing strongly, showing growth levels that are on par with pre-2019 levels. This new surge in growth prospects was spurred on by increased air travel. Greater numbers are taking to the skies, increasing the demand for new aircraft, aftermarket products, and services. In 2023, the aerospace industry witnessed a revival of product demand both domestic and international. Remediated backlogs and production ramp-ups will continue to stimulate growth in an industry that is vulnerable to global crises. The disruption from 2019 caused the industry to falter but created the opportunity for operators to rethink and re-evaluate how products and services were delivered.
What Are the Implications of the Aerospace Industry’s Growth?
The main implication of the aerospace industry’s growth is job creation. Sustainable job creation creates a stable market conducive to healthy economic growth. With a healthy prospect of growth, we can expect billions of dollars of generated revenue and associated innovation in various sectors. Major crises tend to change the aerospace industry through disruptions. Typically, the oil crisis saw a concerted effort by operators and suppliers to reduce fuel usage. This effort reduced the fuel burn by 40% since the 1970s. The fallout of the Gulf War on air travel meant that travel habits changed and new travel routes had to be opened. This led to new destinations for travelers. With this as the backdrop, the industry just went through a major disruption and is seeking new and innovative ways to stimulate growth.
What Are the Current Trends in Aerospace Manufacturing for 2024?
The global aerospace industry is constantly growing. As such, there is a need to constantly transform and innovate to support this growth. With the industry recovering and regaining momentum, new trends emerged as clear winners to carry the industry forward for the next couple of years. The seven major trends in aerospace manufacturing are:
- Additive Manufacturing: This allows for optimized material usage and increases the use of highly intricate components.
- Robotics and Automation: This not only includes the use of robots but also the use of artificial intelligence to optimize delivery.
- Digitization: A data-driven approach to decision-making with new data sources identified during the disruption.
- Sustainability: Not only reducing fuel usage but decreasing the weight of components.
- New Materials: With the advancement of new materials to be incorporated into aerospace components.
- Supply Chain: Supply-chain disruption mitigation, efficiency, and nimbleness. Supply-chain complexity is driving a multitiered approach to resolution.
- Supersonic Capability: On the back of additive manufacturing and new materials, the development of supersonic-capable commercial aircraft will soon be a reality.
To learn more, see our full guide on the Advantages of 3D Printing for the Aerospace Industry.
How Have the Aerospace Manufacturing Sector’s Revenue and Profit Margins Recently Changed?
The aerospace manufacturing sector is recovering from the lowest volumes of new aircraft sales since 2009. All sectors excluding freight forwarders and cargo airlines will recover, with leisure trips rebounding and driving this industry recovery. Freight forwarders, cargo airlines, and the defense industry were the only sectors that generated profit in 2020.
The global aerospace industry’s size and growth are a good indication of a healthy manufacturing sector. In Table 1 the global aerospace industry size is illustrated from 2019 to 2022:
| Metric | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
Metric Revenue | 2019 $754b | 2020 $681b | 2021 $714b | 2022 $741b | 2023 $856b |
Metric Operating Profit | 2019 $65b | 2020 $25b | 2021 $62b | 2022 $67b | 2023 - |
Metric Operating Margin | 2019 8.60% | 2020 3.60% | 2021 8.80% | 2022 9.10% | 2023 - |
Manufacturing in 2022 regained impetus, with the aerospace industry almost at pre-pandemic health, and with the war in Ukraine spurring defense manufacturing to grow. Figure 1 illustrates the largest defense manufacturers ranked according to revenue:
Largest defense manufacturers ranked according to 2022 revenue.
Image Credit: https://www.statista.com/markets/407/topic/939/aerospace-defense-manufacturing/#statistic4
Defense manufacturing increased sharply due to the expansion of existing national defense forces during times of tension. Raytheon, Boeing, Lockheed Martin, and Airbus are the four largest defense manufacturers. The industry as a whole grows or shrinks when these four companies experience growth or losses.
Boeing experienced sharp losses in 2019 due to COVID-19 and two Boeing 737 Max airplane crashes in 2018. Boeing is slowly recovering as illustrated in Figure 2. Figure 2 does not indicate the airplane delivery backlog of Airbus or Boeing, however:
Number of gross orders for Airbus and Boeing.
Image Credit: https://www.statista.com/markets/407/topic/939/aerospace-defense-manufacturing/#statistic2
Is Aerospace and Defense in the Same Industry?
Yes, aerospace and defense are in the same industry. The aerospace and defense industry consists of manufacturing, delivering, maintaining, and repairing airplanes, spacecraft, engines, components, and equipment. Within this industry, you can focus on sector-specific markets. These markets can be divided into the civilian market and military market.
How Did the Pandemic Impact the Recovery of Aerospace Manufacturing?
The pandemic impacted the recovery of aerospace manufacturing on multiple levels. With the many disruptions experienced during these past couple of years, new data streams had to be consulted with more data for measured decision-making to keep up with changing demands. Revenue management systems were forced to rely on outdated demand curves and customer habits, which had drastically changed. These demand curves were also used to drive inventory stock, but the slope of these demand curves will change with the new data streams being consulted and will indicate current demand better. The rectification of the backlog of aircraft supply will align with increased air travel and will help bolster the recovery of the industry in conjunction with the defense sector. The industry experienced a major backlog increase in aircraft supply due to the labor shortages experienced during the pandemic. The recovery is an opportunity for the manufacturing industry to embrace digitization and smart factories to meet the demand, such as increasing shipments of engine components.
How Are Ongoing Supply-Chain Issues Influencing the Growth of Aerospace Manufacturing?
Ongoing supply-chain issues are keeping the aerospace manufacturing industry from reaching its full potential. The manufacturing industry revised production rates downward to adapt to the supply issues. During this slower period, manufacturers should focus on restructuring, adapting new technology, and increasing reliance on digitization benefits. Continued fragility and disruptions should be expected, the consequential increased cost might be carried by the end-user. The raw material shortage is still the main detractor in the supply chain and is expected to fully recover by 2024. Raw material reserves, long lead item stock, diversification of supply, and digitization of operations will position supply chains more favorably to service aerospace manufacturers moving forward from 2024 and onward.
What Impact Does the Commercial Aftermarket Have on the Recovery of Aerospace Manufacturing?
The commercial aftermarket leads a continuing industry recovery. The impact of commercial aftermarkets on the recovery of the aerospace manufacturing sector cannot be overestimated. Aerospace industry growth is due to the highest-performing companies with significant exposure to the commercial aftermarket. Boeing and Airbus, both leading manufacturers, have significant commercial aftermarket revenue.
What Role Does the Demand for New Aircraft Play in the Growth of Aerospace Manufacturing?
The role of new-aircraft demand plays a crucial role in the growth of the aerospace manufacturing sector. The current demand for air travel identified the need to travel farther with less resources. This reduces cost and makes air travel a lot more sustainable than it was. As more affordable air-travel demand increases the requirement for technological advancement and more efficient manufacturing techniques increases.
What Are the Challenges Faced by the Aerospace Manufacturing Industry in Achieving Growth?
There are challenges facing the aerospace manufacturing industry in achieving and sustaining growth. Supply-chain issues hamper growth but can be solved to achieve symbioses with the manufacturing industry. Geopolitical conditions create an opportunity for the manufacturing industry to diversify and expand into new markets stimulating new growth. A short-term challenge like interest rate changes should be mitigated through planning and setting the industry up to face this eventuality. Workforce challenges need to be addressed, and factors such as: increasing salary, workplace culture, increased flexibility, and an intensely competitive market need to be evaluated. Talent acquisition and retention problems face the industry, and employer expectations need to be reevaluated. A bigger push toward talent development will ensure a higher rate of talent retention in the long term. The lack of digitization throughout the whole industry needs to be addressed to execute better planning, opportunity identification, and optimization.
How Is the Aerospace Manufacturing Industry Adapting to 3D Printing Demands?
The aerospace manufacturing industry is adapting 3D printing in ways that could only be dreamt of in the past. Utilizing 3D printing low cost manufacturing and rapid prototyping throughout the R&D process enables complex components to reach production at a fraction of the cost. 3D printing technology enables manufacturers to produce optimized components that weigh less, improve performance, and decrease fuel consumption.
What Strategies Are Aerospace Manufacturers Using To Tackle Labor Shortages and Talent Acquisition?
The aerospace manufacturing industry faces unique challenges when it comes to talent acquisition. The scarcity of skills, industry competitiveness, ever-changing technologies, and emerging markets create a unique set of opportunities to solve. Strategies used by aerospace manufacturers to tackle labor shortages and talent acquisition should be solid yet creative. Innovative manufacturers ensure talent acquisition and retention by creating an appealing work environment, offering competitive packages, implementing robust recruitment strategies, and utilizing a talent pipeline.
How Are Advancements in Technology Affecting the Prospects for Growth in Aerospace Manufacturing?
Advancements in technology continue to shape the prospects of the aerospace manufacturing industry. The complex environment of the aerospace industry is very forgiving toward manufacturers who are pushing the innovation envelope that puts the competition on the back foot. The ever-changing customer demand for enhanced technology shapes the landscape for driving the industry toward innovations. Lower cost, reduced emissions, sustainability, and higher performance is a tall order yet is necessary for growth. The next target for the aerospace manufacturing industry is to marry lowered emissions, sustainability, and supersonic commercial flights for the next air travel experience.
Did the COVID-19 Pandemic Paralyze the Aerospace Industry Operations in 2021?
Yes. The COVID-19 pandemic paralyzed the aerospace industry operations in 2021, and recovery was expected only by 2023. Some operators in the aerospace industry pulled clear of the rest by dodging government aid that stifled decision-making — they relied on internal restructuring, and detached from government incentives. As a result, they did not just tread water, but increased the performance disparity by streamlining operations, reducing cost, and undergoing extreme organizational restructuring.
Operators that were able to restructure, renegotiate midlife leases, and shed excess debt not only survived through the pandemic but emerged stronger and recovered faster. Although the industry was temporarily paralyzed, commercial after-sales drove industry recovery. Geopolitical challenges and commercial after-sales sustained the recovery with commercial leisure flights driving full recovery after the disruption.
Summary
This article presented the aerospace industry, explained it, and discussed its growth. To learn more about the aerospace industry, contact a Xometry representative.
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