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It was a very good year for the Aerospace and Defense (A&D) sector, which reported record profits. Demand for commercial aviation is growing at a rate about twice the growth of global GDP and aircraft manufacturing is at record levels and ramping up. Also, defense budgets have increased significantly in the past few years.
With optimistic short and long term projections, and additional cash generated by the tax reform bill, A&D companies may be considering expansion opportunities. In our latest edition of Aerospace attractiveness manufacturing rankings, we aggregate and analyze data to help companies figure out the best locations globally and within the US. This report can be a helpful tool in planning for future growth, optimizing manufacturing supply chains, and reexamining costs. Below are a few highlights from the report:
Top five global countries/regions
1. US—The United States earned the top rank for the fifth straight year. With $240 billion in sales last year, the sheer size of the industry, coupled with a healthy GDP, strong transportation infrastructure, and educated workforce make it a hard country to beat. The US should get a further boost from tax reform, which took effect in 2018, after the data used in our report.
2. Canada—Canada has an educated labor force, stable government, relatively low costs, and good infrastructure. In 2017, the industry contributed close to $25 billion to the Canadian economy and employed almost 190,000 people. Its aerospace industry has been buoyed by global demand for Canadian exports.
3. Singapore—Singapore has a stable government, which strongly supports the industry and provides a safe business environment, a healthy manufacturing base, and over 130 aerospace-related companies. Singapore has the fastest growing aviation industry in Asia-Pacific, which enables it to both serve the market and draw needed talent from its neighbors.
4. Switzerland—Switzerland’s aerospace industry comprises almost 6% of its GDP. The industry includes more than 500 companies and employs about 160,000 people.
5. United Kingdom—London, with its six international airports and six ports, provides direct access to more than 300 global destinations. The UK’s standing, however, will be challenged by the details of Brexit.
Top five states
1. Washington—Washington topped the state ranking this year, with high marks in the categories of industry, infrastructure, and economy. Washington’s economy and industry size benefitted from Boeing’s booming commercial aircraft business. Washington is also home to 1,400 aerospace-related businesses and has the highest concentration of aerospace jobs in the country.
2. Texas—Texas has a large industry presence, strong economy, and favorable tax policy. Seventeen of the 20 largest aerospace manufacturers in the world have major operations in Texas, so it’s not surprising that about 9% of all aerospace manufacturing jobs are in Texas.
3. Georgia—Georgia is home to more than 800 aerospace companies, including some major players. Georgia’s attractiveness includes its relatively low costs, business-friendly policies, and major international airport. In the last five years, Georgia has gained about 1,700 additional aerospace-related jobs through company expansion.
4. Arizona—Arizona has an ideal climate for aircraft testing and space observation, good transportation infrastructure, and business-friendly tax policy.
5. Colorado—Colorado, with its educated labor force and modern infrastructure, has attracted several major aerospace contractors as well as Department of Defense military installations.
Our rankings take many discrete measures into account: industry size, costs, labor, infrastructure, tax policy, and risk levels (for the country/region ranking). Some of these measures are fairly stable from year-to-year, but others are more volatile and bear close monitoring, such as potential impacts of recent trade disputes. Some companies have decided to contain overseas risks by shifting more of their operations to the US, where business conditions have become more favorable. To bolster the domestic industry, they are joining with schools and state officials to promote the skills the A&D industry needs now and in the future. These proactive educational initiatives are essential to the future growth of the domestic industry and provide companies with a way to connect with the best and the brightest.