This is PwC’s eighth edition of our annual aerospace manufacturing attractiveness rankings report, a guide to—and ranking of—promising geographic locales for aerospace development. The “attractiveness index” examines relative strengths across numerous variables of locations both within the United States and globally, providing organizations with data that can be leveraged to help plan for the future.
This year’s rankings reveal a complex picture as the commercial aerospace industry launched an uneven recovery from the global COVID-19 crisis that broke out in March 2020, triggering pervasive supply chain disruptions, economic contractions and lockdowns, resulting in periods of double-digit unemployment. However, the pandemic also had disproportionate effects on global economies with some, including the United States, hit harder than others. Then, on the heels of this societal disruption, fresh concern arose with the discovery of the coronavirus’s delta variant (in December 2020), muting full recovery to pre-pandemic levels of the global economy and the A&D industry in 2021.
Global air freight has outperformed pax traffic since the pandemic’s outbreak, providing a critical cash flow lifeline to many airlines buffeted by reduced passenger air travel as well as labor and pilot shortages. Meanwhile, demand for military equipment held steady through 2020, amid heightening global security concerns.
The long-term prospects for every sector of aerospace manufacturing—commercial air travel, cargo freight, private-sector space, and military air and space—remain strong. Yet, the global commercial aviation industry, in particular, is likely to remain somewhat unstable and hard to predict in the short-term, as the shape of the post-pandemic recovery demand arc has become even more uncertain than it was at the same time last year.
Our country rankings this year suggest a global A&D industry largely circling in a holding pattern: 2019’s top nine countries are all in this year’s top nine, in an only slightly reshuffled order. A pandemic-induced glut of grounded pax aircraft continues to reduce manufacturing demand. Meanwhile, persistent supply chain bottlenecks—especially a worldwide shortage of containers, port congestion and overwhelmed container vessel operators—indicate continued growth in reliance on air freight in the months and years to come.
Global military spending continues to rise, with no sign of shrinking, which will likely continue to fuel the defense industry.
The accelerating demand to decarbonize aviation is already stimulating technological research and development that is likely to lead to important breakthroughs which could lead to electric and hybrid-electric aircraft and radically different designs.
Looking ahead, companies are discovering that this is an exceptional moment to invest in your people today, and in your workforce of the future—broadening their skill sets, flexibility and commitment through educational and training initiatives targeted toward a very different aerospace sector already visible on the horizon, and incentivizing partners all along your supply chains to do the same.
Our top seven states in 2019 are again our top seven in 2020, in an only slightly revised order. All of our top ten states, in fact, as well as others further down in the ranking, continue to offer outstanding opportunities for A&D investment, as many have for decades. The sense of pent-up energy and a powerful urge to return to full production and delivery are palpable. As they pull out of the pandemic holding pattern, companies that prioritize long-term investment in IT (especially predictive analytics), supply chain resiliency, short-term employment support and long-term workforce development may prove to be the biggest winners.
On the defense side of the industry, budgetary priorities—sure to entail significant upsides for manufacturers in both cases—emphasize modernization in the Air Force and Space Force evolution. The latter’s procurement budget, growing by $456 million to acquire National Security Space Launch vehicles for the anticipated launch of security and intelligence satellites, will likely prove especially stimulative to R&D innovation.
We hope you find this year’s aerospace attractiveness rankings informative and useful. Our Aerospace and Defense Practice provides insights, perspectives and solutions addressing the full-spectrum of scenarios that are changing the possibilities for A&D companies.
We welcome the opportunity to discuss the findings from our report. Clients can contact us through the form below to discuss your companies specific objectives and how we can work to customize our model for your individual needs.
Partner, Global Aerospace and Defense Leader, PwC US