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Industry Profiles - The Aerospace Sector

New developments and process improvements continue at a brisk pace - considerably greater than that typically seen in a number of other industries – and these changes are more of an expectation and a constant in the environment for those working within the aerospace sector. In terms of scope and complexity, the field has expanded more in the past 50 years or so than others have evolved in the last century, or more. This atmosphere of furious change means that anything capable of providing some stability or reliability is worth seizing upon - and that is exactly what AMETEK ECP provides via the components and packaging we supply to aerospace firms. Case in point - Zero Defect Programs or ZDP for short.

What follows is the first in a series of blog posts that will explore the various sectors with which AMETEK does a great deal of its business, starting with aerospace. We'll examine the broader state of this field and also look at indicators that could point toward the direction in which it's headed for the foreseeable future.

Aerospace at a glance

It's fair to describe commercial and military aerospace as an elite field. According to the Department of Commerce, the sector directly employed only about 500,000 workers as of 2018, which represents less than 1 percent of the U.S. civilian labor force. Even taking the 700,000 additional jobs it facilitates in tangentially related industries, it's still undoubtedly a job for the few rather than the many. Between 2016 and 2026, the Bureau of Labor Statistics expects aerospace employment to grow by about 6 percent, which is close to the U.S. average for all jobs. The value aerospace produces involves considerably greater numbers. It generated $147 billion in exports, attracted $22.5 billion in foreign direct investment and created a positive trade balance of $90.5 billion during 2016 - the most recent year for which data was available - and this figure notably outpaced all other manufacturing-related trade surpluses.

defense industry

Trends to watch in 2018 and beyond

In a world that has become increasingly globalized in terms of trade, yet somewhat more fractured from a geopolitical perspective - both trends not likely to reverse themselves any time soon - defense spending has gone up, particularly in the U.S. and Europe.

According to research conducted by Standard & Poor's Global, this will be one of the biggest factors driving revenue growth in the aerospace industry all over the world during the next two years. Specifically, the credit rating and market analysis firm projects that there will be an uptick of about 7 percent in North American aerospace revenue during both 2018 and 2019, with global revenue growth rising steadily to reach just above 6 percent in 2019.

The aforementioned BLS predictions also cite the fact that many commercial aircraft are being redesigned to meet a variety of concerns, including fuel efficiency, excessive noise and sustainability. This will help maintain employment within the sector, as will a recently renewed focus on the possibilities of future space exploration. Finally, Deloitte found that a significant number of U.S. aerospace firms had begun diversifying in an effort to increase profitability, such as defense-focused providers adding the commercial vertical to their offerings and vice versa.

Challenges facing the sector

No industry is free of challenges facing the businesses that practice it, and aerospace isn't an exception to this rule. According to a separate report compiled by Deloitte, although net commercial exports from the U.S. aerospace field went up by 12 percent - $9 billion - in 2016, growth in this vertical slowed down somewhat and fell to 1.7 percent. Sales to foreign armed forces groups from U.S. firms dropped by a much greater number, losing $13 billion to constitute a 28 percent decline for 2016. Finally, employment dropped by 0.3 percent between 2011 and 2016. All that said, these trends, while certainly suboptimal, cannot be seen as massive stumbling blocks for the sector. The world will never lack the need for aerial defense, and as technologies advance even further, the simple fact of endless possibilities guarantees a bright future for aerospace if not a spotless one.

Where AMETEK comes in AMETEK ECP has provided vital products to the fields of commercial and military aerospace for decades, directly working with original equipment manufacturers to always keep the sector moving forward.

Our expertise in designing and manufacturing hermetically sealed packages for voltage regulators, circuits, cabling (fiber-optic and coaxial) feed-through and more has given AMETEK an estimable reputation among leaders in the industry. We devise the foundational pieces that allow one of America's most important industries on a global scale to thrive.

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