Aerospace Parts Manufacturing Market

Overview
The aerospace industry comprises companies producing aircraft, guided missiles, space vehicles, aircraft
engines, propulsion units, and related parts. Aircraft overhaul, rebuilding, and parts also are included.

Firms producing transport aircraft make up the largest segment of the civil (non-military) aircraft portion
of the industry. Civil transport aircraft are produced for air transportation businesses such as airlines and
cargo transportation companies. These aircraft range from small turboprops to jumbo jets and are used
to move people and goods all over the world. Another segment of civil aircraft is general aviation
aircraft. General aviation aircraft range from the small two-seaters designed for leisure use to corporate
jets designed for business transport. Civil helicopters, one of the smallest segments of civil aircraft, are
commonly used by police departments, emergency medical services, and businesses such as oil and
mining companies that need to transport people to remote worksites.

Military aircraft and helicopters are purchased by governments to meet national defense needs, such as
delivering weapons to military targets and transporting troops and equipment around the globe. Some
of these aircraft are specifically designed to deliver a powerful array of ordnance to military targets with
tremendous maneuverability and low detectability. Aircraft engine manufacturers, not the aircraft
manufacturers, produce the engines used in civil and military aircraft. These manufacturers design and
build engines according to the aircraft design and performance specifications of the aircraft
manufacturers. Aircraft manufacturers may use engines designed by different companies on the same
type of aircraft.

Firms producing guided missiles and missile propulsion units sell primarily to military and government
organizations. Although missiles are viewed predominantly as offensive weapons, improved guidance
systems have led to their increased use as defensive systems. This part of the industry also produces
space vehicles and the rockets for launching them into space. Consumers of spacecraft include the
National Aeronautics and Space Administration (NASA), the U.S. Department of Defense (DOD),
telecommunications companies, television networks, and news organizations. Firms producing space
satellites are discussed with the computer and electronic product manufacturing industry in this
publication because satellites are primarily electronic products.

In 2002, about 2,800 establishments made up the aerospace industry. In the aerospace parts industry,
most establishments were subcontractors that manufacture parts and employ fewer than 100 workers.
Nevertheless, 64 percent of the jobs in aerospace manufacturing were in large establishments that
employed 1,000 or more workers.

The Federal Government traditionally has been the aerospace industry’s biggest customer. The vast
majority of Government contracts to purchase aerospace equipment are awarded by DOD. NASA also is
a major purchaser of the industry’s products and services, mainly for space vehicles and launch services.
The aerospace industry is dominated by a few large firms that contract to produce aircraft with
Government and private businesses, usually airline and cargo transportation companies. These large
firms, in turn, subcontract with smaller firms to produce specific systems and parts for their vehicles.
Government purchases are largely related to defense. Typically, DOD announces its need for military
aircraft or missile systems, specifying a multitude of requirements. Large firms specializing in defense
products subsequently submit bids, detailing proposed technical solutions and designs, along with cost
estimates, hoping to win the contract. Firms may also research and develop materials, electronics, and
components relating to their bid, often at their own expense, in order to enhance their chance of
winning the contract. Following a negotiation phase, a manufacturer is selected and a prototype vehicle
is developed and built, and then tested and evaluated. If approved by DOD, the program enters
production. This process usually takes many years.

Commercial airlines and private businesses typically identify their needs for a particular model of new
aircraft based on a number of factors, including the routes they fly. After specifying requirements such
as range, size, cargo capacity, type of engine, and seating arrangements, the airlines invite
manufacturers of civil aircraft and aircraft engines to submit bids. Selection ultimately is based on a
manufacturer’s ability to deliver reliable aircraft that best fit the purchaser’s stated market needs at the
lowest cost and at favorable financing terms.

The way in which commercial and military aircraft are designed, developed, and produced is undergoing
significant change in response to the need to cut costs and deliver products more quickly. Firms
producing commercial aircraft have reduced development time drastically through computer-aided
design (CAD), which allows firms to design an entire aircraft, including the individual parts, solely by
computer. The drawings of these parts can be sent electronically to subcontractors who use them to
program their machinery. Product development teams are increasingly being used through every phase
of development, bringing customers, engineers, and production workers together to make decisions
concerning the aircraft. Additionally, the military has changed its design philosophy, using available
commercially available, off-the-shelf technology when appropriate, rather than developing new
customized components.
Aerospace parts manufacturers play a vital role in the industry, ensuring that aerospace companies have
the parts they need for aircraft, aircraft components, missiles, and space vehicles. Some manufacture all
of these parts, while others specialize in one area. There is typically a high demand for the work
performed by aerospace parts manufacturers, driven largely by military budgets and commercial airline
traffic. The combined annual revenue of US aerospace parts manufacturers and product manufacturers
is around $245 billion. There are many aerospace parts manufacturers that are based out of the US,
ranging from small suppliers to large-scale companies like Boeing. Here are our top 12 picks in the US
and beyond.

The global aerospace parts manufacturing market size is expected to reach USD 1.14 trillion by 2025.
The market is anticipated to register a CAGR of 3.8% over the forecast period. Increasing fleet
replacement rates are expected to lead to a surge in aircraft production, which is expected to boost the
growth.

Rising demand for fleet expansion in emerging economies from Asia Pacific, such as China and India is
expected to provide growth opportunities to the Maintenance, Repair and Operations (MRO) service
providers. A number of established players are expanding their manufacturing facilities to Asia to cater
to the increasing demand from MRO service providers, which is anticipated to boost the regional market
growth.

The aerospace manufacturing industry has witnessed an upward trend in the use of additive
manufacturing technology, for designing parts with advanced materials and unique geometries. A
number of companies adopt the technology owing to its superior designing abilities. Airbus is using it to
manufacture over a 1,000 different parts for its A350 aircraft.

Aerospace Component List

Aerospace component primarily includes aircraft engines and engine parts, as well as fuselage, propeller
and rotor, landing gear, electric and hydraulic control, and avionic systems. Demand for aircraft parts is
driven by new orders for commercial, military, and general aviation aircraft, as well as Maintenance,
Repair, and Overhaul (MRO) services.

Fixed-wing aircraft components

 Fuselage
o Empennage
 Wings
 Control surfaces
o Vertical stabilizer and rudder
o Horizontal stabilizer and elevator
o Aileron
o Trim tab
 Lift control devices
o Flap
o Slat
o Spoiler
 Powerplant and propulsion devices
o Propeller
o Piston engine
o Jet engine
o TurboProp
 Landing gear
o Nose gear
o Main gear
 Cockpit
o Controls
o Information devices
o Navigation devices
o FMS
o Communication devices
 Systems
o Hydraulic
o Electric
 o Pneumatic (Bleed)
o APU
 Navigation lights
 Pressure information intakes
o Pitot tube
o Static port
 Other/Unclassified
o Struts
o Fuel vent

Rotary-wing aircraft components

 Helicopter
 Gyroplane
o Airframe
o Landing Gear
 Propeller
 Lifting Systems
o Rotor
o Wings

Aileron

The ailerons are located at the rear of the wing, typically one on each side. They work opposite to each
other, meaning that when one is raised, the other is lowered. Their job is to increase the lift on one wing
while reducing thelift on the other. By doing this, they roll the aircraft sideways, causing the aircraft to
turn. This is the primary method of steering a fixed-wing aircraft.

Antenna

There are numerous radio antennas located around an aircraft, their size and position corresponding to
the type of work each antenna must perform and the frequencies being transmitted or received. The
GPS antenna, for example, is always mounted to the top of an airplane. This is because the GPS satellites
are in Space, and therefore always above the aircraft. As a general rule, longer antennas are used for
radio communication and navigation (VHF frequencies), while shorter antennas are reserved for higher
frequency data such as the GPS signals and the transponder, which provides air traffic control with
information about the aircraft’s position and altitude.

Cockpit

The cockpit, sometimes referred to as the Flight Deck, is where the pilots sit. It contains the flight
controls, which move the airplane, as well as all the buttons and switches used to operate the various
systems.

Elevator
As the name implies, the elevator helps “elevate” the aircraft. It is located on the tail of the aircraft and
directs the nose of the aircraft either upwards or downwards (pitch) in order to make the airplane climb
and descend.

Empennage

This name stems from the French word “empenner,” meaning “to feather an arrow”. The empennage is
the name given to the entire tail section of the aircraft, including both the horizontal and vertical
stabilizers, the rudder and the elevator. As a combined unit, it works identically to the feather on the
arrow, helping guide the aircraft to its destination.

Engine

An airplane has at least one, or as many as eight engines, which provide the thrust needed to fly. There
are many different makes and models on aircraft today but all perform the same basic function of taking
the air that’s in front of the aircraft, accelerating it and pushing out behind the aircraft. Jet powered
aircraft perform this function by compressing the air using turbines, while propeller-powered aircraft
use a propeller mounted to the engine. In general, the propeller works like a big screw, pulling the
aircraft forward while pushing the air behind it.

Flap

Flaps are a “high lift / high drag” device. Not only do they improve the lifting ability of the wing at slower
speeds by changing the camber, or curvature of the wing, but when extended fully they also create
more drag. This means an aircraft can descend (or lose altitude) faster, without gaining airspeed in the
process. Flaps come in 4 main varieties: plain, split, slotted and fowler.

Fuselage

The fuselage, from the French word “fuselé” meaning “spindle shaped”, is the portion of the airplane
used to literally join, or fuse, the other parts together. It is commonly thought of as the body of the
aircraft and holds the passengers and cargo safely inside.

Horizontal Stabilizer

The horizontal stabilizer is quite simply an upside-down wing, designed to provide a downward force
(push) on the tail. Airplanes are traditionally nose-heavy and this downward force is required to
compensate for that, keeping the nose level with the rest of the aircraft. Some aircraft can control the
angle of the stabilizer and therefore the level of downward force while in flight, while others are fixed in
place.

Rudder

The rudder is attached to the vertical stabilizer, located on the tail of the aircraft. It works identically to a
rudder on a boat, helping to steer the nose of the aircraft left and right; this motion is referred to as
yaw. Unlike the boat however, it is not the primary method of steering. Its main purpose is to counteract
certain types of drag, or friction, ensuring that the aircraft’s tail follows the nose, rather than sliding out
to the side.
Slat

A slat is a “high lift” device typically found on jet-powered aircraft. Slats are similar to the flaps except
they are mounted on the leading edge of the wing. They also assist in changing the camber, or curvature
of the wing, to improve lifting ability at slower speeds.

Spoiler

The spoiler’s function is to disrupt, or spoil, the flow of air across the upper surface of the wing. They are
usually found on larger aircraft, which can have two types installed. The in-flight spoilers are small and
designed to reduce the lifting capability of the wing just enough to allow the aircraft to descend quicker
without gaining airspeed. Although the flaps can also perform this function, the spoiler is intended to

be used temporarily, while the flaps are typically used for longer durations such as during the approach
and landing. The ground spoilers (Img. 1) typically deploy automatically on landing and are much larger
than their in-flight cousins. They are used to completely destroy the lifting ability of the wing upon
landing, ensuring that the entire weight of the airplane rests firmly on the wheels, making the brakes
more effective and shortening the length of runway needed to stop the aircraft.

Struts

The struts are part of the undercarriage, more commonly known as the landing gear. There are two
main types -

straight leg (Img. 2) and trailing link (Img. 3) - but their function is the same: to absorb the impact of the
landing as the aircraft touches the ground. Each strut contains a shock absorber (a collection of springs),
hydraulic oil and gasses which work together to reduce the impact felt by the passengers.

Vertical Stabilizer

The vertical stabilizer is designed to stabilize the left-right motion of the aircraft. While most aircraft use
a single stabilizer, some models, such as the Lockheed C-69 Constellation (Img. 5), use multiple, smaller
stabilizers.

Wheel

The wheels are another part of the undercarriage, or landing gear. While most aircraft have a minimum

of three wheels, larger aircraft require many more to support the immense weight (Img. 6). Typically
aircraft wheels are filled with nitrogen instead of air. This is because the pressure of nitrogen gas
changes very little with changes in altitude or temperature, which is something aircraft constantly
experience.

Windshield

The windshield on smaller aircraft is usually made from polycarbonate, a type of plastic, while
pressurized airplanes use a sandwich of plastic and glass layers, called a laminate, up to 20mm thick.
This is necessary to absorb the impact of birds, insects and other debris that may collide with the
windshield as the airplane flies at close to the speed of sound.

Wing
The wing provides the majority of the lift an airplane requires for flight. Its shape is specifically designed
for the aircraft to which it is attached. On most aircraft, the interior of the wing is also used to store the
fuel required to power the engines.

Winglet

Some aircraft wings have an additional component called a winglet, which is located at the end of each
wing. Its purpose is to reduce the drag (or air resistance) the wing produces as it pushes through the air.
This not only allows the airplane to fly faster, but also means it burns less fuel, allowing it to fly longer
distances without refuelling.
Value chain of aerospace manufacturing
Process flow and key technologies for aerospace component manufacturing

Requirements for Aerospace Components Manufacturing

Product Assurance Classes

 Level 1 – Maximum classification

o The facility must be certified under a quality assurance program (i.e. ISO 9000)
o Have had a Defense Logistics Agency (DLA) Land and Maritime audit or NASA survey
within the previous two years
 o Parts must have been procured for a previous project under highest assurance class
requirements
o No unresolved Government-Industry Data Exchange Program (GIDEP) alerts in the past
three years that have a major impact or negative impact on the quality, reliability or
performance of space flight applications on Level 1 quality or reliability
o Successfully completed qualification for procurement specification
 Level 2 – Mid-level classification
o The facility must be certified under a quality assurance program (i.e. ISO 9000)
o Have had a DLA Land and Maritime audit or NASA survey within the previous two years
o Parts must have been procured for a previous project under highest assurance class
requirements
o No unresolved GIDEP alerts exist that have a major impact on Level 2 quality or
reliability
o Successfully completed qualification for procurement specification
 Level 3 – Minimum classification
o Facility must be certified under a quality assurance program (i.e. ISO 9000)
o The manufacturer has supplied and qualified parts on multiple projects in the past two
years
o A space agency procurement specification exists (e.g. NASA, Department of Defense
(DoD))
o No GIDEP alerts, low destructive physical analysis (DPA) rejection rate or significant
failures related to quality and/or reliability

Advanced Manufacturing Technologies Used in Aerospace

Additive Manufacturing

Aerospace was quick to recognize the huge potential of AM for designing parts with advanced materials
and unique geometries. Powder-bed laser printing systems are preferred for most components;
however, other laser and electron beam systems are also used. AM can also be used to make lattice
structures, especially within the fuselage, which reduce weight and help dissipate heat. AM is also an
excellent way to create a single part that replaces many multiple parts, which reduces the number of
possible failure points and simplifies assembly. Fused deposition modeling (FDM) is an AM technique
that deposits ultra-thin layers of semi-molten thermoplastics to create semi-hollow parts such as
honeycomb structures for the wings of unmanned aircraft systems, thereby reducing weight but also
adding strength. AM is also moving toward building larger parts up to two meters in size. For example,
GKN Aerospace and the U.S. Energy Department’s Oak Ridge National Laboratory have recently
partnered to develop a large-scale AM process for manufacturing large titanium aerospace components.
The process—laser metal deposition with wire (LMD-w)—uses a robot-mounted laser to melt the
surface of a titanium substrate, creating a localized pool of molten titanium into which titanium wire is
fed to form a bead. Advanced robotic controls manipulate this melt pool along a 3D path to fabricate a
large near-net or net-shaped aerospace preform, bead by bead, as defined by a computer-assisted
design (CAD) model. Advantages of LMD-w over other AM deposition processes include the ability to
manipulate widely tunable laser-energy and wire-feed rates. "These features enable a user-selectable
deposition rate and control of material properties," says Josh Crews, GKN's technology center manager
for additive manufacturing in St. Louis. “In addition, wire feedstock used in LMD-w is completely
consumed in the melt pool. Powder-based deposition typically has powder incompletely consumed in
the melt pool.”

Composite Materials

Aerospace engineers continue to rely on advanced composite materials, usually metals or plastics with
precise amounts of certain additives to enhance physical characteristics such as strength, flexibility, and
chemical and temperature resistance. A major goal with composites in aerospace is creating aircraft and
spacecraft that weigh less. Lighter vehicles use less fuel and reduce carbon emissions. Carbon, glass,
metal, and ceramics are essential components in composites. Physical properties vary according to
formulation chemistry and particle alignment. Advanced polymers, composite materials, and
nanomaterials are often key to performance breakthroughs and reductions in lifecycle costs. Although
many improvements in composites are new formulations for the materials themselves, other impressive
advances include enhancements in the manufacturing machinery—especially software advances for
machine control and simulation, assembly processes, and inspection. Robotics Robots—especially for
lifting and handling—are a common sight on aerospace manufacturing floors. “There will be a lot more
robotics and automation to get rid of the labor-intensive processes,” says Scott Beckwith, global
technical director for the Society for the Advancement of Material and Process Engineering. Robot tasks
include inspection, drilling and fastening, welding, and sealing and dispensing. Large, fixed auto-riveting
machines are popular. Industrial robots are increasingly employed to connect aircraft sections. For
example, a crawling drilling-riveting robot with a flexible drilling head can move gently over the aircraft
skin to join fuselage panels together. Robotics is also handling the tasks that are most hazardous to
workers, such as welding and painting. “An entire welding project can be completed with only a small
fraction of the usual waste,” states the Robotics Industries Association. “This makes it cost-effective
when using expensive metals. Applying coatings to a large-scale fuselage can be a long, tedious, and
potentially dangerous undertaking for workers. Robotic arms situated on rails can effectively apply
sealant, paint, and other coatings at distances up to several stories.”

Laser Beam Welding

Laser welding provides rapid and high-precision processing, compared to other welding techniques.
Therefore, laser welding isa good solution for handling material when high precision and repeatability
are required. It is also an effective process for joining dissimilar materials together, which can be a
problem for traditional welding techniques. Perhaps the greatest advantage of laser welding is that it
transfers very little heat to the material being welded. It does not create a heat-affected zone around
the weld. There is no cracking or material weakness that could otherwise compromise the performance
of the joint. Laser machining applications include pressure vessel welding, orifice drilling, proximity
sensors welding, leading-edge hole drilling, battery welding, and sensitive electronics glove box welding.
“For the aerospace industry, laser welding capabilities play an integral role in everything from flight
components to airport security procedures,” states Laserage, a precision laser-processing shop.
“Because laser-enabled welding provides precision from start to finish, it serves as an effective process
for not only an impressive array of industry projects, but especially for materials used in proven
aerospace applications.”
Industry Size

Global Global Aerospace Parts Manufacturing Market

The global aerospace parts manufacturing market size is expected to reach USD 1.14 trillion by 2025.
The market is anticipated to register a CAGR of 3.8% over the forecast period. Increasing fleet
replacement rates are expected to lead to a surge in aircraft production, which is expected to boost the
growth.

Global Aerospace Parts Manufacturing Market: Dynamics

 Rising demand for commercial aircraft, owing to increasing fleet replacement to retire aging
aircrafts with new-generation, lightweight, and fuel-efficient aircrafts is a key factor expected to
drive growth of the global market over the forecast period.
 In addition, increasing rates of fleet replacement resulting in rising aircraft production, which is
expected to further fuel growth of the target market over the forecast period.
 Moreover, technological advancements and increasing need for aircrafts designed for particular
missions are some other factors expected to boost growth of the global market over the
forecast period.
 Furthermore, presence of various established players expanding their manufacturing facilities to
Asia in order to cater the increasing demand from MRO service providers this factor is expected
to propel growth of the target market over the forecast period.
  However, declining military expenditure may affect demand for military aircraft which in turn is
expected to restrain growth of the global market over the forecast period.
 Ongoing trend observed in the target market is increasing collaboration activities among major
players operating in the market in order to establish a joint venture for product development, to
avoid risks, and increase costs associated with the development of new aerospace products.
This trend may expect to support growth of the target market over the forecast period.
 Long in-service period of aircrafts creates opportunities for MRO providers to offer maintenance
and repair of current fleets.
 Rising demand for fleet expansion in emerging economies from Asia Pacific, such as China and
India is expected to provide growth opportunities to the Maintenance, Repair and Operations
(MRO) service providers. A number of established players are expanding their manufacturing
facilities to Asia to cater to the increasing demand from MRO service providers, which is
anticipated to boost the regional market growth.
 The aerospace manufacturing industry has witnessed an upward trend in the use of additive
manufacturing technology, for designing parts with advanced materials and unique geometries.
A number of companies adopt the technology owing to its superior designing abilities. Airbus is
using it to manufacture over a 1,000 different parts for its A350 aircraft.
 Long in-service period of aircrafts creates opportunities for MRO providers to offer maintenance
and repair of current fleets, which further contributes to the demand. In addition, airlines
planning expansion of their fleets may bring back older aircrafts in service or maintain an
extended in-service period, which is expected to drive growth of the aerospace parts
manufacturing market.
 Aircraft manufacturing held the largest market share of 52.9% in 2017, on account of increasing
orders of aircraft deliveries coupled with efforts undertaken by manufacturers to clear backlog
orders
 The demand for commercial aircraft parts is estimated to be the highest on account of rise in
passenger and freight traffic and improved global trade. It is expected to exhibit a CAGR of 4.2%
from 2018 to 2025
 The market is concentrated in North America and is estimated to reach USD 515.68 billion by
2025, owing to the presence of major manufacturers such as Boeing, Northrop Grumman, and
Lockheed Martin
 The market players compete on the basis of differentiation in production technology, design,
product performance, and conformity to customer specifications to increase the market share.

Global Aerospace Parts Manufacturing Market: Segment Analysis

 Among the product segments, the aircraft manufacturing segment is expected to dominate in
the target market over the forecast period. Engine segment is expected to register significant
growth in terms of revenue over the forecast period, owing to innovative technologies such as
additive manufacturing to produce aero engines.
 Among the aircraft segments, the commercial aircraft segment is expected to register significant
growth in terms of revenue over the forecast period. Increasing demand for business aircrafts,
owing to increasing mobility and improved efficiency. Business aircrafts boost productivity, as
 air travel requires less time compared to other modes of travel. This factor is expected to
support growth of this segment over the forecast period.

Global Aerospace Parts Manufacturing Market: Regional Analysis

 The market in North America is expected to register significant share in terms of revenue over
the forecast period, owing to increasing demand for airframe and other aircraft parts across
various countries in the region. In addition, rising demand for new-generation aircraft is another
factor expected to boost growth of target market over the forecast period.
 The market in Europe is expected to account for second-highest share in terms of revenue over
the forecast period, owing to increasing demand for lighter and stronger aircrafts which are
made up of lightweight, high strength, and cost-effective materials.
 The market in Asia Pacific is expected to register fastest growth, owing to rising MRO
(Maintenance, Repair and Overhaul) activities across various countries in the region.

Aerospace Parts Manufacturing Market Segmentation

Segmentation by product:

 Engines
 Aircraft Manufacturing
 Cabin Interiors
 Equipment, System, and Support
 Avionics
 Insulation Components
Segmentation by aircraft:

 Commercial Aircraft
 Business Aircraft
 Military Aircraft
 Others
Segmentation by Application:

 Application 1
 Application 2
Segmentation by region
 North America
o US
o Canada
 Europe
o Germany
o UK
 o France
o Italy
o Spain
o Russia
o Rest of Europe
 Asia Pacific
o China
o India
o Japan
o Australia
o South Korea
o Rest of Asia Pacific
 Latin America
o Brazil
o Mexico
o Rest of Latin America
 Middle East and Africa
o GCC
o South Africa
o Rest of Middle East and Africa

U.S. Aircraft Parts Manufacturing Industry

The total revenue of the United States' aircraft parts manufacturing industry in 2019 is $241 billion.
North America accounted for 42% of the aircraft parts industry market share in 2018. The United States'
dominant market presence in the industry is primarily attributed to the presence of major aircraft parts
companies, such as Boeing and Spirit AeroSystems. Although steel tariffs imposed by President Donald
Trump may negatively impact the industry, advances in additive manufacturing should offset the
detrimental effects of the tariffs.

 Over the past 3 years, the industry has declined at an annual rate of -0.6%.
 There are 1,375 companies in the industry.
 In 2018, the average sales per company was $169 million.
 2019 forecasted inflation is 2.1%.
 Companies average a Fixed Asset Turnover ratio of 3.1.
 Employee productivity is $590,064.
 2.6% of expenses are spent on health insurance.
 In 2018, industry operating expenses grew 3.9%.
 In 2018, payroll per employee was $88,873.
 California averages $81,197 in payroll per employee.
 7.1% of employees in the industry are in management positions.
 The average industry hourly pay for office and administrative jobs is $25.5.
The US aircraft engine and parts manufacturing industry includes about 1,300 establishments (single-
location companies and units of multi-location companies) with combined annual revenue of about $84
billion.

The United States is the largest aircraft manufacturer in the world, with leading companies in large
commercial aircraft, combat aircraft, helicopters, unmanned aerial vehicles and engines segments.

Over the past five years, strong demand from emerging market airlines for new commercial aircraft, the
replacement of older aircraft with newer models. On the other hand, the wind down of US combat
operations in the Middle East and the overall decline in defense spending has led to decline military
aircraft sales. As a result, the industry’s civil products’ share of revenue is estimated to climb over the
past five years. Meanwhile, defense related products’ share of revenue is set to shrink during the
period.

Industry Products & Markets

Aircraft

Aircraft manufacturing dominates the industry, accounting for an estimated 60.8% of industry revenue.
The segment broadly includes civilian and military aircraft as well as modifications to completed aircraft.
Civilian aircraft include large commercial aircraft (LCA), medium or regional aircraft, business jets,
helicopters and ultra-light aircraft. The LCA market (led by Boeing) includes freighters that are built for
logistic air transport. LCA manufacturers supply to nearly all of the commercial passenger airlines and
freight and logistics companies that provide air transportation. In addition, aircraft manufacturers are
contracted to undertake military aircraft manufacturing for governments. Overall, military aircraft
account for over a third of complete aircraft production. Military aircraft can include fixed or non-fixed
wing aircraft. This segment can be further broken down into a variety of aircraft, such as bomber, attack,
fighter, tanker, cargo, trainer and rotary. Moreover, the industry is increasingly investing in unmanned
aerial vehicles (UAVs), especially for military purposes. UAVs are aircraft that can be remotely controlled
or flown autonomously based on preprogrammed flight plans. However, following a massive boom in
demand, UAV revenue has dropped over the past five years.

Aircraft engines and engine parts

Military and civilian aircraft engines, engine parts and engine modification accounts for 19.3% of
industry revenue. Examples of aircraft engines include turbine, shaft, jet and rocket engines. Civilian-
related manufacturing accounts for over half of this segment’s revenue, while defense-related sales
have dropped. In recent years engine fuel efficiency has increased as often high oil prices and
environmental concerns have created demand for more fuel efficient and clean means of propulsion.
Besides improving efficiency, manufacturers have also used more composite material to reduce weight
and maintenance costs. Sales of engines and engine parts are expected to increase as a percentage of
industry revenue as new fuel-efficient commercial aircraft require the industry’s newest engine models.

Other aircraft parts and auxiliary equipment

Other aircraft parts and auxiliary equipment include: civilian and military aircraft subassemblies and
parts, aircraft mechanical power transmission equipment, propellers, helicopter rotors, research and
development of parts (excluding engines), and landing gear. Because many aircraft parts wear and tear
after use and have to be replaced, sales in this segment heavily depend on the amount of flying time
aircraft receive. Some items, such as subassemblies have become more advanced as composite material
use has increased, while others, like fasteners are more standardized and experience little innovation.
The segment is estimated to make up 20.0% of industry revenue.

Industry Demand Determinants

Demand for the Aircraft, Engines and Parts Manufacturing industry is mainly dependent on activity
among airlines and other air transportation providers. When airlines need to expand their fleets to
accommodate a growing number of passengers, demand for products within the industry increases.
Similarly, if airlines’ capacities fall, industry operations will experience a drop in the number of orders.
Demand is also driven by other factors, such as the introduction of new and more efficient models or
involvement in war.

Civil demand

Demand for industry civil products depends on several factors, many of which are macroeconomic in
nature. Many airlines improve or expand their aircraft fleet based on the level of demand from
passengers. Passenger numbers are generally influenced by the consumers’ propensity to spend on
vacations and air travel, as well as the necessity to fly to remote locations. An increase in disposable
income will lead to greater spending on air travel opposed to other products. Conversely, when incomes
fall, people tend to deter any expenditure on discretionary services, such as air travel. Changes in
passenger travel have historically been proportional to changes in GDP. When the economy is growing
at a solid rate private and business travel tends to go up. In particular, due to the industry’s export
orientation, global air travel is a key part of demand for aircraft. Rapid economic growth in emerging
markets has allowed a new segment of the global population to be able to afford air travel. As a result,
foreign airlines have rapidly expanded their capacity, driving demand for industry exports. Related to
demand for air travel, airlines financial position determines demand for commercial aircraft. Notably,
increased airline profit, which are partially driven by air travel volumes, allow airlines to finance more
aircraft. When airline profitability drops, so does their ability to continue financing aircraft purchases.
Interconnected to airlines financial condition are interest rates and the price of fuel. Increased interest
rates make aircraft financing more expensive, decreasing demand for industry products. Similarly,
increased fuel prices may decrease airlines’ profit, thereby also decreasing demand for commercial
aircraft. On the other hand, commercial aircraft are very costly, long-lived capital goods. As a result,
purchases are typically based on expectations of long-term growth in air transport and replacement of
older aircraft, rather than short-term conditions. Therefore, in response to higher fuel prices or even
price volatility, airlines will typically increase purchases of newer, more fuel-efficient, aircraft in order to
reduce operating costs. That is why there has been an uptick in demand for new airliners such as the
787 and in development planes like the 777X because these aircraft are far more fuel efficient and
cleaner than older generation planes. Moreover, airline companies in the developed world have
increased purchases of new models as their relatively old fleet of planes come to the end of their
lifecycle. The development of new planes may also increase demand for new industry products because
older generation aircraft depreciate faster. On the other hand, the recent fall in fuel prices has reduced
some incentives to buy new generation aircraft. Demand for slightly older used aircraft has increased
because their lower price compensates for their reduced fuel efficiency amid lower fuel costs. However,
airlines are only buyers of commercial planes, general aviation and helicopters often have other demand
determinants. General aviation aircraft such as business planes mostly rely on demand for wealthy
individual and corporations. Similarly, helicopters are often sold for business travel. They are sold to civil
government bodies, the oil and gas industry and other operations that take place in remote locations.

Volatile demand for military aircraft

Another driver of demand for industry products is defense spending. National defense is considered to
be one of the main roles of government and as a result, governments often allocate a significant amount
of their budget to the armed services and relevant equipment. In turn, the defense budget itself is
determined by a range of factors such as economic conditions, geopolitical tensions, war and
technological advancements. The United States has the world’s largest defense budget, spending more
on military aircraft than any other nation. This demand is possible due to the nation’s large economy,
which allows for high spending, as well as global geopolitical commitments, which require a large air
force. Recent geopolitical issues such as increased instability in the Middle East and tensions in Europe
and Asia have driven US military demand for industry products. However, actual war and conflict are the
largest drivers of demand for the industry’s military products. For instance, when the United States
entered the Afghan and Iraq wars, demand jumped. Combat operations also increase demand for parts
as aircraft suffer from wear and tear. The improvement and release of new aircraft models and defense
systems also typically leads to a surge in demand. Worldwide military forces constantly upgrade their
aircraft and defense equipment to counter new threats. For instance, the development of more
advanced and integrated air defense systems has been a driving factor for the development of the Air
Force’s B-21 stealth bomber. The United States does generally sell military equipment and vehicles to its
allies. Demand military exports is driven by geopolitical tensions, foreign economic growth and other
factors to could lead to increased defense budgets around the world. However, strong export
restrictions and regulations also limit industry defense exports.

United States Aerospace Parts Manufacturing Major Markets

Exports

The export market is estimated to account for 53.4% of industry revenue. Most revenue generated by
this market is made up of commercial aircraft sales to foreign airlines, leasing companies, manufacturers
and parts distributors. Because US companies like Boeing hold such a strong position within the
commercial aircraft market, any increase in demand by international airlines for new aircraft typically
leads to increased demand for US planes. Defense related exports only make up 7.9% of total exports
because of restrictions on the export of advanced weaponry. In addition, combat aircraft are extremely
expensive, with few nations able to afford them. Over the five years to 2017, export’s share of revenue
has increased as demand from emerging markets climbed. More and more people within these markets
can afford air travel and as a consequence, airlines operating abroad have begun to purchase more
commercial aircraft in order to meet demand. In addition, initially increasing fuel prices have stimulated
demand for more fuel efficient aircraft and engines. Military related exports have also risen as tensions
in the Middle East and Asia have led to more defense spending by relevant nations. US based defense
contractors are also looking to exports to offset pressured Department of Defense (DoD) spending.

Domestic civil market

The domestic civil market accounts for 24.8% of industry revenue. It is primarily composed of airlines,
but also includes leasing companies, aircraft manufacturers, distributors, corporations, wealthy
individuals and civil government agencies. After delaying orders for new aircraft due to the poor
economic condition, domestic airliners have recently begun buying new planes (particularly fuel-
efficient ones) in order to meet rising demand for air travel and reduce fuel costs. Original equipment
manufacturers (OEMs) purchase parts from industry suppliers to assemble their aircraft. As global
demand for commercial aircraft increased, so has demand for parts, with OEMs struggling to meet end
market demand. Consequently, this market’s share of industry revenue has climbed over the five years
to 2017. Wealthy individuals and various businesses are another source of demand in the domestic civil
market, especially when it comes to general aviation and helicopter markets. Initially sales of general
aviation aircraft struggled as the impact of the recession and the bad publicity of using corporate jets
forced companies to cut down on their fleets. Sales to small businesses and individuals dropped the
most as these markets were hit hardest by the economic downturn. On the other hand, sales of larger
jets performed better as they relied on large corporations that fared well after the recession.
Contrastingly, sales of civil helicopters initially did well as increasing US oil and gas production led to
strong demand from the sector’s companies (helicopters are used to ferry employees and equipment to
distant production sites). However, the recent plunge in oil prices has tempered oil and gas production,
resulting in decreasing helicopter sales.

Domestic defense market

The domestic defense market accounts for 21.8% of industry revenue. The United States has by far the
largest defense budget in the world and as a result, it is the biggest consumer of defense related
industry products. Most US defense manufacturers derive more than half of their revenue from sales to
the DoD or defense-related government organizations. The US Navy is currently the largest domestic
defense market as it invests in F/A-18 and F-35 fighters, maritime patrol craft, helicopters and UAVs for
both itself and the Marine Core. The US Air Force (USAF) is the second largest market for industry
domestic defense sales. While the USAF has the largest aircraft fleet in the military, it is currently buying
a smaller number of planes than the Navy. Lastly, the US Army is the smallest defense market. Due to
the ground-based nature of this branch, the army maintains a relatively small aircraft fleet mostly
consisting of helicopters, UAVs and some small transport planes.
Over the past five years, the wind down of military operations in the Middle East and the overall decline
in US defense spending has caused this market to shrink.

International Trade
Exports

The United States aerospace industry is the largest in the world. The Boeing Company is one of only two
major large commercial aircraft (LCA) manufacturers (Airbus being the other) and US defense companies
produce some of the most advanced military aircraft on the market. The industry’s biggest export is fully
completed aircraft, particularly commercial aircraft. Due to its dominance in the LCA market, any pick up
in global demand for airlines typically leads to increased sales for Boeing and because the vast majority
of its planes are built in the United States, export rise. US companies also dominate the aircraft engine
market, with over half of the world’s commercial aircraft using US company built engines. In addition,
because US combat aircraft are among the best in the world, foreign governments regularly buy them.
In recent years rising global demand for air travel and tensions in the Middle East and Asia have led to
strong demand for industry export, both commercial and military. IBISWorld estimates that over the five
years to 2017, industry exports will grow at an annualized 4.7% to $128.3 billion. The industry’s biggest
export market is China, representing 10.1% of exports. The other major export markets are France
(9.4%), the United Kingdom (8.1%) and Canada (7.6%). These countries are home to airlines that
purchase US-built planes.

Some of them also have close military relationships with the United States, with their armed forces
regularly buying US military equipment. Moreover, they mostly have advanced aerospace sectors that
frequently import US inputs for their own manufacturing. Forecasts for Chinese demand of US aircraft
have turned ever-more optimistic over the past few years. For example, Boeing predicts that Chinese
airlines’ plane purchases will total more than $1.0 trillion over the next 20 years as the country builds its
domestic and international fleets to accommodate tourism and business travel. Boeing says this
represents more than 6,800 aircraft through 2035, with China’s air passenger traffic expected to grow
an annualized 6.4% during the 20-year time horizon. While trade tensions pose a threat to US-China
relations more broadly, they have yet to dampen expectations for exports in this industry.

Imports

Over the five years to 2017, imports are expected to grow at an annualized rate of 3.4% to $45.1 billion.
A recently strengthening dollar made imports less expensive, while increasing domestic air travel pushed
up demand for foreign commercial aircraft. However, most imports consist of aircraft engines and other
parts and subsections. For example, Boeing’s new 787 airliner sources many of its subsections from
Japan, which helps explain why 12.4% of imports originate there. Exports from Canada make up 15.8%
of imports, as its proximity to the United States and membership in the North American Free Trade
Agreement provides its suppliers with an advantage. Moreover, many US companies set up
manufacturing subsidiaries in the country. For instance, Bell manufactures most of its civil helicopters in
Canada, and Pratt and Whitney’s Canadian subsidiary is a leading maker of engines for business and
regional plane and helicopters. In addition, Canada’s Bombardier is one of the world’s leading
manufacturers of small- to mid-sized commercial aircraft. France is the biggest source of imports,
representing 20.6%. The country is home to various manufacturers of commercial and business aircraft,
such as Airbus and Dassault, making aircraft its largest export to the United States. Its second-biggest
export segment to the United States comprises engines and engine parts. For instance, General Electric
(GE) and Safran’s joint venture, CFM International, is among the top manufacturers of LCA engines in
the world. In particular, the majority of Boeing’s aircraft are powered by either GE or CFM engines.
Germany, which accounts for 9.3% of imports, is another major exporter to the United States, primarily
exporting aircraft and engines. Like France, Germany is a base of operations for Airbus, including parts of
the company’s commercial airliner and helicopter production.
Business Locations 2017

When choosing location industry operators look at several factors including, government incentives, a
source of skilled labor and locations of universities that do basic research. Suppliers tend to set up
facilities near major original equipment manufacturers’ factories to cut down on transportation costs,
thereby forming manufacturing hubs. Defense contractors commonly spread their operations across
multiple states to gain support from legislatures and government officials when it comes to contracts.
The West

The West region accounts for 27.1% of industry establishments. California has by far the largest
aerospace sector in the country with multiple manufacturers having facilities there. The state has many
leading industry-relevant research centers and is home to a large portion of the technology community.
Washington State has the fourth largest share of establishments because it is the main base for Boeing
manufacturing. Consequently, many suppliers have set up operations in the state and surrounding
regions.

The Southeast and Southwest

The Southeast and Southwest regions make up 16.7% and 15.7% of industry establishments. Most states
in these regions are right-to-work states which weakens unions and lowers labor costs. In the Southeast,
Florida is a major aerospace hub, accounting for 6.4% of total locations. The Southwest is dominated by
Texas, which is home to 8.0% of industry facilities. The state is also where Lockheed is manufacturing
the F-35, the world’s biggest defense program.

Other regions

The Great Lakes region makes up 10.9% of industry establishments. The area has an extensive
manufacturing base and is a major producer of aircraft input materials like steel. As such, companies
with operations in the region can gain from lower supply transportation costs. The plains region
accounts for 9.8% of location, with over half of those based in Kansas. New England has 8.1% of
establishments, with Connecticut account for most of them. The Mid-Atlantic and Rocky Mountain
regions make up 7.7% and 4.0% of industry facilities.

Key External Drivers

Demand from air transportation

When demand for air transport increases, so does the need for more aircraft. In addition, air transport
operators may wish to increase their competitive edge by purchasing newer, more fuel-efficient models,
a strategy that also increases demand for manufacturers. The opposite is true when demand for air
transport falls. Demand from air transportation is expected to increase in 2017, representing a potential
opportunity for the industry.

Federal funding for defense

Public expenditure on defense and military vehicles indicates demand for industry products. When
military spending rises, a portion of that increase typically goes toward industry products.

Non-NATO defense spending

Non-NATO defense spending is the sum of global military spending, excluding the 29 members of the
North Atlantic Treaty Organization. Therefore, this driver excludes spending by most Western and
developed states, focusing more on developing nations. When non-NATO spending increases, the
market for industry exports climbs. Non-NATO defense spending is expected to increase in 2017.
Trade-weighted index

The trade-weighted index (TWI) measures the value of the US dollar against the currencies of its largest
trading partners. A decreasing TWI leads to lower export prices and higher import prices. Therefore,
industry operators benefit from a weak US dollar for stronger export demand. The TWI is expected to
increase in 2017, posing a potential threat to the industry.

U.S. Aircraft Parts Manufacturers

Large Players
1. The Boeing Company
a. Headquartered in Chicago, The Boeing Company is the only US-based maker of large
commercial jets and the second largest defense contractor for the US government,
behind Lockheed Martin.
b. With $94.6 billion in overall annual revenue and more than 148,000 employees in 2016,
Boeing is one of the world’s largest aerospace companies. The company’s three main
businesses are commercial airplanes; defense, space and security (BDS); and Boeing
capital, with only commercial airplanes and BDS being industry-specific.
c. Boeing’s commercial airplanes business is one of the two largest in the world (Airbus
being the other), making up 68.7% of Boeing’s total revenue. Its portfolio of aircraft
families includes the single-aisle 737, the jumbo 747, the 767, the twin-aisle 777 and the
new 787.
2. GE Aviation
a. Based in Boston, General Electric (GE) operates in more than 40 countries and
employs about 295,000 people worldwide. The company is a massive conglomerate
with products and services ranging from durable consumer goods and healthcare
devices to aircraft leasing. In 2016, overall annual revenue for GE totaled $123.7 billion.
b. The company operates in this industry through its GE Aviation subsidiary, which
manufactures and services jet engines, aerospace systems and equipment and
replacement parts. The company is a top supplier of engines to both the commercial
and military aircraft markets, with more than half of its revenue coming from services
and the rest from products.
c. GE Aviation also has several joint ventures with engine and engine part manufacturers.
3. Lockheed Martin Corporation
 a. Lockheed Martin Corporation is a major global aerospace and defense company that is
principally engaged in researching, designing, developing, manufacturing, integrating
and sustaining advanced technology systems, products and services. As of the end of
2016, the company operates 400 locations worldwide and employs about 97,000
people, with most operations (especially manufacturing) positioned within the United
Sates.
b. The company conducts operations through four segments: aeronautics, missiles and fire
control (MFC), rotary and mission systems (RMS) and space systems. However, the
aeronautics segment, which manufactures military aircraft, is the most industry-
relevant. Verso Corporation (Verso), formerly Verso Paper Corporation, was formed in
2006 following the acquisition of International Paper Company’s coated papers division
by Apollo Global Management LLC, a private equity firm.
c. The company generated $2.5 billion in US revenue in 2018, translating to 11.3% of the
coated and laminated paper manufacturing market in the US
4. United Technologies Corporation
a. United Technologies Corporation (UTC) was founded in 1975 with headquarters in
Hartford, CT. UTC manufactures technology products and services to building systems
and aerospace industries worldwide through four primary segments: Otis; UTC climate,
controls and security; UTC aerospace systems; and Pratt and Whitney. However, only
the last two segments are industry-relevant. In 2016, the company generated more than
$56.1 billion in revenue and employed 197,200 people worldwide.
b. Pratt and Whitney manufactures commercial, military, business jet and general aviation
aircraft engines and parts, and provides fleet management for engines. UTC aerospace
systems produces aerospace products and offers aftermarket services, including power
generation, management and distribution systems; flight, engine-control and
environmental control systems; fire protection and detection systems; auxiliary power
units; and propeller systems.

Other Notable Companies

 Textron Inc.
 General Dynamics
 Collins Aerospace
 Triumph Aerostructures, LLC., Vought Aircraft Division
 Cobham Mission Systems Davenport LSS Inc.
 RMS Company
 The Atlas Group
 GKN Aerospace Transparency Systems, Inc.
 Parker Hannifin Corp., Fluid Systems Division
Major Associations

Name Website Description

ACM comprises one of the largest, most
experienced concentrations of world-class
aerospace companies, the world's AEROSPACE
http://www.aerospacec
aerospace components ALLEY! ® Our firms grew up where aerospace
manufacturers
omponents.org/ was born. Today, our precision components
take to the skies every day, in every corner of
the globe, as they have since the inception of
powered flight.
American Aerospace and Defense industry has
shaped the world around us in countless ways
with immeasurable impact. Today, we are
Aerospace Industries https://www.aia-
critical to the health of the U.S. economy—and
Association aerospace.org/ a seamless, fundamental part of daily life. So
today more than ever, it’s vital that the industry
has a strong voice speaking on its behalf.
MAMA’s purpose is to promote the aerospace
manufacturing industry in the State of Michigan
and, in connection therewith, to help shape a
favorable legislative and regulatory
Michigan Aerospace http://www.michman.o environment, encourage innovation and
Manufacturing Association rg/ productivity, facilitate employment growth, and
increase public understanding of the industry
and its economic contribution to the State of
Michigan.

Resources
 https://www.industryselect.com/blog/fastest-growing-us-aircraft-parts-manufacturers
 https://en.wikiversity.org/wiki/Introduction_to_aircraft_components
 https://www.hq.nasa.gov/office/aero/pdf/parts_of_an_airplane_9-12.pdf
 https://www.myplan.com/careers/industries/aerospace-product-and-parts-manufacturing/industry-
outlook-nature-of-the-industry-08.01.html
 https://www.businesswire.com/news/home/20190307005279/en/Global-Aerospace-Parts-Manufacturing-
Market-Outlook-2025
 https://www.globenewswire.com/news-release/2019/03/15/1755137/0/en/Worldwide-Aerospace-Parts-
Manufacturing-Market-2019-to-2025-A-1-14-Trillion-Opportunity-Driven-by-the-Rising-Demand-for-Fleet-
Expansion-in-Emerging-Economies-from-Asia-Pacific.html
 https://www.researchandmarkets.com/research/4fcds5/global_aerospace?w=4
 https://marketresearch.biz/report/aerospace-parts-manufacturing-market/
 https://www.grandviewresearch.com/industry-analysis/aerospace-parts-manufacturing-market
 https://www.researchandmarkets.com/reports/4761813/aerospace-product-and-parts-manufacturing-
the?utm_source=BW&utm_medium=PressRelease&utm_code=gv3sxv&utm_campaign=1234783+-
 +United+States+Aerospace+Product+%26+Parts+Manufacturing+-
+2019+Market+Research+Report&utm_exec=joca220prd
 http://www.firstresearch.com/Industry-Research/Aircraft-Engine-and-Parts-Manufacturing.html
 https://sanpete.com/downloads/33641A.pdf
 https://www.industryselect.com/blog/fastest-growing-us-aircraft-parts-manufacturers
 https://www.asme.org/topics-resources/content/four-key-advanced-manufacturing-technologies-used
 https://www.businesswire.com/news/home/20190411005410/en/United-States-Aerospace-Product-Parts-
Manufacturing--
 https://www.researchandmarkets.com/reports/4761813/aerospace-product-and-parts-manufacturing-
the?utm_source=BW&utm_medium=PressRelease&utm_code=gv3sxv&utm_campaign=1234783+-
+United+States+Aerospace+Product+%26+Parts+Manufacturing+-
+2019+Market+Research+Report&utm_exec=joca220prd
 https://www.industryselect.com/blog/fastest-growing-us-aircraft-parts-manufacturers
 https://www.researchandmarkets.com/reports/4761813/aerospace-product-and-parts-
manufacturing-
the?utm_source=BW&utm_medium=PressRelease&utm_code=gv3sxv&utm_campaign=123478
3+-+United+States+Aerospace+Product+%26+Parts+Manufacturing+-
+2019+Market+Research+Report&utm_exec=joca220prd
 https://www.sciencepark.or.th/files/Overview%20of%20Global%20Aerospace%20Parts%20Man
ufacturing%20Technologies.pdf
 https://www.asbg.com/products/aerospace-defense.aspx
 https://www.tempoautomation.com/blog/requirements-for-aerospace-components-
manufacturing/
 https://www.namf.com/top-12-aerospace-parts-manufacturers/
 https://www.industryselect.com/blog/4-trends-in-the-us-aircraft-parts-industry