U.S. becomes hot spot for aerospace manufacturing

Wed Feb 11, 2015 6:23pm EST
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By Alwyn Scott

SEATTLE (Reuters) - The aerospace industry is shifting more manufacturing investment to the United States after a decade in which production jobs in the sector flowed to China and other emerging economies, according to a new study.

Consultancy ICF International analyzed more than 2,000 investment transactions made since 2000, and found 28 manufacturing investments in the United States from 2012 to 2013, compared with eight each in China and Mexico, and four in Brazil. A decade earlier, Mexico led the pack with 10 investments, compared with just six investments in the United States.

ICF said its data show a strong flow into China, India, Brazil, Mexico and other emerging markets until 2012. In the last three years, investment has shifted toward the United States.

"The U.S. at this point in time has become the hot spot in aerospace manufacturing," Kevin Michaels, a vice president at ICF, said at the annual Pacific Northwest Aerospace Alliance conference this week. "Comparative advantage is a fleeting thing. Three years ago it looked like everything was heading to China. Now that's changed."

Commercial aircraft manufacturers are under intense pressure to reduce costs within the supply chain to offset falling inflation-adjusted prices for plane tickets.

U.S. aircraft manufacturer Boeing Co (BA.N: Quote) is moving more production in-house to U.S. plants, reducing the outsourcing used for the 787 Dreamliner. Rival Airbus (AIR.PA: Quote) is building an assembly line in Mobile, Alabama.

For example, Boeing found a 787 air duct made near Seattle was being shipped to Italy, reboxed and shipped to the 787 factory in Charleston, South Carolina, to be installed.

"We unwound that," Kent Fisher, vice president of supplier management at Boeing, said at the Pacific Northwest Aerospace Alliance conference Wednesday. "Now we have a direct relationship and the part ships directly to Charleston."   Continued...

A 787 Dreamliner being built for Air India is pictured at South Carolina Boeing final assembly building in North Charleston, South Carolina December 19, 2013. REUTERS/Randall Hill