pricewaterhousecoopers (pwc) · aircraft manufacturing $129.2 45.7% instrumentation $44.4 15.7%...

PricewaterhouseCoopers (PwC)

Mike Quindazzi,

Managing Director

THE CHANGING FACE

OF AEROSPACE in

SOUTHERN

CALIFORNIA

THE FUTURE IS HERE

INSTITUTE FOR APPLIED ECONOMICS


THE CHANGING FACE OF AEROSPACE in

SOUTHERN CALIFORNIA

• The Future Has Arrived

• Recent Industry Activity

• Sizing Things Up

• Spreading the Wealth

• Work, Work, Work

• What the Industry Says


The Future Has Arrived.


SOUTHERN CALIFORNIA


Aerospace is being

transformed by exponential

technologies from within and

from outside the industry.


SOUTHERN CALIFORNIA



SOUTHERN CALIFORNIA

US R&D Spending as % of GDPBy Funding Source

Commercial / Non-Federal R&D

DoD RDT&E

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

1950 1960 1970 1980 1990 2000 2010

4x



SOUTHERN CALIFORNIA

Linear platforms outpace exponential Future Disruption

Va

lue

Time

Exponential Growth Path

Linear Growth Path

Legacy Aerospace & Defense:

Linear vs. Exponential Growth


Southern California remains

one of the world’s most

competitive regions for

aerospace innovation.


SOUTHERN CALIFORNIA


Recent Industry Activity.


SOUTHERN CALIFORNIA


Total Value of Shipments in 2014$ billions


SOUTHERN CALIFORNIA

Aircraft manufacturing

$129.245.7%

Instrumentation$44.415.7%

Aircraft engine and

engine parts mfg$41.714.8%

Other aircraft parts and auxiliary

equipment mfg$39.814.1%

Guided missile and space vehicles,

parts and auxiliary mfg

$27.69.8%

Total Value of

Shipments:

$282.7 billion


Composition of US Aerospace Exports 2014$ millions


SOUTHERN CALIFORNIA

Civilian aircraft engines$32,550

$18,850

Civilian aircraft parts

$22,365

$17,576

Civilian aircraft$58,156

$16,727

Military aircraft / parts$5,058

$3,279

Space vehicles

$76

$186

$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000

Exports

Imports

$118.2 billion

Source: BEA

$56.6 billion


Sizing Things Up.


SOUTHERN CALIFORNIA



SOUTHERN CALIFORNIA

Aerospace Industry

Aerospace Products and Parts

Guided Missile / Space Vehicles

Guided Missile / Space Vehicle Propulsion Units

/ Parts

Other Guided Missile / Space Vehicle Parts / Auxiliary Equipment

Aircraft

Aircraft Engine /

Engine Parts

Other Aircraft Parts / Auxiliary Equipment

Search, Detection, Navigation, Guidance, Aeronautical and

Nautical Systems and Instruments


Aerospace Payroll Employment 2014

Other Aircraft Parts & Auxiliary Equipment Mfg

25,96030%

Instrumentation25,300

30%

Aircraft Mfg16,500

19%

Guided Missiles & Space Vehicles

8,88010%

Guided Missile & Space Vehicles –Engines, Parts & Auxiliary Equip

Mfg7,190

9%

Aircraft Engine & Engine Parts

1,6702%


SOUTHERN CALIFORNIA

85,500

payroll

jobs


Southern California Aerospace Employment


SOUTHERN CALIFORNIA

0

20,000

40,000

60,000

80,000

100,000

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Instrumentation Aircraft manufacturing Aircraft engines Aircraft parts Guided missiles and space vehicles

101,700

85,500


4.5%

-16.0%

4.7%

-39.1% -39.8%

24.4%

64.4%

-40%

-20%

0%

20%

40%

60%

Employment Growth Since 2004


SOUTHERN CALIFORNIA


Employment by County 2014


SOUTHERN CALIFORNIA

Los Angeles County54,15563.3%

Orange County15,28517.9%

San Diego 12,04014.1%

Kern County1,0801.3%

San Bernardino 950

1.1%

Riverside 920

1.1%

Ventura 900

1.1%

Imperial 170


Employment Growth by County


SOUTHERN CALIFORNIA

Los Angeles County78.8%

Orange County73.2%

San Diego County166.7%

40%

60%

80%

100%

120%

140%

160%

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

*

20

12

20

13

20

14


Average Annual Earnings in 2014


SOUTHERN CALIFORNIA

$126,112

$86,772

$125,863

$105,715

$53,597

$51,368

Instrumentation

Aircraft

Guided missiles and space vehicles

Aerospace cluster

All other Industries

SoCal


Real Wage Growth Since 2004


SOUTHERN CALIFORNIA

1.2%4.3%

1.4%

9.7% 9.1%

-4.4%

0.3%

15.5%

-10%

0%

10%

20%

55.3%

-11.4%



SOUTHERN CALIFORNIA

Employment Location QuotientsLocation Quotient

2014

ChangeSince 2004

Instrumentation: 3.13

Aircraft:

Aircraft manufacturing 1.09

Aircraft engine and engine parts manufacturing 0.33

Other aircraft parts and auxiliary equipment manufacturing 3.74

Subcluster 1.62

Guided missiles and space vehicles:

Guided missile and space vehicle manufacturing 2.47

Guided missile /space vehicle propulsion units /propulsion unit parts 7.58

Other guided missile /space vehicle parts /auxiliary equipment 5.49

Subcluster 3.45

TOTAL 2.14



SOUTHERN CALIFORNIA

SoCal Share of National Aerospace Employment

17.3%

27.5%

12.6%

5.2%

25.5%

16.0%

8.3%6.6%

14.0%

20.5%

7.1%

2.2%

24.5%21.5%

19.7%

35.9%

0%

10%

20%

30%

40%2004 2014


Spreading the Wealth.


SOUTHERN CALIFORNIA


Composition of Outlays 2014


SOUTHERN CALIFORNIA

Purchases of intermediate inputs

$24.4 billion61.2%

Labor costs$11.1 billion

27.9%

Profits$4.1 billion

10.4%

Taxes0.6%

Total Outlays:

$39.9 billion


85,500 payroll jobs

• 245,770 total jobs

• $20.3 billion labor income

• 2.4 percent of SoCal GDP

• $7 billion S/L taxes


SOUTHERN CALIFORNIA

Aerospace Industry Economic Contribution



SOUTHERN CALIFORNIA

Regional Provision of Intermediate Inputs

Professional / business services

Trade, transp, utils

All other

Gross inputs Regional inputs

0%

20%

40%

60%

80%

100%More than half of all

intermediate goods

and services are

purchased from

vendors outside

Southern California

Less than 30 percent of manufactured inputs come

from Southern California

Manufacturing

$24.4 billion

$11.1 billion



SOUTHERN CALIFORNIA

Regional Purchase Gap by Input

Aircraft engines / engine parts$3.0 billion

18.1%

Other aircraft parts

$2.0 billion14.9%

Guided missiles / space vehicles

$1.5 billion11.4%

Other aerospace vehicles / parts

4.0%

All other transportation

1.9%Instrumentation

1.3%

All other computer/electronics$2.7 billion

20.4%

Fabricated metal products

6.6%

Primary metals4.7%

Electrical equipment / components

3.1%

Plastic / rubber products

2.0%

Other manufactured

goods3.8%

All other products / services

$1.0 billion7.9%

Purchases Made

Outside SoCal:

$13.3 billion


Work, Work, Work.


SOUTHERN CALIFORNIA



SOUTHERN CALIFORNIA

Industry Occupations

Production22,320 26.3%

Engineering18,770 22.1%

Comp / math8,3509.8%

Bus / financial

7,3608.7%

Management7,3208.6%

Office / administrative

6,680 7.9%

Installation, maintenance, repair

3,940 4.6%

Transportation1,310

Sales1,150

All others2,250



SOUTHERN CALIFORNIA

Occupational Distribution USA vs CA 2014

Production30.4% 24.0%

Engineering20.8% 22.9%

Business / financial9.9% 8.9%

Computer / math 9.7% 11.1%

Management 8.4% 9.7%

Admin 8.3% 8.3%Maint. 5.5%

All other 6.4% 5.9%

US CA

0%

20%

40%

60%

80%

100%



SOUTHERN CALIFORNIA

Entry Level Requirement (next 5 years)

Less than HS

2.8%

HS43.2%

> HS< BA

12.7%

BA, no exp33.8%

BASome

exp7.1%

Graduate0.3%

0% 20% 40% 60% 80% 100%


What the Industry Says.


SOUTHERN CALIFORNIA



SOUTHERN CALIFORNIA

26%

28%

22%

16%

5%

4%

Excellent

Good

Fair

Poor

Very poor

DK/NA

“How would you rate Southern California as a place for aerospace firms to do business?”



SOUTHERN CALIFORNIA

“How satisfied is your firm with your access to capital in Southern California?”

36%

32%

22%

2%

8%

Very satisfied

Somewhat satisfied

Neither satisfied nordissatisfied

Somewhat dissatisfied

Very dissatisfied

Of those stating an opinion



SOUTHERN CALIFORNIA

“How satisfied is your firm with your access to customers in Southern California?”

38%

40%

13%

5%

32%

Very satisfied

Somewhat satisfied



Very dissatisfied




SOUTHERN CALIFORNIA

“How satisfied is your firm with your ability to recruit highly-skilled talent in Southern California?”

31%

32%

15%

12%

10%

Very satisfied

Somewhat satisfied



Very dissatisfied




SOUTHERN CALIFORNIA

“How satisfied is your firm with your ability to find qualified entry / mid-level talent in Southern California?”

29%

40%

12%

12%

7%

Very satisfied

Somewhat satisfied



Very dissatisfied




SOUTHERN CALIFORNIA

“How satisfied is your firm with your access to suppliers in Southern California?”

48%

39%

10%

3%

1%

Very satisfied

Somewhat satisfied



Very dissatisfied




SOUTHERN CALIFORNIA

“What are the biggest challenges to being located in Southern California?”

31%

22%21% 20%

14%

10%

7%

15%

Multiple responses allowed. Percentages may sum to more than 100%.


Strengths of Southern California:

“Diverse and professional ecosystem”

“Higher education resources”

“Quality of life”

“Spirit of risk-taking and innovation”


SOUTHERN CALIFORNIA


Take-Aways?


SOUTHERN CALIFORNIA


The industry’s deep roots,

established infrastructure and

forward-thinking new pioneers will

ensure a vibrant and robust future for

aerospace in Southern California.


SOUTHERN CALIFORNIA

THE CHANGING FACE

OF AEROSPACE in

SOUTHERN

CALIFORNIA

THE FUTURE IS HERE


pricewaterhousecoopers (pwc) · aircraft manufacturing $129.2 45.7% instrumentation $44.4 15.7%...

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