Post on 17-Jul-2020
PricewaterhouseCoopers (PwC)
Mike Quindazzi,
Managing Director
THE CHANGING FACE
OF AEROSPACE in
SOUTHERN
CALIFORNIA
THE FUTURE IS HERE
INSTITUTE FOR APPLIED ECONOMICS
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
INSTITUTE FOR APPLIED ECONOMICS
The Future Has Arrived.
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
INSTITUTE FOR APPLIED ECONOMICS
Aerospace is being
transformed by exponential
technologies from within and
from outside the industry.
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
Linear platforms outpace exponential Future Disruption
Va
lue
Time
Exponential Growth Path
Linear Growth Path
Legacy Aerospace & Defense:
Linear vs. Exponential Growth
INSTITUTE FOR APPLIED ECONOMICS
Southern California remains
one of the world’s most
competitive regions for
aerospace innovation.
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
INSTITUTE FOR APPLIED ECONOMICS
Recent Industry Activity.
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
INSTITUTE FOR APPLIED ECONOMICS
Total Value of Shipments in 2014$ billions
THE CHANGING FACE OF AEROSPACE in
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:
$282.7 billion
INSTITUTE FOR APPLIED ECONOMICS
Composition of US Aerospace Exports 2014$ millions
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
Sizing Things Up.
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
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%
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
85,500
payroll
jobs
INSTITUTE FOR APPLIED ECONOMICS
Southern California Aerospace Employment
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
4.5%
-16.0%
4.7%
-39.1% -39.8%
24.4%
64.4%
-40%
-20%
0%
20%
40%
60%
Employment Growth Since 2004
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
INSTITUTE FOR APPLIED ECONOMICS
Employment by County 2014
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
Employment Growth by County
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
Average Annual Earnings in 2014
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
Real Wage Growth Since 2004
THE CHANGING FACE OF AEROSPACE in
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%
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
Spreading the Wealth.
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
INSTITUTE FOR APPLIED ECONOMICS
Composition of Outlays 2014
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
85,500 payroll jobs
• 245,770 total jobs
• $20.3 billion labor income
• 2.4 percent of SoCal GDP
• $7 billion S/L taxes
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
Aerospace Industry Economic Contribution
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
Work, Work, Work.
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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%
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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%
INSTITUTE FOR APPLIED ECONOMICS
What the Industry Says.
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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?”
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
“How satisfied is your firm with your access to customers in Southern California?”
38%
40%
13%
5%
32%
Very satisfied
Somewhat satisfied
Neither satisfied nordissatisfied
Somewhat dissatisfied
Very dissatisfied
Of those stating an opinion
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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
Neither satisfied nordissatisfied
Somewhat dissatisfied
Very dissatisfied
Of those stating an opinion
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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
Neither satisfied nordissatisfied
Somewhat dissatisfied
Very dissatisfied
Of those stating an opinion
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
“How satisfied is your firm with your access to suppliers in Southern California?”
48%
39%
10%
3%
1%
Very satisfied
Somewhat satisfied
Neither satisfied nordissatisfied
Somewhat dissatisfied
Very dissatisfied
Of those stating an opinion
INSTITUTE FOR APPLIED ECONOMICS
THE CHANGING FACE OF AEROSPACE in
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%.
INSTITUTE FOR APPLIED ECONOMICS
Strengths of Southern California:
“Diverse and professional ecosystem”
“Higher education resources”
“Quality of life”
“Spirit of risk-taking and innovation”
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
INSTITUTE FOR APPLIED ECONOMICS
Take-Aways?
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
INSTITUTE FOR APPLIED ECONOMICS
The industry’s deep roots,
established infrastructure and
forward-thinking new pioneers will
ensure a vibrant and robust future for
aerospace in Southern California.
THE CHANGING FACE OF AEROSPACE in
SOUTHERN CALIFORNIA
THE CHANGING FACE
OF AEROSPACE in
SOUTHERN
CALIFORNIA
THE FUTURE IS HERE
INSTITUTE FOR APPLIED ECONOMICS