The Aerospace Industry Partners Meeting March 29, 2016 Which Costs - PowerPoint PPT Presentation

The Aerospace Industry Partners Meeting March 29, 2016

Which Costs More? Boeing 747 Lockheed Martin F-22 Raptor $412 million $378 million

How Many Chevy Cruzes For One GE-90 Engine? Approximate Cost: $20,000 Approximate Cost: $24 million 1,200 Chevy Cruzes

Meeting Overview • Aerospace Industry Overview • Aerospace in NEO • Aerospace Trends • Opportunities for NEO

Meeting Objectives • Become more knowledgeable about the aerospace industry • Learn about new technologies that can keep a company competitive • Be able to talk to a company about aerospace opportunities and how to get into the industry • Learn about resources to connect aerospace companies to in order to help them grow

Aerospace Value Chain

Determinants of Demand

Determinants of Demand

Commercial Aircraft Demand Expected to Increase • Passenger demand is expected to double in next 20 years • Boeing and Airbus have a backlog of 12,400 orders for aircraft estimated to be 9 years worth of production • Commercial production will increase 30% over next decade

Global Military Aircraft Demand Shrinking US Market but Global Growth • Department of Defense is projecting $86 billion in cuts from 2016-2019 for military aircraft • U.S. companies are relying more on exports with domestic demand shrinking • Military demand will be steady outside of the U.S. • Tensions in Asia are leading to growth in Asian air defense forces

Growth in Emerging Markets • Asia expected to be the largest air travel market over the next 20 years

Strong Projected Production Growth

Production also Influenced by Replacement Need

Changing Economics of Commercial Air Travel • Fuel efficient aircraft like the Boeing 787 are changing the economics of air travel making new flights viable • The best ways for airlines to bring in more customers is to create new routes and provide more frequent departures

The Aerospace Industry Ohio and Northeast Ohio

Aerospace in • 1 st ranked U.S. supplier state to Boeing and Airbus • 1 st Industry size ranking for 2015 (PwC) • 3 rd Aerospace Manufacturing Attractiveness Ranking 2015 (PwC) • 26,521 Aerospace workforce (private) • 528 Aviation and Aerospace firms

JobsOhio Strategy • Manufacturing Focus – Unmanned aerial systems – Systems, components, and parts manufacturing – Commercial space • Aerospace Sales and Outreach – Airline Services, MRO – Aerospace sales campaign • Technology Focus – Attend major international – Additive Manufacturing aerospace shows – Strategic BRE outreach to – Advanced Materials top aerospace companies – Automation/Internet of in Ohio Things/Intelligent Machines

Aerospace in NEO • NEO Aerospace Employment: 9,745 – (3.6% of manufacturing workforce) • NEO Aerospace GRP: $2.5 billion – (6.1% of manufacturing output) • 180 NEO Aerospace Manufacturing Companies:

Aerospace in NEO Aerospace Employment in NEO 2006-2016 7,000 5,791 6,000 5,529 5,527 5,479 5,473 5,405 5,286 5,258 5,182 5,137 4,946 5,000 4,069 4,023 3,953 3,954 3,962 3,932 3,911 3,831 3,812 3,748 3,731 4,000 3,000 2,000 1,000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jobs Jobs Jobs Jobs Jobs Jobs Jobs Jobs Jobs Jobs Jobs Navigational, Measuring, Electromedical, and Control Instruments Manufacturing Aerospace Product and Parts Manufacturing

Aerospace in NEO Aerospace GRP NEO 2006-2016 1,800 1,679.6 1,603.0 1,541.2 1,600 1,470.1 1,444.7 1,422.2 1,424.7 1,403.6 1,338.6 1,297.5 1,400 1,228.4 1,200 $ Millions 941.0 1,000 884.7 842.8 784.7 769.5 747.9 730.6 800 622.2 625.8 577.9 551.6 600 400 200 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Aerospace Product and Parts Manufacturing Navigational, Measuring, Electromedical, and Control Instruments Manufacturing

Aerospace Supply Chain in NEO is 3x as Large as the National Average Industry 2015 Location Quotient 2.5 Plastics Product Manufacturing 4.2 Iron and Steel Mills and Ferroalloy Manufacturing 2.7 Alumina and Aluminum Production and Processing 3.8 Foundries 4.8 Forging and Stamping 1.2 Architectural and Structural Metals Manufacturing 1.3 Spring and Wire Product Manufacturing 2.9 Machine Shops; Turned Product; and Screw, Nut, and Bolt Manufacturing 3.6 Other Fabricated Metal Product Manufacturing

Aerospace in NEO NEO Aerospace Companies

Alcoa 50,000 Ton Press • $100 million rebuild completed in 2012 • Produces parts for aircraft including the F-35 Joint Strike Fighter

Aerospace in NEO Nextant Aerospace • More than 40 400XTIs remanufactured • Nextant’s backlog for the 400XTI represents a quarter of the available fleet of about 600 jets • Nextant is planning future models

Aerospace Workforce Top 20 Occupations Median Hourly Median Hourly Wage 2015 Occupation 2015 Jobs Earnings Earnings Difference Location Northeast Ohio United States NEO vs USA Quotient Aerospace Engineers 895 $51.02 $51.57 ($0.55) 0.92 Engineers Electrical Engineers 1,853 $36.99 $44.65 ($7.66) 0.76 Electronics Engineers, Except Computer 1,028 $39.77 $46.80 ($7.04) 0.54 Industrial Engineers 3,946 $35.94 $39.79 ($3.85) 1.19 Mechanical Engineers 4,002 $33.92 $40.36 ($6.44) 1.05 Engineers, All Other 2,613 $40.56 $46.07 ($5.50) 1.46 Electrical and Electronics Engineering 1,042 $25.45 $28.71 ($3.26) 0.55 Technicians Engineering Technicians, Except Drafters, All 1,397 $28.62 $29.93 ($1.31) 1.46 Other First-Line Supervisors of Production and 11,517 $25.48 $26.99 ($1.51) 1.40 Operating Workers Aircraft Structure, Surfaces, Rigging, and 93 $23.83 $23.92 ($0.09) 0.17 Systems Assemblers Electrical and Electronic Equipment Assemblers 3,258 $13.25 $14.62 ($1.37) 1.14 Production Electromechanical Equipment Assemblers 1,010 $15.21 $15.97 ($0.75) 1.55 Team Assemblers 21,796 $14.50 $13.95 $0.55 1.37 Assemblers and Fabricators, All Other 6,638 $12.58 $12.95 ($0.37) 1.98 Computer-Controlled Machine Tool Operators, 5,855 $17.15 $17.84 ($0.69) 2.85 Metal and Plastic Cutting, Punching, and Press Machine Setters, 8,426 $14.93 $14.98 ($0.04) 3.22 Operators, and Tenders, Metal and Plastic Machinists 11,340 $18.04 $19.38 ($1.34) 2.09 Multiple Machine Tool Setters, Operators, and 5,037 $15.30 $16.50 ($1.20) 3.75 Tenders, Metal and Plastic Tool and Die Makers 4,355 $25.63 $24.27 $1.36 4.10 Inspectors, Testers, Sorters, Samplers, and 10,600 $16.75 $17.27 ($0.52) 1.55 Weighers Total 106,701 $20.20 $23.53 ($3.34) 1.90

NEO Aerospace Education • Case Western Reserve- Aerospace Engineering • Cleveland State- Mechanical Engineering including Aerospace • University of Akron- Aerospace Systems Engineering • All three universities also have strong programs in materials used in aerospace

Aerospace Resources in NEO

NASA Glenn • 1568 Civil servants and 1560 contractors in Cleveland • NASA Plum Brook- 6500 acres and 115 employees • $567 million budget in 2014 with 50% dedicated to aerospace • NASA is pushing its scientists to look for more technology transfer and commercialization opportunities

NASA Glenn Core Competencies

Glenn Service Offerings to Non-NASA Community

Ohio Aerospace Institute • Mission: Enhance Ohio’s aerospace competitiveness through research and technology development, workforce preparedness, and engagement with global networks for innovation and advocacy. • Services: Contact – Technology Roadmapping Ann Heyward – Assessment tools Executive Vice President – Proposal development Phone: 440.962.3030 – Project management Email: AnnHeyward@oai.org

The Aerospace Industry New Technologies and Opportunities for NEO

Aerospace Technology OEMs are Pushing Suppliers to Invest in New Technologies • Aircraft OEMs are demanding high standards of production from their suppliers and companies that can not innovate and keep up with new technology will not be able to compete • Competitive pricing pressures make the competition fierce among suppliers

Aerospace Industry Trends Fuel Efficiency • Fuel accounts for 30-40% of airline operating expenses • Reducing weight and increasing engine efficiency are the two main strategies used to reduce fuel consumption • Low fuel prices recently have had an effect on fuel efficiency driven sales but airlines are making long term decisions when purchasing aircraft and lowering fuel consumption is still important

Aerospace Opportunity for NEO Lightweight Materials • Aircraft manufacturers are increasingly using advanced lightweight materials like carbon fiber composites to reduce fuel consumption • The Boeing 787 airframe is made up of 50% composite materials

Aerospace Opportunity for NEO Increase Exports • Ohio exports $5.3 billion worth of aerospace goods each year Aerospace Exports Country 2015 France $1,300,555,977 Canada $554,897,101 Brazil $451,445,425 United Kingdom $416,771,913 China $375,178,694 South Korea $196,883,569 Mexico $190,101,464 Germany $176,807,461

Aerospace Opportunity for NEO Increase Exports

Aerospace Opportunity for NEO Unmanned Aerial Vehicles