The Aerospace Industry Which Costs More?

Boeing 747 F-22 Raptor $378 million $412 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 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 Demand Expected to Increase

• Passenger demand is expected to double in next 20 years

• and 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 to bring in more customers is to create new routes and provide more frequent departures The Aerospace Industry

Ohio and Northeast Ohio Aerospace in

• 1st ranked U.S. supplier state to Boeing and Airbus

• 1st Industry size ranking for 2015 (PwC)

• 3rd 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 – Services, MRO • Aerospace Sales and Outreach – Aerospace sales campaign • Focus – Attend major international – Additive Manufacturing aerospace shows – Advanced Materials – Strategic BRE outreach to – Automation/Internet of top aerospace companies Things/Intelligent Machines in Ohio 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 5,405 5,479 5,529 5,473 5,527 5,258 5,137 5,286 5,182 4,946 5,000 4,023 4,069 3,831 3,932 3,812 3,911 3,953 3,954 3,962 4,000 3,731 3,748

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 1,422.2 1,444.7 1,424.7 1,403.6 1,297.5 1,338.6 1,400 1,228.4 1,200 941.0 1,000 842.8 884.7 747.9 784.7 769.5 800 730.6 622.2 625.8 $ Millions $ 551.6 577.9 600 400 200 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

Iron and Steel Mills and Ferroalloy Manufacturing 4.2 2.7 Alumina and Aluminum Production and Processing

Foundries 3.8

Forging and Stamping 4.8

Architectural and Structural Metals Manufacturing 1.2

Spring and Wire Product Manufacturing 1.3

Machine Shops; Turned Product; and Screw, Nut, and Bolt 2.9 Manufacturing

Other Fabricated Metal Product Manufacturing 3.6 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 Electrical Engineers 1,853 $36.99 $44.65 ($7.66) 0.76 Electronics Engineers, Except 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 1,042 $25.45 $28.71 ($3.26) 0.55 Technicians

Engineers 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 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

Production 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- • 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 and advocacy.

• Services: – Technology Roadmapping Contact Ann Heyward – Assessment tools Executive Vice President – Proposal development Phone: 440.962.3030 – Project management Email: [email protected] 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 Aerospace Opportunity for NEO Unmanned Aerial Vehicles

• Predicted to double over the next decade (AIA)

• Still confusion over integrating UAVs into national air system

• Regulation of UAVs having trouble keeping up with technological advancement

• There will be opportunities in airframe design but most opportunity will be in software Aerospace Opportunity for NEO Unmanned Aerial Vehicles Support Network Aerospace Opportunity for NEO Commercial Space • NASA is Focusing on deep space missions and leaving the private sector to lead low earth orbit missions

• The goal is to build a strong commercial space sector in the United States

• Leading commercial space companies include Boeing and SpaceX Aerospace Opportunity for NEO Additive Manufacturing • Additive Manufacturing is helping aerospace companies make parts lighter to meet fuel efficiency targets

• Aerospace is the perfect market for additive manufacturing because of weight requirements, low production volumes, and high precision manufacturing

• Additive manufacturing using metal is most applicable to aerospace but can be expensive to implement (Machine cost can be $1 million and up)

• Additive manufacturing can help a company break into the aerospace supply chain Aerospace Opportunity for NEO Additive Manufacturing Help Companies Become a Part of the Aerospace Supply Chain

• The Quality management system for automotive (ISO/TS 16949:2009) is similar to the Aerospace system (AS9100C)

• Companies must be certified AS9100C to supply to tier 1 and tier 2 aerospace suppliers

• A revision is underway to the new AS9100D standard. This should be complete in the next few months.

• NADCAP (National Aerospace and Defense Contractors Accreditation Program) may also be required for certain parts as well as individual manufacturer standards

• MAGNET can help companies implement these Quality Management Systems and achieve certification Aerospace Summary

• Aerospace is projected to experience strong and steady growth over the next two decades

• Ohio and NEO have a robust aerospace industry with many leading companies and research institutions

• New technologies and emerging sub-industries are creating opportunities and challenges for aerospace companies.

• Economic developers have many resources available to help companies overcome their challenges and take advantage of opportunities