Aviation and Aerospace to the US

Trends and opportunities

The market

The United States (US) is one of the world’s biggest markets for aerospace, defence and space.

The US remains the highest spender on defence capability globally, with US$1.3 trillion allocated in the US 2019 budget for defence spending. (Source: US Department of Defense, FY 2019 Defense Budget 12 February 2019)

The US also remains the world’s biggest exporter of defence products. This provides opportunities for Australian industry to contribute to the US through global supply chains and providing niche capabilities.

The aerospace industry continues to be a key manufacturing industry for the US underpinned by major aircraft companies such as Boeing. The industry produces a range of components, systems and services for domestic and international use. The industry will also continue to grow, buoyed by growing domestic and global passenger numbers and demand for aircraft.

The US space industry is a global leader, with extensive and growing capabilities encompassing launch, research and development, communications and satellites and the full spectrum of supporting services. Australia’s own growing space industry has capabilities that complement that of the US and there are opportunities in areas such as space situational awareness, communications technologies and services.

US aviation, aerospace and defence industries are world leaders in the design, development and manufacture of technologically advanced aircraft, space systems and defence capabilities. The industries are one of the largest contributors of employment, earnings and wages in the US, supporting 2.4 million jobs in 2017. The aerospace and defence industries are major export earners for the US, with the industries accounting for 9% (US$143 billion) of total US exports in 2017.(Source: Aerospace Industries Association, ‘AIA Facts’ 12 February 2019)

Aerospace

The United States continues to be a key market for aviation, with strong future growth expected. The US market is expected to grow annually at approximately 1.9% per year out to 2038. (Source: Federal Aviation Authority, ‘FAA Aerospace Forecast 2018 – 2038’ 12 February 2019)

Demand for passenger aircraft is also expected to grow. The number of jet aircraft in the US is expected to grow 28% out to 2038, and the cargo jet aircraft fleet is forecasted to grow 37% out to 2038. However, the regional carrier fleet in the US is expected to shrink significantly over the same period, with turboprop and piston aircraft shrinking 79% out to 2038. (Source: Federal Aviation Authority, ‘FAA Aerospace Forecast 2018 – 2038’ 12 February 2019)

US civil aircraft production grew by 6% in 2017, led by higher shipments of helicopters, transport aircraft and general aviation systems. US exports also remained high, with US$122.8 billion in civilian aerospace. (Source: Aerospace Industries Association, ‘AIA Facts’ 12 February 2019)

Defence

The US has an expansive industrial base to develop, manufacture and maintain defence capabilities – including aircraft. This includes combat and non-combat aircraft, helicopters and Unmanned Aerial Systems (UAS), and other platforms. This sector also includes the design and manufacture of specialised components such as avionics, guidance-and control systems and reconnaissance and surveillance systems.

The US has seen the levels of competition and the size of its defence and manufacturing industrial base shrink in recent years. Concerned by these trends, the US recently completed a Presidential Executive Order report, entitled Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency. The report identifies several areas of weakness across the industrial base and commits the US to further investment and support to mitigate these weaknesses. (Source: US Department of Defense, ‘Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency’ 12 February 2019)

Overall, US military aircraft deliveries fell in 2017 because of lower volumes of military helicopters and trainer aircraft, while higher volumes of fighter, attack, transport and patrol aircraft continued. (Source:Aviation Industries Association: ‘2018 Annual Report’ 12 February 2019)

Space Systems

The US space industry is expected to grow significantly over the five years to 2023, with industry revenue forecast to climb an annualised 3.8% to US $34.4 billion. Space policy also enjoys bi-partisan support and the Congress’ most recent budget increased NASA’s budget by over US$1 billion to US$20.7 billion. Industry competition will intensify as new players continue to enter the market, while the commercial segment expands.

Deliveries of US space systems grew in 2017, driven by a surge in commercial space launches and payloads. In total, 29 US launch vehicles were flown in 2017, up seven units from the previous year.

Opportunities

A bulleted list or 2-3 paragraphs of opportunities and/or services that exist for Australian exporters.

The existing US aerospace and defence industries, and rapid growth in the space sector, means strong competition for companies seeking to enter the US. However, there remains good opportunities for Australian companies to contribute, including through exports. Notably, in 2017 imports to the US aerospace and defence industries totalled US$57 billion. (Source: Aerospace Industries Association, ‘AIA Facts’ 12 February 2019)

Aerospace

The US aerospace sector will see greater demand driven by increasing global passenger numbers and the renewal of aircraft fleets (with more fuel efficient aircraft introduced). This will create opportunities in aircraft, engine and parts manufacturing, assisted further by Boeing’s strong US presence and global supply chains. (Source: IbisWorld, ‘Aircraft, Engine and Parts Manufacturing in the US – December 2018’)

The aircraft maintenance, repair and overhaul industry is also anticipated to continue to steadily grow, driven by increased global demand and growth in the US mainline fleet. While there may be opportunities for Australian businesses with expertise, competition is strong due to established industry players, in-house airline maintenance and original equipment manufacturers. (Source: IbisWorld, ‘Aircraft, Engine and Parts Manufacturing in the US – December 2018’)

Defence

US capability acquisition projects will continue to draw upon global supply chains, providing opportunities for Australian businesses to contribute. Additionally, global demand for US defence exports, such as the F-35 Joint Strike Fighter will provide further opportunities for Australian industry to contribute.

Australian businesses with innovative, niche capabilities have recently encountered success in the US market on both small and larger scales.

Where these niche capabilities match US defence requirements there may be opportunities for Australian businesses to supply directly to the US market.

The recently completed Executive Order report into the US defence industrial base identified over 280 impacts that the US, working with allies and partners such as Australia, will seek to address. Australian businesses may find opportunities to contribute their own capabilities and offset these impacts. (Source:  US Department of Defense, ‘Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency).The positions of Australian industry in doing so may be aided by the close defence relationship between Australia and the United States, including Australia’s position as a part of the United States’ National Technology and Industrial Base.

Space

There are great opportunities for Australia’s space companies to play a role in the constantly evolving and expanding US space industry.

Australia’s own national civil space priorities complement that of the US, and companies active in these priority areas may find opportunities in the US. For example, areas such as space situational awareness and communications technologies, services and ground stations offer potential opportunities and are areas of proven Australian competitive advantage. (Source: Australian Space Agency, 12 February 2019)

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Market entry

Barriers to entry in the US aerospace and defence industries are high, due to a mix of regulatory requirements, strong domestic competition and the need for capital investments.(Source: IbisWorld, Aircraft, Engine and Parts Manufacturing in the US – December 2018) While several Australian companies have successfully established major facilities in the US, there are significant challenges in doing so.

Working through global supply chains and partnering with established US companies can be effective strategies to limit these barriers. Attendance at major US trade shows and events can also help facilitate market entry.

US export controls, especially the International Traffic in Arms Regulations (ITAR), can also have a significant impact on businesses exporting to the US or establishing a presence there due to their regulatory complexity and impact on business operations.

Defence

Australian industry will most likely achieve exports as part of the global supply chains of prime companies or in niche technologies or innovative solutions that complement the industrial capabilities of the other countries.

Engaging with US based prime contractors and providing components or services through their supply chain is one effective market entry strategy for companies.

The Australian Government’s Global Supply Chain (GSC) program includes Boeing, Leidos, Lockheed Martin, Northrop Grumman and Raytheon as members and can assist Australian businesses.

Australian businesses with innovative, niche capabilities may also find opportunities to directly enter the US market. However, doing so can be expensive and time consuming, with the defence industry characterised by complex regulatory requirements. Partnering with US businesses can help address these barriers.

Space

Australian businesses may find opportunities to work with key industry players in the space sector. This includes major primes like Boeing and Lockheed Martin and key industry players including SpaceX, Virgin’s Orbit and Galactic businesses, and Blue Origin. There are also a growing number of companies like NanoRacks and Astrobotic Technologies that are developing products and offering services for the commercial utilisation of space (both lower-Earth orbit and, starting 2021, lunar orbit and surface).

There are numerous established Space Industry hubs in the US that may assist with market entry. These are mostly clustered around NASA centres in Southern California, Houston, Florida’s Space Coast, and Huntsville, Alabama. Other key growth centres for space technologies include Seattle and Colorado.

There is a wide range of regular industry events and trade shows held regarding space and the space industry in the US. These can provide valuable opportunities to understand the sector and identify partners.

Next Steps

The US is a priority market under the Australian Government’s Defence Export Strategy. Companies are encouraged to engage the Australian Defence Export Office and/or Austrade to discuss available opportunities.

Information on the ADEO is at http://http://www.defence.gov.au/Export/Office/.

Austrade also has an expansive network in the US and works across the aerospace, defence and space sectors. We can assist businesses to enter the US market through providing advice on the market, identifying potential partners and preparing market visit programs. We also regularly conduct trade missions across all three sectors to support Australian exporters.

The Global Supply Chain Program, managed by the Centre for Defence Industry Capability, allows access to markets and opportunities through the supply chain of multinational defence primes.

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

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The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

  • develop international markets
  • win productive foreign direct investment
  • promote international education
  • strengthen Australia's tourism industry
  • seek consular and passport services.

Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.