The aerospace industry comprises companies producing aircraft, guided missiles, space vehicles, aircraft engines, propulsion units, and related parts. Aircraft overhaul, rebuilding, and parts also are included.
Firms producing transport aircraft make up the largest segment of the civil (non-military) aircraft portion of the industry. Civil transport aircraft are produced for air transportation businesses such as airlines and cargo transportation companies. These aircraft range from small turboprops to jumbo jets and are used to move people and goods all over the world. Another segment of civil aircraft is general aviation aircraft. General aviation aircraft range from the small two-seaters designed for leisure use to corporate jets designed for business transport. Civil helicopters, one of the smallest segments of civil aircraft, are commonly used by police departments, emergency medical services, and businesses such as oil and mining companies that need to transport people to remote worksites.
Military aircraft and helicopters are purchased by governments to meet national defense needs, such as delivering weapons to military targets and transporting troops and equipment around the globe. Some of these aircraft are specifically designed to deliver a powerful array of ordnance to military targets with tremendous maneuverability and low detectability. Aircraft engine manufacturers, not the aircraft manufacturers, produce the engines used in civil and military aircraft. These manufacturers design and build engines according to the aircraft design and performance specifications of the aircraft manufacturers. Aircraft manufacturers may use engines designed by different companies on the same type of aircraft.
Firms producing guided missiles and missile propulsion units sell primarily to military and government organizations. Although missiles are viewed predominantly as offensive weapons, improved guidance systems have led to their increased use as defensive systems. This part of the industry also produces space vehicles and the rockets for launching them into space. Consumers of spacecraft include the National Aeronautics and Space Administration (NASA), the U.S. Department of Defense (DOD), telecommunications companies, television networks, and news organizations. Firms producing space satellites are discussed with the computer and electronic product manufacturing industry in this publication because satellites are primarily electronic products.
In 2002, about 2,800 establishments made up the aerospace industry. In the aerospace parts industry, most establishments were subcontractors that manufacture parts and employ fewer than 100 workers. Nevertheless, 64 percent of the jobs in aerospace manufacturing were in large establishments that employed 1,000 or more workers.
The Federal Government traditionally has been the aerospace industry’s biggest customer. The vast majority of Government contracts to purchase aerospace equipment are awarded by DOD. NASA also is a major purchaser of the industry’s products and services, mainly for space vehicles and launch services.
The aerospace industry is dominated by a few large firms that contract to produce aircraft with Government and private businesses, usually airline and cargo transportation companies. These large firms, in turn, subcontract with smaller firms to produce specific systems and parts for their vehicles. Government purchases are largely related to defense. Typically, DOD announces its need for military aircraft or missile systems, specifying a multitude of requirements. Large firms specializing in defense products subsequently submit bids, detailing proposed technical solutions and designs, along with cost estimates, hoping to win the contract. Firms may also research and develop materials, electronics, and components relating to their bid, often at their own expense, in order to enhance their chance of winning the contract. Following a negotiation phase, a manufacturer is selected and a prototype vehicle is developed and built, and then tested and evaluated. If approved by DOD, the program enters production. This process usually takes many years.
Commercial airlines and private businesses typically identify their needs for a particular model of new aircraft based on a number of factors, including the routes they fly. After specifying requirements such as range, size, cargo capacity, type of engine, and seating arrangements, the airlines invite manufacturers of civil aircraft and aircraft engines to submit bids. Selection ultimately is based on a manufacturer’s ability to deliver reliable aircraft that best fit the purchaser’s stated market needs at the lowest cost and at favorable financing terms.
The way in which commercial and military aircraft are designed, developed, and produced is undergoing significant change in response to the need to cut costs and deliver products more quickly. Firms producing commercial aircraft have reduced development time drastically through computer-aided design (CAD), which allows firms to design an entire aircraft, including the individual parts, solely by computer. The drawings of these parts can be sent electronically to subcontractors who use them to program their machinery. Product development teams are increasingly being used through every phase of development, bringing customers, engineers, and production workers together to make decisions concerning the aircraft. Additionally, the military has changed its design philosophy, using available commercially available, off-the-shelf technology when appropriate, rather than developing new customized components.