The Southern California aerospace industry is maintaining its competitiveness, according to a detailed report just released by the Los Angeles Economic Development Corporation in March.
A common metric to capture competitiveness is employment concentration or location quotients. It is thought that the threshold to demonstrate regional competitiveness is a location quotient of at least 1.2. Using this threshold, it appears that the aerospace industry cluster as a whole continues to be relatively competitive in the Southern California region, with a location quotient of 2.14.
The Changing Face of Aerospace in Southern California
The nature of the aerospace industry in the Golden State is changing. Once home to numerous facilities manufacturing conventional airplanes, today the majority of growth in the industry lies in drone development and space-related technologies.
Today, the region is a leading powerhouse in guided missiles and space vehicles, a segment that has grown by more than 64 percent since 2004, most of this occurring in Los Angeles County. In fact, almost one quarter of the national employment in this industry segment is in Southern California. The growth in this segment is facilitated by startups and small firms.. The remarkable increase in the representation of small firms is a clear sign that the industry segment in Southern California is innovating quickly as new firms start out small.
Employment and Wages
Aerospace employment in California is less than half of what it was in 1990 due to the winding down of defense spending after the end of the Cold War. Declines have continued over the past decade but at a much slower rate.
The aerospace industry cluster employed 85,500 payroll workers in the eight-county Southern California region in 2014, accounting for more than 85 percent of all aerospace employment in California. More than 63 percent of industry employment in Southern California is in Los Angeles County, with 17.9 percent in Orange County and 14.1 percent in San Diego County.
Overall, it is clear that the space vehicle industry segments are growing and paying increasingly higher wages, while the industries associated with aircraft engines and parts are slowing. This is a harbinger of the future direction of the industry in Southern California.
Future Job Needs
Overall, it is expected that 2,250 new job openings will be created in the industry in Southern California over the next five years. The industry will need an additional 3,380 replacement workers over the same period.
Over the next five years, the highest number of openings will be found in occupations related to production, such as inspectors, assemblers, machinists and technicians (630 new jobs and 1330 replacement jobs). Engineering occupations will provide the second highest number of openings (520 new jobs and 910 replacement jobs).
The Future: the Disruptive Force of Exponential Technologies
According to the foreword written by PwC, the aerospace industry is in the midst of technological transformation. In Southern California, engineers and innovators are no longer focused on avionics alone, but introducing increasingly complex systems of communication, autonomy, advanced manufacturing processes, robotics and artificial intelligence.
Consequently, the aerospace industry is being split into a complex system of past development and information-based technologies of the future. The trend has been developing for a long time – commercial research and development has been outpacing defense four-fold since the 1990s. For some technologies, such as autonomy, the growth disparity has been much more pronounced. The integration of information technology and digitization – the so-called exponential technologies – into aerospace products and industries is becoming a disruptive force.
Today, aerospace companies in the U.S. employ less than one of every 150 engineers with expertise in areas such as autonomous systems, secure communications, artificial intelligence and machine learning. Further, these companies spend far less in R&D than technology companies (2% vs. 8%). Aerospace companies need to accelerate their ability to use digital technology. Otherwise they will find themselves increasingly sidelined.
While Southern California enjoys a long history of Aerospace innovation and manufacturing, Santa Clarita Valley is a newcomer who has enjoyed a rapid trajectory of growth. Thanks to its ample availability of land, modern facility, favorable business environment and easy access to major highways, more Aerospace companies are calling it home, providing products, services and solutions in such areas as flight controls, cockpit-to-surface solutions, large complex machined parts and assemblies, interior repair and overhaul, precision components, fluid control services and actuators, just to name a few. As Aerospace enters the new age of exponential technologies, the challenge is to attract more innovative companies – especially those startups in burgeoning fields – while training new generation aerospace workers and engineers.
To download the complete report, please click here.