the aerospace advantage

Transcription

1 the aerospace advantage OPPORTUNITIES FOR AEROSPACE MANUFACTURERS IN SOUTHWEST OHIO Aerospace manufacturing is an important economic driver in the U.S., employing more than 400,000 at an average annual income of over $80,000. However, the aerospace manufacturing industry has also been heavily impacted by globalization, forcing the industry to continuously improve performance, decrease production costs, and shorten the time to market in order to stay competitive in the global marketplace. The Dayton Region has much to offer the aerospace manufacturing industry to help them remain competitive. With a history in aviation innovation and an economy built on manufacturing, the Dayton Region offers a strong and diverse manufacturing base, from materials to high-tech aerospace systems. The Dayton Region is the home base for the Air Force Research Laboratory, offering access to aerospace research and development that can result in improved performance and efficiencies for aerospace manufacturers. Even better, the Dayton Region s Midwestern location makes economic sense. With lower wages and costs of living than the East and West coasts, businesses can find competitive wages for a talented workforce. In addition, the Region offers access to major interstates and transportation infrastructure, making it simple for businesses to reach markets, suppliers, or aircraft manufacturers.

2 aerospace development Joe Zeis Vice President/Chief Strategist membership Maureen Patterson Vice President, Stakeholder Relations 900 Kettering Tower Dayton, Ohio business development Marty Hohenberger Vice President, Business Development data analytics Kim Frazier Executive Director, Strategic Analytics and Evaluation 2012 dayton development coalition

3 ohio s supply chain resources The Dayton Region, like many other cities in Ohio and the Midwest, has a strong history of manufacturing. The manufacturing industry was the most prominent driver industry in the 20th century. Although the Dayton Region lost much of its automotive manufacturing in the last decade, aerospace manufacturing grew by more than 30 percent during the same period. This manufacturing infrastructure, along with a robust transportation and logistics network, has created a state-wide ecosystem for aircraft parts manufacturing and the aircraft assembly supply chain. 90 TOLEDO EXPRESS TOLEDO BURKE LAKEFRONT CLEVELAND 80 NASA GLENN CLEVELAND-HOPKINS INT L AKRON-CANTON AKRON 76 YOUNGSTOWN-WARREN REGIONAL CANTON DAYTON INT L 70 COLUMBUS PORT COLUMBUS INT L New York DAYTON WPAFB RICKENBACKER INLAND PORT Chicago Dayton Philadelphia Washington D.C. WILMINGTON AIR PARK St. Louis CINCINNATI 74 Atlanta CINCINNATI-NORTHERN KENTUCKY INT L OPPORTUNITIES FOR AEROSPACE MANUFACTURING IN SOUTHWEST OHIO 1

4 manufacturing capacity Although no aircraft are currently being manufactured in Southwest Ohio, the Region is a national leader in the aircraft manufacturing supply chain. The combined strengths of both Dayton and Cincinnati create a nearly complete supply chain within just a 50-mile radius of Dayton. Of the top 30 manufacturing industries that the aircraft manufacturing industry requires for aircraft production, 28 exist in the state of Ohio and 24 are concentrated in Southwest Ohio. The location quotient (LQ) measures the concentration of that industry within a region (US=1.0). The Southwest Ohio Region has a higher concentration in almost all of the related support industries. In the rare instances where the industry does not exist in Southwest Ohio, other Ohio metropolitan areas offer the manufacturing needed to support the aircraft industry. NAICS Industry Description Amount Spent in US Aircraft Manufacturing Supply Chain MSA with Greatest Industry Concentration 2012 Jobs 2012 LQ Other Aircraft Parts and Auxiliary Equipment Manufacturing $8,627,160,000 Dayton 1, Aircraft Engine and Engine Parts Manufacturing $7,910,580,000 Cincinnati 8, Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing $5,294,450,000 Dayton Aircraft Manufacturing $2,214,130,000 n/a n/a n/a Semiconductor and Related Device Manufacturing $1,423,170,000 Toledo 1, Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing $986,767,000 Cincinnati Iron and Steel Mills $917,831,000 Cincinnati 2, Other Measuring and Controlling Device Manufacturing $456,320,000 Dayton Fluid Power Valve and Hose Fitting Manufacturing $317,501,000 Dayton Machine Shops $301,638,000 Dayton 1, All Other Plastics Product Manufacturing $274,713,000 Dayton 1, Industrial Valve Manufacturing $232,374,000 Cincinnati Fluid Power Pump and Motor Manufacturing $219,771,000 Akron Fluid Power Cylinder and Actuator Manufacturing $155,706,000 Dayton Hardware Manufacturing $148,740,000 Cincinnati Other Metal Valve and Pipe Fitting Manufacturing $141,527,000 Cincinnati Iron and Steel Pipe and Tube Manufacturing from Purchased Steel $135,248,000 Cincinnati Rolled Steel Shape Manufacturing $128,051,000 Cincinnati Current-Carrying Wiring Device Manufacturing $127,200,000 Cincinnati Printed Circuit Assembly (Electronic Assembly) Manufacturing $123,634,000 Dayton Bolt, Nut, Screw, Rivet, and Washer Manufacturing $122,405,000 Cincinnati All Other Motor Vehicle Parts Manufacturing $121,538,000 Dayton Aluminum Sheet, Plate, and Foil Manufacturing $116,782,000 Canton Ball and Roller Bearing Manufacturing $111,498,000 Canton 4, Precision Turned Product Manufacturing $106,102,000 Dayton Aluminum Extruded Product Manufacturing $104,226,000 Cincinnati Guided Missile and Space Vehicle Manufacturing $103,895,000 n/a n/a n/a Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals $93,872,700 Cincinnati Corrugated and Solid Fiber Box Manufacturing $90,885,200 Cincinnati 1, Iron and Steel Forging $89,654,700 Dayton Source: EMSI Complete Employment 2 THE AEROSPACE ADVANTAGE

5 SD In these same 30 industries in the supply chain, Ohio ranks third in the number of jobs, with only California and Texas leading. Yet the difference in average annual wages between the other states and Ohio is significant. Ohio s capacity to significantly contribute to aerospace production is a direct result of the manufacturing strengths the state developed throughout the 20th century. Many of the industries that comprise the aircraft manufacturing supply chain also support other industries. The existing concentration of these critical components not only places Ohio third in the nation for capacity the state is a national leader in 12 of the industries. State 2011 Jobs 2011 Average Annual Wages California 301,391 $113,529 Texas 173,556 $96,556 Ohio 134,903 $73,187 Washington 105,998 $111,645 Illinois 102,629 $74,162 Pennsylvania 101,157 $75,119 Michigan 95,500 $71,800 Indiana 92,602 $76,515 New York 78,188 $80,869 Arizona 68,133 $112,789 Source: EMSI Complete Employment This concentration, capacity, and affordability makes Ohio a leading competitor for future aircraft manufacturing growth and an asset to any aerospace company. aircraft manufacturing supply chain CAPACITY COMPARATIVE ANALYSIS FL CT AZ MA AL KY GA SC MN TN UT WA MD IA MO NH KS AR NJ OR MS CO ID NM VA WV LA OK MT WI NC NV WY ME PA NY MI RI VT AK IL IN Increasing Concentration and Competitiveness HI DE CA TX OH ND NE NAICS Required for Aircraft Manufactuing contribution to the supply chain Other Aircraft Parts and Auxiliary Equipment Aircraft Engine and Engine Parts Search, Detection, Navigation Aircraft Semiconductor and Related Device Radio, TV, & Wireless Communications Equipment Iron and Steel Mills Other Measuring and Controlling Device Fluid Power Valve and Hose Fitting Machine Shops All Other Plastics Product Industrial Valve Fluid Power Pump and Motor Fluid Power Cylinder and Actuator Hardware Other Metal Valve and Pipe Fitting Iron and Steel Pipe and Tube from Purchased Steel Rolled Steel Shape Current-Carrying Wiring Device Printed Circuit Assembly (Electronic Assembly) Bolt, Nut, Screw, Rivet, and Washer All Other Motor Vehicle Parts Aluminum Sheet, Plate, and Foil Ball and Roller Bearing Precision Turned Product Aluminum Extruded Product Guided Missile and Space Vehicle Instrument for Measuring and Testing Signals Corrugated and Solid Fiber Box Iron and Steel Forging >$1B $1B - $200M $200M - $100M <$100M = top 3 within the NAICS = top 10 within the NAICS OPPORTUNITIES FOR AEROSPACE MANUFACTURING IN SOUTHWEST OHIO 3

6 research and development The aerospace industry demands innovation to stay competitive. Whether using new materials, adapting new technologies, or improving system performance, aerospace companies will need access to the latest developments in aerospace and its related technologies. Unlike other communities that manufacture aircraft, such as Seattle or Wichita, the Dayton Region leads aerospace research and development. Home of the Air Force Research Laboratory, the Region also houses R&D contractors and small businesses that focus on the technological needs of the Air Force and the aerospace industry. Of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) contracts awarded by the Air Force, the Dayton Region ranks fourth in the nation for dollars awarded. air force SBIR dollars awarded PER MSA FROM (IN MILLIONS) boston, ma los angeles, ca washington d.c. dayton, oh san diego, ca san jose, ca new york, ny $- $50 $100 $150 $200 $250 $300 $350 $400 $450 Not only does Dayton rank fourth in the total amount of SBIR/STTR dollars awarded from the Air Force, Dayton leads the nation in the concentration of Air Force SBIR/STTR as a percent of the Region s Gross Domestic Product (GDP). Boston, Los Angeles, and Washington, D.C. may lead Dayton in the actual research dollars into the Region, but by measuring the R&D aerospace concentration of a Region, Dayton leads the nation. intensity of SBIR research per GDP compared to national average (# OF TIMES CONCENTRATION OF NATIONAL AVERAGE) dayton, oh boston, ma san diego, ca san jose, ca los angeles, ca washington d.c. new york, ny THE AEROSPACE ADVANTAGE

7 One of the Dayton Region s most important assets is the Air Force Research Laboratory (AFRL). Of the ten directorates of AFRL, five of them are located at Wright-Patterson Air Force Base (WPAFB) in Dayton. The five directorates include: Materials and manufacturing; Power and propulsion; Sensors; Human Performance; and Air Vehicles. AFRL s research and development budget alone is nearly twice the R&D investment made by all Ohio Academic and public institutions. In fact, if AFRL s R&D expenditures were compared to all the other state s university (public and private) R&D expenditures, AFRL ranks #3. Only California and New York universities are spending more on R&D. Additionally, federal agencies have invested $731 million in Ohio small businesses over the last ten years through Small Business Innovative Research and Small Business Technology Transfer (SBIR/STTR) contracts. These cornerstones to the Region and the State s R&D are foundational to increasing industry opportunities. public r&d by state compared to AFRL r&d budget EXPENDITURES IN BILLIONS $8.00 $7.00 $6.00 R&D Expenditures in billions $5.00 $4.00 $3.00 $2.00 $1.00 $- CO WA VA WI GA FL MI OH IL NC MA PA MD TX AFRL NY CA Funding Sources Institution funds Federal government State and local government Industry All other sources Source: State expenditures represent higher-education R&D reported to NSF; AFRL figures from FY09 data OPPORTUNITIES FOR AEROSPACE MANUFACTURING IN SOUTHWEST OHIO 5

8 logistics and distribution The Dayton Region and the State of Ohio offer a business-friendly environment. Site Selection magazine awarded Ohio with the 2011 Governor s Cup, recognizing its national leadership in the development of new and expansion projects. In addition, Dayton tied for second place in the top metro areas. The State of Ohio has aggressively reformed its tax structure, making it easier for companies to do business in Ohio. A recent report by Ernst & Young entitled Competitiveness of State and Local Business Taxes on New Investment ranked Ohio as having the third-friendliest tax environment in the U.S. and the friendliest in the Midwestern region. In addition to its business-friendly climate, the Dayton Region is well positioned to support aerospace manufacturing. Dayton and Cincinnati together offer a strong concentration of aerospace manufacturing and the supply chain that supports it. And Dayton s prominence in aerospace research and development connects the aerospace industry to the research and innovation that is required for companies to adapt to new technologies and continue to be competitive. Dayton is also a convenient location for aerospace manufacturers and the access to the supply chain that they required. Dayton, Ohio sits at the intersection of I-70 and I-75, one of the most highly traveled intersections in the United States. The Dayton Region is within 600 miles of 53 percent of the U.S. population and 60 percent of workers currently employed in manufacturing industry, providing short commutes to major markets. Five international airports Cincinnati, Dayton, Columbus, Louisville and Indianapolis are within a 90-mile drive from Southwest Ohio. Those five airports are responsible for more than 15% of all air cargo in North America. ohio airport cargo rankings among the busiest north american airports BASED ON 2010 TRAFFIC REPORTS Rank Airport (airport code) Total Cargo (metric tones) Airports within a 90 mile radius of Southwest Ohio 3 Louisville International Airport (SDF) 2,166,656 8 Indianapolis International Airport (IND) 1,012, Cincinnati-Northern Kentucky International Airport (CVG) 371, Dayton International Airport (DAY) 8, Port Columbus International Airport (CMH) 4, Blue Grass Airport (LEX) 75 Other major Ohio airports 22 Toledo Express Airport (TOL) 254, Cleveland-Hopkins International Airport (CLE) 79, Rickenbacker Inland Port (LCK) 69, Burke Lakefront Airport (BKL) Akron-Canton (CAK) 65 Total 3,967,973 Source: Airports Council International 6 THE AEROSPACE ADVANTAGE

9 An ideal spot for manufacturers, Ohio offers a variety of options for moving materials. Ohio is ranked the top state in both value and weight of domestic shipments, and offers the infrastructure required to move those shipments. The largest transportation and logistics in Ohio is the trucking industry. Ohio has the sixth-largest interstate system in the U.S., with nearly 1,600 miles of interstate, including eight major interstate highways. Ohio s trucking industry is the fourth largest in the U.S., employing nearly 70,000 people. Ohio s rail system employs 7,800 people and is the third largest in the U.S. for rail miles, including 36 freight railroads covering 5,800 miles that transports $1.8 billion in shipments. Rail spurs connect truck, air, and water traffic, maximizing the logistics infrastructure that the Ohio offers. Recent investments include construction that will allow doublestacked trains to transport across Ohio. Cleveland, Columbus, Dayton, and Cincinnati all offer international airports, and two regional airports are located in Akron and Youngstown. Air transport includes air-cargo hubs at Wilmington Air Park in Wilmington, Rickenbacker International Airport near Columbus, and Toledo Express in Toledo, Ohio. Water transport is also an option for moving shipments. Bordered to the south by the Ohio River, which feeds into the Mississippi, and to the north by the Great Lakes, Ohio offers 209 ports along 716 miles of waterways that lead to the Gulf of Mexico and the St. Lawrence Seaway. 90 TOLEDO EXPRESS TOLEDO BURKE LAKEFRONT CLEVELAND 80 NASA GLENN CLEVELAND-HOPKINS INT L AKRON-CANTON AKRON 76 YOUNGSTOWN-WARREN REGIONAL CANTON DAYTON INT L COLUMBUS 70 PORT COLUMBUS INT L INDIANAPOLIS INT L INDIANAPOLIS, IN INDIANA DAYTON WPAFB RICKENBACKER INLAND PORT WILMINGTON AIR PARK 65 CINCINNATI 74 CINCINNATI-NORTHERN KENTUCKY INT L KENTUCKY LOUISVILLE INT L LOUISVILLE, KY 64 BLUE GRASS LEXINGTON, KY For more information on Ohio s Logistics and Distribution assets refer to Gaining Access to North American Markets: The Ohio/Texas Advantage. White Paper, Ohio Business Development Coalition, OPPORTUNITIES FOR AEROSPACE MANUFACTURING IN SOUTHWEST OHIO 7

10 the southwest ohio advantage The Dayton Region in Southwest Ohio provides an ideal location for the aerospace manufacturing industry. The Region s history of aviation and of manufacturing laid the foundation for a community that leads the way in research and development, innovation, aerospace, and advanced manufacturing. Even better, the Midwestern location and the transportation infrastructure provide access to markets throughout North America and beyond, yet the wages for a skilled workforce remain below the national average, lowering the cost of business for manufacturing companies. All of this makes Dayton, Ohio a good investment in the future of aerospace manufacturing. 8 THE AEROSPACE ADVANTAGE