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Economic Research

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Volume 15, Number 1
First Quarter 2013

It's Tough to Develop a Dominant Aerospace Cluster

Without question, the South's aerospace sector has grown recently. Yet for various reasons it is difficult today to amass a dominant industry cluster along the lines of Seattle where, thanks mainly to Boeing, aerospace employs some 50,000 people, according to data from the BLS.

One of the major reasons it is hard to form a large concentration of aerospace companies is the changed nature of aircraft manufacturing.

Assembly plants have become just that: assemblers. To a large extent, today's aircraft factory workers put together pieces made by outside suppliers scattered across the country and the world. This approach requires fewer workers in the assembly plants and has proven to be a lower-cost, more efficient model for the manufacturers.

For example, to produce commercial jetliners with one aisle through the cabin, Airbus's planned Mobile, Alabama, plant initially will employ only 300 people. The company says that number will rise to 1,000 as production increases. The plant will piece together parts from suppliers in 40 states and various countries. For its three existing assembly plants in Europe and China, Airbus has 1,500 primary contractors in more than 30 countries, according to the company.

An assembly plant opened in 2011 by the Brazilian jet maker Embraer in Melbourne, Florida, has 200 employees, fewer than many large retail stores.

With suppliers dispersed around the globe, new aircraft assembly operations do not necessarily spawn legions of new vendors close by. Airbus's Mobile plant figures to generate about two jobs outside the plant for each job inside, said Neal Wade, chairman of The Aerospace Alliance, a group that helps Southern economic developers reach aerospace companies. That 2-to-1 "multiplier" would be more than 6-to-1 in the automotive industry, according to the Center for Automotive Research in Ann Arbor, Michigan.

Huge aerospace clusters are largely "a creature of World War II," industry consultant Richard Aboulafia said. "No one is doing that anymore," Aboulafia said of producing aircraft components inside assembly plants. "You have a few hundred folks to put them together, and some logistics, and not a lot other than that."