South Carolina Aerospace Achieving Diversified and Sustainable Growth Joseph Von Nessen, Ph.D. Research Economist Moore School of Business - University of South Carolina August 24, 2016 joey.vonnessen@moore.sc.edu
Recapping Existing Findings
2014: Economic Impact of Aerospace in South Carolina Select Key Takeaways Aerospace is a rapidly expanding industry Aerospace has a sizeable economic footprint, including many small firms Aerospace supports the knowledge economy Aerospace supports the state s tax base
2015: South Carolina and its Competitive Markets Select Key Takeaways Aerospace is a diverse cluster majority of firms not in Boeing s supply chain There are gaps in the supply chain South Carolina firm presence is statewide with concentrations in Lowcountry and Upstate regions
Where are we in 2016? (1) Is South Carolina s aerospace cluster continuing to grow? (2) If so, where is the source of this growth? (3) What is the outlook for aerospace in South Carolina?
National Establishment Time-Series (NETS) Firm-level data across South Carolina Includes firm names, addresses, various industry codes, employment, sales revenue, headquarters location, etc Data are captured over time: 1989-2013
Strengths and Limitations of NETS Excellent source for overall market trends Timeliness of data most current data is 2013 Firms self-select into industry categories Percentage of a given firm s aerospace client base is unknown
Aerospace Cluster Defined Private Sector Aerospace Core Military Avia9on Aerospace Manufacturing Air Transp. Air Transp. Support Services
Airports not incorporated into this analysis S.C. airport system plan study forthcoming in 2017
S.C. Aerospace Cluster Total Employment 2003-2013 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: NETS Database
20.0% 15.0% 10.0% 5.0% 0.0% - 5.0% South Carolina Employment Growth 19.5% 11.7% 4.6% 1.3% 1.7% 2.0% - 0.4% - 3.7% 2010 2011 2012 2013 Aerospace S.C. Source: NETS Database & U.S. Bureau of Labor StaTsTcs
Has the Economic Impact Grown? Yes! Original Results (2012) Current Results (2013) Total Impact Employment Tax Revenue ContribuHon Employment MulHplier $17.4 billion 102,721 $532 million 2.2 $19.1 billion 108,426 $619 million 2.3 Growth in Aerospace Occurred Despite Not Including Airports as Part of the Cluster in Current Analysis Aerospace represents 6.3% of South Carolina s economy Source: S.C. Council on CompeTTveness
Total Aerospace Job CreaHon: 108,426 100,000 80,000 60,000 Induced Jobs Indirect Jobs MulHplier Effect 40,000 20,000 Direct Jobs 0 Source: S.C. Council on CompeTTveness
Growth Source? Private Sector Aerospace Core Two primary sub-sectors Aerospace Manufacturing Air Transp. & Support Services
Aerospace (Annual) Employment Growth: 2005-2013 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% - 10.0% 45.3% Aerospace Manufacturing - 0.9% Air TransportaHon and Support Services Source: NETS Database
Aerospace Manufacturing Explored
Aerospace Manufacturing: S.C. Economic Output (in millions) 14% 3% 1% 1% AircraQ Manuf. ($2,120.8m) Engine Manuf. ($379.5m) 81% Other AircraQ Parts Manuf. ($66.0m) Instrument Manuf. ($25.0m) Misc. Parts Manuf. ($26.0m) Source: S.C. Council on CompeTTveness
Distribution of Firms by Employment Size (2013) Misc. Parts Manuf. Other AircraQ Parts Manuf. Engine Mfg AircraQ Manuf. Instrument Manuf. 0 2 4 6 8 10 12 14 16 18 20 <5 employees 5 to 9 employees 10 to 50 employees 51 to 100 employees 100 to 500 employees 500+ employees Source: NETS Database
12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Annual Firm Growth (2005-2013) 10.9% 9.1% 1.7% 2.5% Instrument Mfg AircraQ Manuf. Engine Manuf. Other AircraQ Parts Manuf. The overall number of firms has increased more than 62% since 2005. Source: NETS Database
Annual Employment Growth (2005-2013) 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 7.3% 80.6% 24.2% 9.6% Instrument Mfg AircraQ Manuf. Engine Manuf. Other AircraQ Parts Manuf. Source: NETS Database
Avg. Annual Compensation by Industry: 2013 S.C. State Average Air Trans. & Support Svs. Avg. Manufacturing Industry Average Aerospace Industry Average AircraQ Manuf., Engine Manuf. & Misc. Other AircraQ Parts Manuf. Instrument Manuf. $41,338 $50,777 $53,350 $70,008 $80,758 $107,933 $77,552 Aerospace Manuf. Subclusters $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 Source: Quarterly Census of Employment and Wages
Aerospace in the Larger Context
Manufacturing is Moving South!
Annual Durable Manuf. Emp. Growth (2011-2016) 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% - 1.0% - 2.0% 2011 2012 2013 2014 2015 2016 U.S. Dur. Manuf. Southeast Dur. Manuf. Source: U.S. Bureau of Labor StaTsTcs
3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Annual Durable Manuf. Emp. Growth Source: U.S. Bureau of Labor StaTsTcs (2011-2016) 3.2% 1.8% 1.4% 1.2% 3.4% 3.2% 2.7% US GA MS NC TN AL SC
AutomoHve Cluster Employment Aerospace and Automotive Cluster Employment 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 BMW Arrival 1990-2013 Boeing Arrival Great Recession 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 12,000 10,000 8,000 6,000 4,000 2,000 0 Aerospace Cluster Employment AutomoHve Aerospace Source: U.S. Bureau of Labor StaTsTcs
We Must Actively Build on Existing Success
Thank You! Joseph Von Nessen, Ph.D. joey.vonnessen@moore.sc.edu