Aerospace addressing gaps in industry capability

11 January 2015

By Alden M. Monzon

THE PHILIPPINE aerospace industry is projecting revenue of at least $779 million this year, excluding any gains from the maintenance, repair and operations segment, with new jobs generated amounting to 5,600, though uneven capabilities within the industry represent a bottleneck to more rapid expansion.

The Aerospace Industries Association of the Philippines (AIAP) also issued a long-term projection of $10 billion in revenue by 2022 on the back of 5% per annum growth starting 2018.

AIAP president John T. Lee said however that one of the major challenges that the local industry lies in production and process capability. “We still lack some certifications, for example from NADCAP (the National Aerospace and Defense Contractors Accreditation Program) as well as from other countries,” he said.

Mr. Lee said the industry is seeking to address some of the gaps in capability, citing in particular the ability to work with the latest surface treatment and coating technology to control corrosion in aircraft.

“We have some companies engaged in surface treatment but they are not certified to do some processes yet, Mr. Lee said, noting that performing to a recognized standard is one of the most immediate concerns for the industry.

According to the Boeing Market Outlook 2014-2032, the Asia-Pacific Region will have the highest demand for new airplanes in the world, amounting to $2 trillion during the period -- a situation that the local industry needs to take advantage of, according to the AIAP.

Expensive machine tools and other equipment have been cited as one of the barriers to industry expansion, with Mr. Lee estimating that a machining operation properly outfitted for the aircraft industry would be saddled with initial capital investments of between $1 million and $10 million.

Other challenges include supply chain integration, training and education, and improvement of industry-centered government programs and incentives for potential investors.

The IAP is pushing for the classification of Aerospace Manufacturing as a pioneering industry entitled to tax holidays of up to 6-8 years under the national government’s Investment Priority Plan, in order to attract more players.

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