Philippine Aerospace Industry Grows to $2.707 billion

29 December 2015

The Philippine aerospace industry has grown from a total market size of $2.58 billion as of end-2014 to $2.707 billion this year, data from the US International Trade Administration (ITA) showed.

The country has been identified by the American government agency as one of the “best prospect” industries for US-based aerospace firms, as it was seen offering significant opportunities for investment, being home to three tier 1 original equipment manufacturers (OEM) namely Moog Controls Corp., B/E Aerospace and Jamco, supplying parts to plane manufacturer Boeing and Airbus.

The total market size of the Philippine aerospace industry is expected to grow to $2.8 billion by next year, while total exports are seen to hit $467.8 million and $491 million in 2015 and 2016, respectively.

Aerospace Industries Association of the Philippines president John Lee earlier said the Philippine aerospace industry aims to be the region’s hub for aircraft interior market.

According to the US ITA reports, the Philippine aerospace industry was attractive due to the Philippine government’s thrust to develop the country’s civil aviation infrastructure, and the ongoing expansions being undertaken by the local airline industry and aerospace parts manufacturers.

“The Philippine aerospace industry presents significant opportunities for airport design companies, aviation consultants, airport ground support equipment, security equipment, wide body aircraft, jet engines, and helicopters,” the US ITA said.

Lee said the Philippines already has three of the world’s largest MRO providers, Lufthansa Technik Philippines, Singapore Engineering Philippines and Hong Kong’s Metrojet Engineering generating revenues close to 1 billion US dollars this year, up by 25 percent from $800 million in 2014.

Lufthansa Technik, which is the biggest facility outside of Germany, is a joint venture between Philippine Airlines’s affiliate MacroAsia Corp. and Lufthansa Group, while Singapore Engineering in Clark International Airport is a joint venture between Singapore Airlines affiliate SIA Engineering and Cebu Pacific parent JG Summit. Metrojet Ltd. of Hong Kong is the biggest corporate jet MRO provider for Bombardier, Cessna, Hawker, Dassault and Embraer planes in Asia Pacific which also calls Clark airport its home.

Lee said the local aerospace industry is “a net export industry," with 99 percent of industrial output manufactured for export.

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.