The mood of participants in our Aerospace Trends Survey is the most positive since the series began in 2003
Confidence among top aerospace companies is at its highest level since Flight International's Aerospace Trends Survey began in January 2003, according to the results of the latest quarterly industry snapshot.
Fifty-five per cent of the respondents in the survey conducted by Flight International with partner PricewaterhouseCoopers reported greater confidence in their businesses' prospects than in the previous quarter.
The survey asks 40 of the world's top 100 aerospace companies by turnover how their confidence in their company's prospects compares with the previous quarter; how their orderbooks compare with the same quarter a year earlier; and how they expect employee numbers to evolve during the coming 12 months.
The final results are calculated by subtracting the number of negative answers from the number of positive ones, ignoring "neutral" answers and converting the figure to a percentage. The companies that take part in the survey are identified by region (North America, Europe or the rest of the world), by sector (majority civil – more than 70% civil revenue, majority military, or mixed) and by position in the supply chain (original equipment manufacturer, component manufacturer, tier one supplier or services/after-market supplier).
In the last survey, conducted in December 2004, 45% of respondents felt more confident than they had in the previous quarter. Any positive figure means that confidence is up on the previous quarter, but the most recent increase – of 10 percentage points – demonstrates that more businesses are feeling more confident about their prospects than in the last three-month period.
The latest survey shows a trend towards greater confidence among companies based in the USA and Europe, with more than half in each region – 11 out of 18 in Europe and 11 out of 17 in North America – bullish on their prospects. The similar results for the two regions reflect the increased globalisation of the industry, according to PricewaterhouseCoopers' Neil Hampson, who conducted the survey. "There's no real distinction between national champions any more – if Airbus is doing well that makes US suppliers more confident," he says.
The continuing weakness of the US dollar does not seem to be dampening the confidence of Europe-based businesses. "Most people aren't overly worried as they are well protected with hedging in the short term and are making plans to manage the situation in the long term," says Hampson.
Four of the five businesses outside Europe and North America reported the same level of confidence as they felt during the previous quarter, while just one was more optimistic.
Confidence is split relatively evenly between categories of the companies surveyed. Eight out of the 10 tier 1 suppliers included in the research reported increased confidence. Ten of the 20 component manufacturers included in the survey reported feeling the same level of confidence in their business's prospects as they had during the previous quarter. One Europe-based civil/military component manufacturer provided the single negative response in the survey on future confidence, while the remaining nine manufacturers were bullish on the future.
Orders are on the increase too: 50% of respondents to the survey reported improved orderbooks compared with the first quarter of last year. Eleven of the 21 companies with an improved orderbook compared with the first three months of 2004 were based in Europe.
In December, 58% of participants had reported a better quarter for orders than the last quarter of 2003. Although the improvement compared with the corresponding quarter of last year is slightly less marked than it was the last time the survey was carried out, orderbooks continue to grow. And the improvement is fairly evenly split geographically: 10 of the 21 respondents that reported a better orderbook than in the same quarter of 2004 were based in Europe, and eight in North America.
Twenty-eight per cent of the companies surveyed expected their employee numbers to rise over the coming year, compared with 25% in the last survey. The employment trend appears to have flattened out, Hampson says, compared with the larger jumps of 13 and 20 percentage points respectively in the second and third quarters of last year.
Increased outsourcing could account for the fact that fewer than a third of the companies surveyed expect to take on more employees, Hampson says. Smaller companies further down the supply chain that are not included in the research are likely to be the ones expanding their workforce, he says.
Just three out of 40 respondents – all component manufacturers for both civil and military sectors representing all three regions of the survey – expect a decline in employee numbers.
Overall the recovery in aerospace appears to have stabilised: "We've come out of the trough and companies are looking around for acquisitions either to balance their portfolios or to move into growth sectors," Hampson says. "The recovery has stabilised with confidence high – expectations are that civil aircraft orders will continue to rise and military aircraft programmes are largely on track."
The questions 1. Compared with the previous quarter, is your confidence about your business's prospects higher, lower or the same? 2. Compared with the same quarter last year, was this quarter better, worse or the same in terms of orders? 3. Do you expect employee numbers to fall, rise or stay the same over the next 12 months?
HELEN MASSY-BERESFORD
Source: Flight International
