Latest poll shows quarterly sales at their highest since our survey began and Top 100 firms looking to recruit
More than three in five of the world’s top aerospace companies took more orders between April and June than the same three months last year. And, as business confidence continues to soar, employment prospects are also rising, according to our latest quarterly industry poll, which paints a picture of an industry in full and sustained recovery.
With only one of our sample of 40 Top 100 aerospace companies saying sales had dropped during the period, the positive confidence score of 60% is the highest since we launched the Aerospace Trends Survey in January 2003.
The feelgood factor is also strong, with 23 of the 40 companies saying their confidence grew between the first and second quarters. Again, with only one respondent feeling less optimistic, it means the positive balance on this question is 55%, the same as the last survey, which was the highest figure since the survey began.
The employment question also continues to be revealing. For the first two years of our survey, this score tended to lag behind the other two, indicating that, despite rising confidence and orderbooks, Top 100 aerospace companies did not expect their workforces to grow accordingly, reinforcing the impression of a jobless recovery.
However, since the second quarter of 2004, businesses have begun to ramp up their recruitment plans and in this latest survey the positive score has reached its highest yet at 35%, with 17 of our respondents expecting employee numbers to rise over the next 12 months and another 20 predicting that they will remain static.
According to Neil Hampson, a partner at PricewaterhouseCoopers, which carries out the survey, there are “no dramatic messages” from the latest poll, but “we are at that part of the economic cycle where we might not expect to find any”.
He says that, while confidence levels remain “very stable”, there are signs that “sales momentum in the industry is clearly coming back”. However, the dramatic acceleration in confidence seen in early 2003 and then again at the beginning of last year appears to have “tapered off” as the industry settles down to a period of sustained recovery.
On employment, Hampson believes that after “holding out for 12 to 18 months, as the recovery began to take hold”, the industry’s big players “are now actually seeking to take on people as firm contracts and delivery schedules are established”.
This type of delay is typical of business cycles, where first confidence begins to rise, followed by orderbooks and finally by employment levels when companies find they do not have the capacity to meet delivery schedules. After several years of painful downsizing, companies could now be facing the problem of finding sufficient numbers of skilled staff as they struggle to cope with rising demand.
He says the only “dark cloud” is a growing nervousness among European and rest of the world companies about the ongoing weakness of the US dollar. Of the 17 North American respondents, 13 are more confident about prospects, while just 10 of the 18 Europeans – and just one of the five rest of the world companies give the same answer. The only company that feels less optimistic is also European.
Hampson says anecdotal feedback from those questioned indicates that this is the biggest worry for companies outside the USA.
“Even though the dollar has risen in value, the exchange rate with the euro is really beginning to bite because so many hedge schemes are coming to an end,” he says. Many European aerospace manufacturers have had arrangements in place for the past year or two based on a rate of one euro to the dollar.
The result is that European companies are trying to adjust their cost bases to make them less reliant on buying in euros. “It’s a dollar world, and this is why more European businesses are looking to invest in the USA, either through partnerships or acquisitions,” says Hampson.
However, when it comes to orders, the regional picture is more balanced, although slightly skewed in favour of Europe. Twelve of the 18 Europeans and nine of the 17 North Americans reported higher orders in the second quarter. Of the rest-of-the-world contingent, two out of five say orderbooks have improved, with the rest saying they have remained static.
Prospects on employment differ little between the two main regions, with nine Europeans and eight North Americans expecting to create jobs. However, two of the three companies planning to scale back their workforces are from Europe, with the other from the rest of the world.
PricewaterhouseCoopers spoke to 40 of the Flight International Top 100 aerospace companies, ranked by turnover, in early July. They were asked how their confidence in their company’s prospects compared with how they felt in the previous quarter; how their orderbooks compared with the same quarter a year earlier, and how they expected employee numbers to change over the coming 12 months.
The final figures are calculated by subtracting the number of negative answers from positive ones, ignoring neutral responses, and converting them to percentages. 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 – where more than 70% of revenue comes from the civil arena – majority military, or mixed) and by position in the supply chain (original equipment manufacturer, component manufacturer, tier one supplier or services/aftermarket supplier).
MURDO MORRISON/LONDON
Source: Flight International