Advertising

OPINION: President Trump should make aerospace nervous

To put it mildly, the year 2016 will not be remembered fondly by proponents of globalisation. A protectionist tide spills over borders in the West and East, placing the present structure of the aerospace industry in a rather awkward position.

Signs of the shifting public mood were evident well in advance of the morning of 9 November, when much of the Western world woke up to learn that Americans had elected New York real estate baron and reality TV star Donald Trump to be president until at least 2020, on a wave of exasperation with global trade and exhaustion with world conflict.

From Moscow to London to Washington DC, the message to industrialists is clear – home markets will be harder to access for outsiders.

This call for change cuts against a nearly 20-year trend that has transformed the geography of aerospace and enabled its broadest and longest period of expansion.

In the last five years alone, the industry has benefited considerably from global trade. Airbus now assembles A320s in China and the USA, as well as Europe. Boeing is also planning a completion and delivery centre for 737s in China. Major structural sections of the Lockheed Martin F-35 emerge from assembly lines in partner nations.

And were it not for a global class of investors ranging from Brunei to China to Japan, American general aviation stars such as Cirrus, Piper and Quest may have long ceased to exist. Likewise, Russia’s Irkut MC-21 would not be viable outside the domestic market without access to Pratt & Whitney PW1400G engines.

The policy and trade mechanisms that fuelled this globalisation may never have been widely popular, but relied on a steadfast consensus of developed and emerging economies that now appears to be crumbling.

How long the shift in mood lasts is now anybody’s guess, but it is increasingly dangerous to bet against it. To continue growing, the aerospace industry must find new ways to expand within its domestic markets. The industry also may need to reconsider the value proposition of globalised supply chains, as home governments move to withdraw the policy underpinnings of labour cost arbitrage.

The map of the aerospace industry is not changing overnight. The European-owned factories that now dot the US Southeast and Mexican highlands are not about to close. The flow of capital into aircraft financing is not constricting to domestic markets. But the era of unchecked globalisation appears to be over.

Advertising
Related Content
Advertising