Has U.S. Aerospace Employment Already Peaked?
The U.S. aerospace manufacturing workforce reached its last employment peak right before the COVID-19 pandemic and may not surpass it again for a generation, if ever. Taking the brunt of the hit are suppliers.
- Crises and lights-out manufacturing mean smaller A&D ranks
- Suppliers took the brunt of industry’s job losses in 2020
More than 1.5 years after the worst business downturn in the commercial jet age—as well as aftershocks of the Boeing 737 MAX fiasco—new data and new expectations indicate that private-sector U.S. aerospace and defense employment topped out on the eve of the two crises. Beyond the immediate layoffs and retirements stemming from a cessation in commercial air travel, employment levels look unlikely to return due to industry consolidation and new manufacturing technologies, among other reasons.
According to the 2021 Facts and Figures report from the U.S. Aerospace Industries Association (AIA), released in September, the U.S. sector saw a net loss of more than 87,000 employees in 2020, a 4% year-over-year decline. Two-thirds of the losses were in the supply chain.
By the end of 2020, there were 2.09 million total aerospace and defense workers, compared with 2.2 million in 2019 and 2.1 million in 2018. Those levels had finally surpassed the previous peak in 2012.
AIA produces the statistics with consultancy IHS Markit. Data pertaining to the industry’s employment, output, wage and value-added figures are based on statistics from the U.S. Census Bureau and Labor Department as well as proprietary information from economic data provider Implan and IHS.
The trade association and consultancy in the late 2010s significantly revamped its methodology after the AIA changed study partners, in turn revising previous proclamations of as many as 2.56 million employed in 2018, for instance.
Regardless of the exact level, it is clear that industrial base employment is waning and suppliers are shedding workers disproportionately. Although large OEMs, defense prime contractors and even Tier 1s were trimming their workforces for years in the run-up to the 2019 peak, it was dramatic employment growth in the supplier base—where more than half the workers reside—that led to overall growth. By the end of the past decade, commercial aerospace suppliers were struggling to hire enough employees to meet narrowbody production-rate forecasts of roughly 120 new aircraft a month and more from Airbus and Boeing, while the defense sector enjoyed a roughly 20% base budget increase from the Trump administration.
But the pandemic and the MAX fiasco turned those conditions on their heads. Although the latest AIA tally reported that only 87,000 jobs had been lost, the trade association warned last fall that 220,000 could be eliminated as industry troughs and recovers.
Other organizations have asserted that more jobs have already been lost than indicated by the latest IAI figures. The Machinists Union (IAM) says more than 100,000 aerospace jobs were erased, according to a Sept. 15 statement. Federal officials used the same figure this past summer (AW&ST July 26-Aug. 8, p. 66).
Those assertions helped drive Congress to approve the Aviation Manufacturing Jobs Protection Program under the Biden administration’s American Rescue Plan pandemic-recovery stimulus law. The funds will be awarded to companies in 37 states and Puerto Rico to help protect up to 22,500 jobs. In September, the Transportation Department announced that 313 aerospace businesses will be awarded $482.3 million; Tier 1 aerostructures giant Spirit AeroSystems will garner the lion’s share with more than $70 million. Other large recipients include Pratt & Whitney—the engine-making giant that is a division of Raytheon Technologies, one of the largest A&D companies—as well as Hexcel.
Still, the department stressed that many of the fund recipients are small businesses: Roughly 60% had fewer than 100 employees and roughly 80% had fewer than 250 employees at the end of 2020.
Although the pandemic and MAX crises served as the toughest headwinds, they are not the only trends buffeting A&D employment. Advanced manufacturing technologies continue to eat at overall demand for employees as aerospace and other industries pursue “lights-out manufacturing,” a methodology in which manufacturing is fully automated and no human presence is required—thus, lights and even ventilation can be shut off.
“There has been a steady rise in activity and interest in lights-out manufacturing from stakeholders in the past five years, and ideas developed in the late 20th century are now seeing a resurgence because of modern technologies like advanced robotics, computer vision, industrial Internet of Things, machine learning algorithms and improved computing,” consultancy Lux Research states in a September report.
Funding of robotics and automation in the manufacturing sector has also significantly increased since 2015, the consultancy continues. While most of the financing has been in the form of venture capital investments in emerging startups, public companies have also raised millions of dollars; the greatest investment in robotics and automation for manufacturing have occurred in North America and Asia.
The news is not all bad, however. For employees who remain in A&D or are attracted to it, the latest AIA figures show that it continues to be a relatively financially rewarding career path. At $104,577, the A&D industry’s average wages and benefits remained 41% above the comparable national average. In total, industry paid out $218.6 billion in compensation in 2020, or roughly 2% of all U.S. labor income.