2006 A&D Survey: Industry Foresees Worker Shortage
CSC, in association with the Aerospace Industries Association (AIA) and Aviation Week and Space Technology magazine, recently completed the 2006 Aerospace and Defense Industry Survey. The Executive Summary excerpts below outline the key issues identified in the report, ranging from the shortage of skilled workers to the impact of increased cost pressures and globalization on the industry.
Against a backdrop of continued growth and record results, the Aerospace & Defense industry is going through significant change. This year’s survey reflects that change through the responses of over 130 industry executives. The survey results highlight six key issues impacting the industry:
Photo courtesy NASA.
Finding and retaining qualified employees. Ninety percent of the respondents identified finding and retaining qualified employees as having the highest or moderate impact on the industry over the next one to two years. A full 70 percent believe we either have or will have a shortage of qualified employees within the next five years. The majority of the respondents still believe there will be a shortage in the engineering ranks but an increasing number also believe there will be a shortage in finding and retaining qualified program managers. The changing role of the industry from supplying assets to providing services and support is pushing the issue of finding and retaining qualified program managers up the strategic agenda.
Cost pressures. Only 12 percent of the respondents reported their programs come in on time and on budget 80 percent of the time or more. One in five responded they were on time and on budget less than 20 percent of the time. To help deal with the cost pressures, an increasing number of companies are turning to outsourcing: business process and IT outsourcing. Whereas last year outsourcing was perceived as a major factor impacting the industry, this year it is viewed more as a tool for getting business done. The vast majority of respondents indicate they perceive outsourcing primarily as a way to manage costs and potentially improve service levels.
Consolidations and alliances. Consolidations and alliances ranked third as a force impacting the industry over the next one to two years. These consolidations and alliances seem to focus more on protecting sources of supply and availability rather than growth through acquisition. Five times the number of respondents ranked organic growth as a more important business priority than growth through acquisition. Over half the respondents indicated they had formed longer-term alliances/purchasing agreements over the last six months as a way of mitigating the impact of limited material availability and rising material costs.
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Globalization. Almost 80 percent of the respondents identified globalization as having the greatest or moderate impact on the industry over the next one to two years. The robust global economy is putting pressure on both the demand and supply side of the industry. Demand for commercial aviation is growing. Regions such as the Middle East, China and other countries in Asia are driving much of the rebound in large commercial airliners. Similarly, a robust world economy and security concerns are driving demand for very light jets and executive travel.
Security. Two years ago, security and protecting intellectual assets was at or very near the top of the list of issues keeping industry executives awake at night. While still a concern, it appears fair to say that executives have greater confidence in how information security is being managed and don’t necessarily see it as an inhibitor to collaboration.
Collaboration. The rise in the need, desire and ability to collaborate naturally accompanies industry changes in globalization, security, cost and teaming arrangements. In working with suppliers and partners, the ability to collaborate to meet schedules, reduce costs and shorten lead times ranks as a driving issue in the industry.
Survey demographics and methodology. The survey was conducted entirely electronically with 132 respondents representing a broad distribution of roles, functional responsibilities and industry segments. Again this year, the survey had excellent representation from "C" level executives, with more than 20 percent of the respondents at the CXO level. Respondents represent a good mix of commercial and government providers across most segments of the industry.
