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Canada occupies fifth place in the global aerospace production rankings. (Thinkstock)
Canada occupies fifth place in the global aerospace production rankings. (Thinkstock)

Emerging markets producing hungry new competitors in aerospace industry Add to ...

Emerging markets represent a major opportunity for North American aerospace manufacturers, but those same markets are also increasingly producing hungry new competitors to the established players, says a new study.

“The U.S. and Canada are beginning to see more aggressive competition from emerging-market producers, who are becoming more effective at challenging advanced-economy producers on their home turf,” said BMO Nesbitt Burns economist Aaron Goertzen.

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Among the most active countries in the development of a homegrown aerospace industry are China, Russia and India.

Those countries, as well as Middle Eastern states such as the United Arab Emirates, have also become significant export markets.

However, advanced-economy producers continue to hold a commanding share of the global market, says the report. The U.S. alone accounts for almost half of global aerospace revenue.

The North American aerospace industry accounts for about $200-billion (U.S.) in annual revenue, says the study, released Tuesday.

Canada occupies fifth place in the global aerospace production rankings.

“U.S. producers have a slightly stronger foothold in developing markets than their Canadian counterparts, but Canadian firms are also benefiting from the export of U.S.-assembled aircraft containing Canadian-made components,” said Mr. Goertzen.

Meanwhile, business is healthy on the business-jet front, according to the analysis.

“Deliveries and orders of corporate jets have increased significantly this year, and we anticipate growth will be in the 5 per cent range for the industry through 2016,” said Joe DiLallo, vice-president and director of corporate aircraft finance at BMO Harris Bank, in a news release Tuesday.

A solid recovery in private demand has resulted in a record backlog of unfilled orders, enough to support industry output even if the global economy bounces back at a slower pace than anticipated, says the report.

Air travel and freight shipments are expected to grow this year, helping support airline profitability and thus further expansion of aerospace orders, the report says.

An improving global economy, coupled with very low interest rates, helped boost aerospace demand last year and should continue to do so in 2013, it predicts.

Also helping keep up demand are high fuel prices, which are pushing airlines to seek new, more fuel-efficient aircraft, according to the study.

But the eventual rise in interest rates will likely dampen growth demand, it adds.

And Canadian producers must deal with a high Canadian dollar, which hampers international competitiveness, says the report.

Quebec – and Montreal, where a large part of Canada’s aerospace sector is clustered – have been attracting foreign manufacturers over the past few years.

Last week, it was announced that three French aerospace companies – in simulation, parts and composite materials – will open operations in Quebec, creating about 100 jobs.

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