Change is a constant, outsourcing jobs, capital flows, emerging markets are a given and this includes the aviation manufacturing sector as we see the current migration accelerate.

It seems that the technological advantage that we have here in the United States is no longer going to sustain us without further advances. Previously, our work in aerodynamics (during and after World War II), our industrial capacity, and our continued capitalization of the aerospace industry was enough to keep us ahead of the curve. Currently in the US we are seeing job losses in aerospace assembly in cities like Everett, WA and Wichita, KS. We see other areas trying to gain a foothold in the aviation manufacturing market in cities like Albuquerque, NM and Centennial, CO. However, in reality there are few niches that do not have many competitors. A new market, the mini-Business Jet, seems to be a potential as many companies are building these planes for less than 1 million dollars. Still, we are viewing the opening of the small business jet market as a long-term positive in the private jet market, but a short-term problem for the small single-engine turboprop and piston markets from Beechcraft, Cessna and others. The long term will be good because these are seen as starter aircraft bringing new buyers to the market, however in the short term they will drive buyers away from the higher priced 4-8 seat turbo cabin class singles. They can also turn buyers away from popular models like Beechcraft Bonanza, Cessna 210, Piper Malibu, Saratoga, etc. We will also see problems in this market as insurance companies increase prices as less experienced pilots and single pilot commercial minijets experience a higher percentage of cases. In fact, such accidents are already causing friction in corporate jet insurance costs, showing that certain companies are separating the categories to keep mini-business jets in their own purview and price points.

Today we see massive well-paid aerospace workers out of work and much of the component manufacturing leaving our shores. Some say it’s to save money on manufacturing, which is a serious consideration with workers’ compensation, insurance benefits, unions, excessive regulation and laws taking their toll. There is also another reason; we want to sell our planes to other countries, so if they build components, then maybe Boeing can beat Airbus. However, Airbus is doing the same thing by building component plants in China, Boeing already builds surface aircraft components there. We still sell our planes all over the world, but Bombardier, a niche market that has been dominated for decades by Boeing with many famous models like the 737, is also entering the small plane market.

The light aircraft market in the US has been dominated by Piper, Beech, Cessna, but in the last two and a half decades finished product liability has skyrocketed as lawsuits from lawyers have grown so large in number as in monetary compensation. Many light aircraft manufacturers had stopped making aircraft and discontinued several popular lines. Many planes had increased their price by 100% to allow for the incessant demands. As the price rose, new aircraft sales could not keep up and used aircraft prices also skyrocketed. This has left the door open for foreign light aircraft manufacturers from around the world. Many light utility aircraft buyers would come to the US and buy used aircraft put in long range tanks and then fly them across the pond instead of buying inferior light aircraft from other countries, but as prices rose in the used market and the new market other manufacturers skyrocketed in those other countries stepped out and filled the void. With all the red tape and lawyers, fewer planes were sold, fewer workers were needed, and parts costs rose due to economies of scale. Wichita has had its hay day stolen, but will it move on to other hopeful US cities as the new business jet niche becomes more prevalent? Will Albuquerque really be the new manufacturing hub for private planes? The Governor of New Mexico has certainly spoken out as very supportive of the economic development of the aviation sector. Colorado’s economic development agency has pretty much promised it. Wichita is working hard to keep what it got, while Boeing is selling buildings and Bombardier is contemplating competing in the smaller jet business. In India they say that we can build light aircraft and unmanned aerial vehicles to start with and then we will build larger aircraft. And it looks like they’re going to do just that and some of our companies can read the writing on the wall, so they’re even going to put up some capital to make sure they’re involved. So how prepared is India to take over the light aircraft manufacturing sector? Well, they certainly have the job offer with over 1.06 billion people and growing. Yes, of course, they are primed and ready. Yes, they have set a priority to do this.

[http://www.thestatesman.net/page.news.php?…sess=1&id=60517]

India is also manufacturing UAVs with huge factories under construction as we speak. Countries like Eastern Europe or China, Mexico and India will take over the general aviation industry from the US, but India seems to be the most likely winner and they know it. As cities like Albuquerque NM try to become the next American city with available labor to enjoy the economic vitality that comes with such industries, they try to attract them, we see them trying to no avail through their economic development partnerships. Those jobs go out to sea. It is too late to stop them now, in our self-righteousness to control and over-regulate business, we have driven business away. Of course, it’s not just the aviation sector and it’s not just the US, for example, in Europe also with Airbus and the entire automotive industry. Bureaucracy is not just killing America. In the UK: BMW boss says bureaucracy and red tape “choke” the motor industry. Red tape and red tape are unnecessarily inhibiting business development in the UK while costing you a fortune, according to BMW (GB) managing director Jim O’Donnell. BMW in the US faces similar problems as do all automakers as they use franchise car dealerships as their business model. The franchise industry is also completely over-regulated:

[http://www.ftc.gov/os/comments/franrulesta…t/OL-100001.pdf]

In America we no longer extract our own raw materials, iron ore mines cannot stay in business due to regulations and restrictions, same goes for gold mines, copper mines etc. This means that if we have to import raw materials to compete, we also pay those shipping costs, and since the price is transferred by over-regulation in each industry, we find that we are our own worst enemy. America has two competitors, one is ourselves and our movement towards socialism and the over-regulation and political correctness it creates; the second is other countries with similar industries that are free from the minutiae that we have created here with all the lawyers.

http://worldthinktank.net/wttbbs/index.php…=7&st=0entry8 [http://worldthinktank.net/wttbbs/index.php…=7&st=0]

One may wonder how many industries are lost entirely before America wakes up, some in our country who are capitalizing on such industries no longer care, as their money is best spent where business conditions, labor supply, and a viable government with open arms and for the business exists. The new age of innovation will not belong to the US, they have forgotten where they came from, forgotten what it takes to build, forgotten why we fought so hard to do it, and forgotten why we came in the first place. See YA, aviation sector? Well, it sure was a great race. One might ask, why so much pessimism? Well, none really, just observation of the facts and it depends on which side of the fence you’re on. What is our loss is their gain, we don’t deserve it anymore and India is showing industry, capitalists and now the world that they deserve it. We did it to ourselves with our inability to curb lawsuits, inability to cap awards, excessive regulation in manufacturing, but this is not a new thing, these issues and advocates have plagued the commercial and private aviation industry of our country for nearly three decades. Obviously, the industry is making decisions right now about future direction, as are governments who want this industry for its continued growth along with customer demand for more affordable aircraft, labor and features. Some say that unions have been their own worst enemy like the “Lou Dobbs debate; off shoring America” continues, however, customers vote with their money, businesses vote with theirs, and no matter what the government does in the way of intervention, the aviation industry is moving now.

We also need to understand that if we want to sell to these countries, some of the component construction may need to be in those other countries as they will be buying our aircraft and we also need to compete on price. We can’t do that here in the states as the costs have become too high and the trading system we’ve created and the bureaucracy is more than the aviation market sector can handle.

Look at some of these purchases? That’s a lot of high-tech equipment and we need those sales. These foreign airlines are buying a lot compared to our airlines, which are canceling orders. American Airlines canceled 54 new aircraft orders from Boeing recently, not good, increases in operating fuel costs, Continental postponed its large aircraft order.

The writing on the wall is clear, India is booming and they are rapidly securing many of America’s major industries and with them jobs and capital will flow. The world economy is always in a state of flux. Even if the aircraft manufacturing industry survives in the US, it will have to share more of that global market with other countries like India and China. Just as Airbus was able to wrest 50% of the market share from Boeing after the merger with MacDonald Douglas, India will take its share of the UAV and private jet market and eventually further divide the aircraft manufacturing sector.