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2017 US aerospace and defense industry export and labor market study
US aerospace and defense export growth faces global competition
Explore trends in US aerospace and defense industry, which added nearly US$85 billion positive trade balance in 2016. This report combines our prior year’s labor market and export studies into one report and presents new findings.
- US A&D industry export and labor market
- View the Infographic
- A&D industry exports
- A&D industry employment trends
- Read the 2016 report
US aerospace and defense industry export and labor market study
The US aerospace and defense (A&D) industry has been a significant contributor to America’s net exports, a top employer, taxpayer, and major contributor to the nation’s gross domestic product. However, recently we are seeing a slowdown in the industry.
A strong US dollar, increasing global competition, and decreasing export financing are causing US aerospace and defense (A&D) industry export growth to decline. At the same time, employment in the US aerospace and defense sector has declined significantly over the last five years, much of it due to budget sequestration. What can the industry do to change course?
Our latest aerospace and defense industry study includes developments and trends from two important focus areas in the US aerospace and defense industry: employment and exports.
Last year, we developed two separate reports that highlighted industry trends in both of these areas. This year, readers who download the report will experience the same beneficial information tied together in one comprehensive report.
Report findings include:
- Export growth slowed at 1.7 percent in 2016
- Exports directly supported 1.42 million jobs in 2016
- Net commercial exports rose sharply in 2016 by $9 billion or 12 percent
- US Foreign Military Sales declined by $13 billion or 28 percent in 2016
- Total employment in the US A&D sector decreased in 2016 by 0.3 percent
- Direct and indirect jobs lost in the defense subsector between 2011 and 2016 totaled 165,044
The slower pace of growth is due to a decline in export financing, the strengthening of the US dollar, and global competition. While American-manufactured A&D products remain attractive to foreign customers, US exports are more costly in the international market. Global competitors increased proficiency in manufacturing A&D products; and competitive currencies and lower labor cost will continue to press US A&D export growth in the coming years.
Aerospace and defense industry exports
A&D industry exports contributed to overall US exports, adding approximately $85 billion to the positive trade balance in 2016. The industry has played an integral role in America’s overall exports, creating significant employment, at approximately twice the national wage rate, which helps support the nation’s overall growth. While not included in the commercial export data, US Foreign Military Sales (FMS) has increased $5.8 billion or 21 percent from 2013 to 2016, but experienced a $13 billion decline or 28 percent in 2016.
Aerospace and defense industry employment trends
The US A&D industry is one of the top employers to the US economy, with 4.1 million workers directly and indirectly employed in 2016. Despite an increase in sector revenues over the last five years, total employment has decreased by 344,610 over the same period, with the decline slowly tapering off in the recent years. Much of this decline was in the defense subsector and was likely due to the effects of the Budget Control Act of 2011, the ongoing efforts to replace labor with process automation and robotics, and internal efficiency initiatives.
Total employment in the sector experienced a decrease of 0.4 and 0.3 percent in 2015 and 2016 after a 2.2 percent drop in the employment level in 2014. Of total A&D employment, exports supported nearly 1.42 million jobs in 2016 (34 percent of the total A&D jobs), slightly up from 1.40 million in 2015 and 1.37 in 2014. However, growth in export related jobs remained somewhat sluggish in 2016 at 1.1 percent, in line with the slow growth in A&D exports.
A&D export study: 2016 report
The US aerospace & defense (A&D) sector has been a significant contributor to America’s net exports during the period 2010 through 2015, as well as a top employer, taxpayer, and major contributor to the nation’s gross domestic product.