Reversing a trend over the past several years, employment in the United States aerospace and defense (A&D) industry is set to rebound, driven primarily by growth in defense spending and continued strong demand for commercial aircraft, according to a new study by the consulting firm Deloitte.
In 2015 the rate of job declines in the A&D sector is expected to have tapered off with robust growth projected for this year, according to the report, US Aerospace & Defense Labor Market Outlook. The employment decline for 2015 is pegged at 0.8 percent versus a 1.1 percent drop in 2014 while the outlook for job gains this year is put at 3.2 percent, meaning about 39,443 more employees, says the study.
Over the next few years the outlook for employment in the sector is “positive,” says Deloitte.
In December the Aerospace Industries Association released preliminary estimates for the first nine months of 2015 showing a 1 percent decline in employment in the U.S. A&D sector with the average annual workforce decline between 2010 and 2015 just over a half-percent (Defense Daily, Dec. 15, 2015).
Deloitte says the U.S. A&D sector in 2014 had direct and indirect employment of 4.1 million workers, paying $115.6 billion in wages to direct employees and $54.3 billion in corporate and individual income taxes at all levels of government.
Since 2010, growth in jobs in the commercial subsector were more than offset by declines in the defense industry, which “has affected the industrial base and its ability to retain critical capabilities and skills for the future,” writes Tom Captain, vice chairman of Deloitte, in the introduction to the report.
The report notes that despite the decline in employment in the U.S. A&D sector the past few years, jobs in the industry are paying nearly twice the national average, demonstrating the importance of the sector to the national economy.
Employment in the defense subsector was down 2.4 percent and 1.3 percent respectively in 2014 and 2015, the report says, and is expected to increase 3.7 percent this year. The commercial subsector posted 0.4 percent job gains in 2015 and is forecast to see 1.8 percent employment growth in 2016 driven by stable U.S. economic growth, lower commodity prices, and strong passenger travel demand, it says.
Deloitte says that job growth in the commercial subsector will lag revenue growth due to manufacturing, supply chain, and engineering efficiencies, and with increased use of process automation and robotics.
Between 2010 and 2014, employment at small companies in the sector was down 22 percent followed by mid-sized companies at 15 percent with workforce declines at the top 20 large companies off nearly 7 percent, the report says. It also says that in that period every state in the Union saw job declines in the sector except South Carolina, which saw its A&D workforce increase18 percent versus a 9 percent decline across the remaining states and territories.
Half of all A&D employees in the United States work in seven states, led by California and followed in descending order by Washington, Texas, Florida, Arizona, Connecticut and Kansas, Deloitte says.