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PH poised to become aerospace manufacturing and MRO hub in Asia

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By Emmie V. Abadilla

Asia is poised to be the world’s largest travel market in the next 20 years and the Philippines intends to be the region’s next aerospace manufacturing as well as maintenance, repair and overhaul (MRO) hub.

 United Parcel Service (UPS) Managing Director Chris Buono

United Parcel Service (UPS) Managing Director Chris Buono

Already, the country registered a compounded annual growth rate of 42% from 2012 to 2016, among the fastest in the Asia-Pacific region, according to United Parcel Service (UPS) Managing Director Chris Buono.

Today, many Filipino aerospace companies are involved in manufacturing and assembling components and sub-assemblies for interiors and flight control systems, as well as MRO activities.

These components and sub-assemblies are then distributed to the biggest export destinations, the US and Europe.

The local industry currently supports about 8,600 employees, of which 3,000 are in aerospace activities, another 3,000 in supplier operations; and 2,600 in aircraft MRO.

While this accounts for less than 1% of the Philippines overall workforce, employment within the industry grew 300% from 2007 to 2014, resulting from an increase of 25% in global trade in components and sub-assemblies for the same period.

The increased demand for industry-specific skills makes it critical to equip Filipinos with varied engineering backgrounds that would enable them to effectively contribute to the existing workforce.
Beyond offering international aerospace players another potential hub in the region, the sector’s success also creates high-quality and sustainable jobs for Filipinos.

Significantly, the manufacturing sector of the Philippine aerospace industry only began its expansion in the past five to ten years, with substantial earnings of US$604 million recorded in 2014 due to aerospace manufacturing exports.

This shows that even as this sector is still relatively new, it has the potential to become a significant player in the global marketplace.

At present, the country has four aerospace Original Equipment Manufacturers, eight repair stations certified by the Federal Aviation Administration, and 19 supporting tier suppliers for aerospace in the country.

The question is: What’s stopping the Philippines from increasing these numbers and making a bigger impact on the global aerospace and aviation community, Buono asked.

Deficiencies in regional aviation infrastructure, inadequate facilities, safety management issues, high taxation, and limited investments in air transport are some of the challenges that local aerospace players struggle with.

To facilitate growth, the local industry needs to adopt capacity-building policies that future-proof itself and the supply chains it contributes to.

Technology will continue to drive evolution in the manufacturing industry, the same way its changed consumer behavior. The challenge is to remain future-forward by prioritizing innovation.

This will assure that the Philippine aerospace industry will fulfill its potential to be a major player in aerospace manufacturing, MRO, and aircraft maintenance in Asia Pacific.

Keeping up with the global industry demands and development can insure against obsolescence.

In 2015, the Philippines ranked 67th out of 210 countries in the Aerospace Manufacturing Attractiveness Index Rank. A couple of years later, the country leapt 20 spots to place 37th.

The Philippines’ 2017 performance showed the country’s contribution to global aerospace value chains, and signifies how it has caught up to its Southeast Asian neighbors Thailand and Indonesia, both of whom have fallen out of the top 30.

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