The Philippine aerospace industry aims to make the country a major hub for manufacturing of original equipment manufacturing (OEM) parts and allied services, such as maintenance, repair and overhauling (MRO), for the global commercial aircraft industry.
Aerospace manufacturing is a high-technology industry that produces aircraft, guided missiles, space vehicles, aircraft engines, propulsion units, and related parts. The industry is comprised of government and private industries that perform the institutional roles of end-users, suppliers and manufacturers. The value chain consists of the government and airline companies as primary customers; OEM companies, a tiered chain of suppliers and manufacturers; companies that perform MRO of equipment and parts; and the consuming public as aircraft passengers.
Currently, the domestic aerospace industry has an estimated .15% share of 2013 GDP, and a projected 0.57% share of 2022 GDP projection given a positive program intervention spearheaded by the government. There are currently three tier 1 suppliers in the country located in economic zones. The industry is under the supervision of Aerospace Industries Association of the Philippines.
Among the industry’s strengths are:
Labor Force and Strategic Location. A pool of young, relatively cost-competitive, English-proficient, highly trainable and fairly knowledgeable manpower that makes up the aerospace-specific labor force, which is in turn supported by a chain of aerospace and aviation schools. At the same time, Philippines is located in a strategic location and could make the country serve as a potential vital link in the aerospace industry value chain.
Growing Commercial Airlines. The growth and expansion of domestic airlines such as Philippine Airlines (PAL), Cebu Pacific (CEB), and ZestAir are contributing to the development of the industry. PAL entered into a $7-billion contract with EADS (Airbus) in 2011 to acquire 34 units of A321ceo, 10 units of A321neo, and 10 units of A330-300s, and $2.5-billion to exercise an option to acquire 10 more units of A330 aircraft. On the other hand, CEB in 2011 announced that it was purchasing 30 units of Airbus A320neo and 7 units of Airbus 320 for $3.8-billion to more than double its fleet by 2021 and expand its international routes.
Presence of Suppliers and Linkages. Presently, three major original equipment manufacturing (OEM) are located in the country: Moog, which manufacture actuators; B/E Aerospace, which manufactures galleys; and JAMCO, which manufactures airframes and sub-assemblies. At the same time, the creation of the Association of Aerospace Industries of the Philippines (AIAP) is a positive factor in solidifying the initiatives for the growth and development of the aerospace industry because it presents a collective voice in helping shape the government policies and incentives affecting this sector.
Growth in Business Aircraft. Although the country lagged behind its regional neighbors in the growth of business aircraft (65% growth rate in the Asia-Pacific region), it grew by 45% over a ten-year period with 63 business aircraft in 2012 compared to 46 in 2002. The region increased from 947 units in 2002 to 1,566 units in 2012. Business aircraft are corporate jets that are not engaged in public transportation services. The country can capitalize on this trend by capturing more market-share in the overall demand in the region.
Facts and Figures
- Currently, the domestic aerospace manufacturing industry has an estimated 0.15% share of 2013 GDP, and a projected 0.57% share of 2022 GDP.
- The industry contributes 2,200 in direct-employment, generating an estimated $10 million as salaries of direct and allied workers.
- In 2013, the industry contributed $2 million as income tax from compensation.
- The industry has export projections of $1.5 billion in the next 10 years.
Philippine Aerospace Development Corporation
The Philippine Aerospace Development Corporation (PADC) operates under the supervision of the Department of Transportation and Communications (DOTC), and is mandated under P.D. 286 (as amended by P.D. 696), to undertake all development projects for the establishment of a reliable aviation and aerospace industry, including but not limited to the following:
- Design, assembly, manufacture and sale of all forms of aircraft and aviation /aerospace devices, equipment or contraptions, studies or researches for innovations and improvements there upon.
- Development of local capabilities in maintenance, repair, overhaul (MRO), and modification of aerospace and associated flight and ground equipment and components thereof in order to provide technical services and overhaul support to: government agencies owning aerospace equipment, the Philippine Air Force / foreign air forces , the national airline / foreign airline companies, and to the aviation industry in general.
- Operation and provision of air transport services, whether for cargo or passengers on a scheduled or charter basis, on domestic and/or international scale
The manufacture of aerospace parts and components, and support activities (e.g., R&D activities, research/testing laboratories, and technical vocational education and training institutions) is among the preferred activities listed in the IPP.
The maintenance, repair and overhaul (MRO) of aircraft is also among the preferred activities listed in the IPP. This covers R&D activities and the establishment of research/testing laboratories, Centers of Excellence and technical vocational education and training institutions in support of the manufacturing of aerospace parts and components (or maintenance, repair and overhaul of aircraft).
Project CREAMM (Clustering of the Regional Enterprises of CAR for Agri-Industrial Machinery and Parts Manufacturing)
Project CREAMM aims to improve the productivity and competitiveness of the metals and engineering MSMEs in the Cordillera Administrative Region (CAR) by organizing them into clusters and raising their competency level. This enables them to cater to the equipment and parts requirements of the Moog Controls Corporation, which has determined that tapping a local supply chain would improve its overhead costs and facilitate the company’s expansion plans.
Started in 2012, the project runs for a three-year period to support high precision manufacturing and equip and assist MSMEs to acquire aerospace standards and certification through trainings.
Industry Development Program
The aerospace industry Technical Working Group (TWG) conducts meetings to discuss and address industry concerns and issues. Among its recent activities are:
- 2nd National ASEAN Single Aviation Market (ASAM) Convention. The industry featured Tier 1 Aerospace Original Equipment Manufacturers (OEM) locators’ profile and future market expectations to the local aviation industry and members of the academe. Hosted by CAAP in September 2014, the Convention also showcased manufactured products of the aerospace locators.
- Compliance with AS 9100. AS9100 is a widely adopted and standardized quality management system for the aerospace industry. AIAP and the DOST-MIRDC is targeting to have at least 6 member companies compliant with AS 9100 by 2016 with training assistance from DOST. In 2014, AIAP had five (5) member companies participate in the training and are in the process of documenting the requirements for certification.
- MOU between AIAP and DOST-MIRDC. During the DOST Metals and Engineering (M&E) Week in June 2014, an MOU between AIAP and the DOST-MIRDC was signed to consolidate the MIRDC’s commitment to push for the competitiveness of the sector in light of the ASEAN economic integration, which includes the establishment of the Tool and Die Solution Center and the provision of capacity building activities to companies and its labor force. Through the MOU, the industry was included in the DOST’s Makibayan Program.
Aerospace Industries Association of the Philippines (AIAP)
2nd Floor, Industry & Association Wing,
MIRDC Compound, Gen. Santos Ave.
Bicutan, Taguig City
Tel. No (+63) 918-888-0100 or (+63) 919-999-8303
E-mail address: [email protected]
Board of Investments (BOI)
Industry and Investments Building,
385 Senator Gil Puyat Ave.,
Makati City, Philippines
Tel. No. (+632) 897-6682
Email: [email protected]