Survey Results Show Aerospace Industry Players Moderately Optimistic About Impact Of Economic Environment
"The Singapore Aerospace Industry in general is confident that it’s well placed to manage through the bleak economic landscape, with many important local players believing that positive growth can be achieved in 2009," said Charles Chong, President of the Association of Aerospace Industries (Singapore), after the release of the AAIS – AeroStrategy desktop survey results, where some 40 Aero-Companies in Singapore participated.
Statistically, on the general outlook of Singapore’s aerospace sector for 2009, respondents were almost equally split, with 39% forecasting a growth of 1-10% over 2008, and 15% expecting no change. Meanwhile 34% expect a contraction of 1-10%. This suggests that not all areas within the Singapore aerospace sector will be equally impacted by the financial crisis, and that some still expect steady and continued growth.
With regards to employment expectations, there is a spark of light shining through this darker economic time; with some 27% of respondents stating that they intend to slightly increase their hiring plans in 2009, in contrast to the 24% that will decrease. 44% said that they are going ahead as planned, with no change in their hiring plans from 2008. In addition, 68% indicated that they were prepared to spend more on skills training. This is a healthy indicator that the aerospace industry in Singapore places great value on keeping, attracting and training skilled staff.
Amidst a global backdrop of negative business sentiments, the key challenges for 2009 which the respondents were most concerned about are the availability of new business contracts (21%), followed closely by the challenge in attracting new customers (20%). It seems likely that the short-term economic climate will lead to greater competition. 12% of respondents were concerned with cost of materials and resources and another 10% with keeping good employees.
Singapore’s ability in terms of attracting, retaining and expanding aerospace-related businesses, was ranked highly, with the majority (78%) rating Singapore as being better positioned than other regional markets. 17% rated Singapore as being the same while a small percentage of 5% said that Singapore is worse positioned than other regional markets.
In anticipation of more turbulent times, Singapore Aerospace Companies’ are taking action. Among the main cost cutting measures that have been or are to be taken are reductions of: capital expenditure (37%); compensation packages / recruitment budgets (24%); and production capacity (17%).
In addition, some Aerospace Players’ are responding to the crisis by ramping up or maintaining business development efforts, rather than cutting back: 32% are doubling their business development budgets while another 34% are keeping their budgets unchanged over 2008. 24% will be cutting their budgets by less than 10% while only 7% will be cutting their business development budgets between 10 and 20%. This is a good indicator that the Singapore Aerospace Players are clear about maintaining and expanding their business network during the tough times and to engage their customers continuously, so as to forge good and lasting relationships for future business.
“All this reinforces our view that Singapore remains the regional aerospace hub of choice. But even in these harsh times, Singapore cannot sit still and given some of these survey results, it appears that it is not. There’s a continuing focus on improving the business, reacting to the realities of economic situation and openness to investing in people skills” says David Stewart, co-founder and Partner at AeroStrategy.
Understanding the scope of international engagement, the survey noted that 19% of respondents had business dealings within the Southeast Asian market, 15% with the Chinese market and 14% with the Indian market. Respondents have some exposure to the worst-hit economies of Europe (12%) and North America (8%), with an expectation of a negative growth in business dealings in these areas of up to -7.9%. This, however, can be neutralised with expected positive business dealings with the Middle East (4.6%), China (4.1%) and all other key international markets.
The survey ended with the golden question on the respondents’ expectations on how long the current economic downturn would last. Optimistically, a good 48% indicated that they expected the business environment to start improving by the 1st half of 2010, another 30% cited 2nd half of 2009 and the remaining 17% stated in the 2nd half of 2010. None of the respondents expect a recovery in the 1st half of 2009, and only one expect the financial crisis to last beyond 2010.
The AAIS has commenced proactive activities with the industry to tackle rising issues. On the drawing board lie activities ranging from frequent engagement forums with the Singapore government economic agencies, supporting statutory boards, to seminars with private sector experts in areas of corporate finance advisory, human resource management, training and development, and more. An upcoming event on 27 February 2009 will focus on how companies, especially SMEs in the industry, can weather the economic storm with tips on cashflow management, personnel management and public relations.
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The 2009 Singapore Aerospace Industry Economic Sentiment Survey was commissioned by the AAIS, in partnership with AeroStrategy Ltd (Singapore). The aim of the desktop survey with members of the aerospace community is to gauge the level of impact of the ongoing global financial crisis on the aerospace sector in Singapore. A total of 41 companies responded.
ABOUT AAIS
The Association of Aerospace Industries (Singapore), AAIS, a non-profit organisation, was founded in Feb 2003 and is registered with the Singapore Registry of Societies. The AAIS is dedicated to promoting competitiveness within Singapore's aerospace industries. Working with its partners Singapore Economic Development Board (EDB); Singapore Workforce Development Agency (WDA); International Enterprise Singapore (IE Singapore) and SPRING Singapore, the AAIS aims to assist aerospace companies in growing existing businesses as well as developing new businesses / partnerships regionally & globally. To drive this growth, the AAIS endeavours to provide leadership by facilitating strategies in innovation competitiveness, technical standards and accreditation. The AAIS also serves as a forum for members to discuss and elevate relevant issues to policy-makers and stakeholders. www.aais.org.sg
ABOUT AEROSTRATEGY
AeroStrategy is a premier management consulting firm devoted to aviation and aerospace. Founded in 2001 by David Stewart and Kevin Michaels, AeroStrategy delivers informed, high-quality strategic consulting services to a varied roster of global clients, large and small. AeroStrategy’s team of consultants on three continents offers a rare combination of industry knowledge and classic consulting skills to solve client problems thoroughly, practically, and cost-effectively. www.aerostrategy.com
Media Contact:
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Executive, Communications
Association of Aerospace Industries (Singapore)
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