It’s no secret the aerospace industry has arrived in South Carolina. Boeing’s North Charleston site selection and the state’s strong military footprint have put the state on the map. A recent study from USC economist Joseph Von Nessen highlighted an industry impact of over $17 billion to the state’s GDP and an annual employment growth rate of 11.4 percent for the sector – more than six times higher than the state’s average annual growth rate.
Growing more of these jobs will impact South Carolina’s economic output and raise the prosperity levels of its citizens, such as per-capita-income – a key metric in how we rank amongst other states nationally. To put that in perspective, the average compensation for someone working in the aerospace cluster is almost 75 percent higher than someone in general manufacturing, or $71,000 per year versus $48,000 per year.
The 787 Dreamliner has over two million parts per airplane. In 2012, Boeing purchased over $28 billion in parts from outside suppliers, with approximately 75 percent of its supplier content from U.S. companies. Now amplify this with Boeing’s increased production rate on the 787 Dreamliner and the opportunity to grow South Carolina’s manufacturing industry and employment look bright.
The BMW effect? Well, sort of.
While it might seem natural for more Boeing suppliers to relocate here as happened with BMW, distinct differences challenge that prediction. Unlike automotive manufacturing, production volumes are much lower in aerospace and the need for a local supply chain and lower transport costs are less important. Boeing produces 10 jets each month, three in North Charleston and the remaining seven in Seattle. By comparison, BMW produces about 10 sports activity vehicles in Greer every 12 seconds.
While the cost of a 787 Dreamliner is higher than the MSRP of a new BMW X5 Sport Activity Vehicle, the lower production volumes of required parts and logistical costs play a smaller role in a supplier’s total cost competitiveness. Boeing and other aerospace customers need suppliers who can deliver advanced components on time and with perfect quality, and will source them from any supplier worldwide.
As previous co-founder and CEO of Greenville-based ADEX Machining Technologies, I was honored to supply for Boeing. We proved South Carolina had the talented workforce and training support to transform a 21-year-old commodity machine shop into an advanced manufacturer with certified aerospace quality systems. Today, when someone boards a new Boeing aircraft, it will have one or more advanced parts made in the Palmetto State.
While we’ve made a lot of progress, South Carolina still has few aerospace manufacturers capable of earning long term contracts to produce flight critical components beyond tooling, prototype or non-flight support products. If we want to capitalize on the aerospace market growth potential, we’ve got to increase support of existing manufacturers, in addition to recruitment and relocation of new companies.
Becoming an aerospace supplier is hard, really hard. Boeing uses a highly structured system of testing and oversight, ensuring process consistency, accountability and compliance at all levels of the supply chain. Boeing’s external supplier network is an extension of its factories, and they are expected to meet or exceed established performance measures for quality, capability and compliance.
Boeing suppliers must also certify their production systems, have them approved by Boeing, the Federal Aviation Administration (FAA) and an independent third party. The FAA also has a dedicated management unit for the oversight and compliance of Boeing’s supplier management. Boeing performs rigorous audits of supplier operations and will sometimes embed their personnel at supplier factories to monitor quality, process improvements, and ensure adherence to Boeing standards and schedules.
For help, look to the beacons. South Carolina has a secret weapon in its ability to assist and support its growing aerospace market, and it comes directly from its strong base of existing aerospace companies. These companies represent beacons of light with an enormous pool of talent, thought leadership, and best practices that illuminate the right path for existing companies wanting to penetrate the challenging world of aerospace.
Many do not realize when boarding their plane at GSP that an existing aerospace supplier, Stevens Aviation, has been on the same campus for 50 years. Stevens’ premier services include structural repair maintenance, avionics modifications, exterior and interior painting, turbine flight training and much more on a variety of mid-size aircraft like the Gulfstream, Cessna, Learjet, and others. The company’s leadership and expert service teams have won numerous FAA and customer awards, and are highly skilled in meeting rigorous FAA compliance standards, along with advanced certifications necessary for Supplemental Type Certificates (STC) and Parts Manufacturing Authority (PMA) project applications.
Recently, South Carolina companies like Stevens Aviation, Boeing, Lockheed, GKN, and Champion have joined forces to create an even brighter beacon: they are now working together as part of a formal advisory board initiative launched by the Department of Commerce and the SC Council on Competitiveness. Industry veteran and serial entrepreneur Steve Townes, CEO of Ranger Aerospace, is chairman. This kind of strategic direction and insight provided by OEM’s and top suppliers will ensure the Palmetto State continues its successful journey.
South Carolina is cleared for takeoff.
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Jason Premo is chairman of Premo Ventures, a Greenville-based venture capital firm focused on investing and accelerating small to mid-size advanced manufacturing companies with high-impact potential in the aerospace, defense, energy, and medical device industries.
