Navigating geopolitical tensions, talent shortages and disrupted supply chains while exploring sustainable manufacturing practices is on the agenda for leading OEMs as more carriers aim to expand and green their fleets.
According to the International Air Transport Association (IATA), the airline industry is estimated to achieve a profit of $5 billion in 2023, against a loss of $7 billion in 2022. Meanwhile, growing global demand for military equipment and increased defense budgets are expected to strengthen defense industry.
A notable development in this area was Boeing's Project Voyager expansion plan in St. Louis, Missouri. The project, if approved and built, will be one of the largest defense projects in the region's history with a capital investment of $1.8 billion and aims to create 500 jobs.
Despite the current economic uncertainty, there is potential for successful investment in many markets. Therefore, it is critical for aerospace companies considering expansion to choose locations that provide multiple opportunities to facilitate industry growth.
The conditions for the development of businesses in the field of aerospace and defense
The US aviation market is in a strong position for continued growth. Evidence of this is the fact that US A&D industry exports grew 11.2% between 2020 and 2021, generating $391 billion in economic value, according to the Aerospace Industries Association.
Companies looking to thrive in the rapidly evolving US A&D sector must assess the availability of a skilled workforce, minimizing supply chain disruptions and optimizing cost efficiency.
With a rich heritage in manufacturing and military aviation, emerging advanced manufacturing hubs like the one in Missouri are vital for companies to drive A&D innovation and thrive in a competitive global marketplace.
“A stable business climate is critical for companies considering new investments. Missouri is an attractive prospect for long-term investment because of its AAA bond rating from all three credit rating agencies, its healthy tax climate and flexible incentive programs,” says Subash Alias, CEO of the Missouri Partnership. The public and private economic development agency has helped companies expand in Missouri, creating nearly 33,000 new jobs and $6 billion in new capital investment.
The state is a major transportation hub, with two international airports and several regional ones, along with a system of river barges, railroads, and roads that connect more than half of the continental US within a day's travel. Three foreign trade zones are present in the state, making Missouri the trade center of the Midwest.
More than 100 aerospace manufacturing companies have established bases in Missouri, including LMI Aerospace, PAS Technologies and Westar Aerospace & Defense Group. While the nation's second largest defense contractor, Boeing, employs more than 16,000 highly trained personnel at Defense, Space and Security facilities in the state.
The talent pool is one of the state's biggest assets with a growing population and more than 40 educational institutions offering aerospace and defense degrees. A strategic workforce training program, Missouri One Start, connects knowledge centers across the state into a seamless system that can be used by businesses based there to provide personalized training to future and current employees.
Many training centers in Missouri also contribute to the state's educated workforce. These include the Center for Aerospace Manufacturing Technologies (CAMT), the Aviation Maintenance Institute, the Boeing Cooperative Autonomous System Research and Technology Laboratory, and Flight Safety International. Added to that will be a federal grant-funded Advanced Industry Innovation Center currently under construction in St. Louis.
Enabling lower operating costs for aerospace companies
The rise of the geospatial technology sector in the Midwest is another factor that could prove beneficial for A&D companies. In an increasingly digital landscape, geographic information systems (GIS) enable A&D professionals to discover and visualize market trends, patterns, opportunities and risks much faster than they could manually with paper and a spreadsheet.
Technology and geospatial industry leaders such as Stereotaxis, General Dynamics, T-Kartor USA, Maxar and Ball Aerospace have already established bases in the state. Notably, the National Geospatial Information Agency (NGA) has also begun construction on its new $1.7 billion headquarters in St. Louis. The development, which is expected to be completed in 2025, will see more than 3,000 employees occupy the site, analyzing satellite data, radar and infrared images of the Earth.
As an emerging advanced manufacturing hub, Missouri offers many incentives for manufacturers to create employment opportunities for their local workforce, such as the Missouri BUILD (Business Use Incentive for Large-scale Development) program. Companies that qualify for this initiative are issued refundable state tax credits equal to the amount of the annual debt service payments on the bonds over a period of ten to 15 years.
Missouri is one of the most tax-friendly states in the US, with a corporate income tax rate of only 4% and a sales-based corporate income tax distribution model. In addition, MNCs' income tax liabilities in Missouri are not calculated using uniform global or national tax assessments.
Along with tax incentives, businesses looking to relocate or expand operations in the Midwest can mitigate risk and increase the potential for success by partnering with economic development organizations like the Missouri Partnership.
The organization provides a comprehensive review process by identifying and analyzing suitable locations, talent pool locations, and customized training programs, as well as tax credit counseling and help navigating the market. For companies, access to such actionable data can help strengthen their growth areas and minimize risks.
To learn more about how the Missouri Partnership can help develop a construction project, download the white paper below.
