The 10 countries with the largest aerospace industries in the world export billions of dollars worth of aircraft and parts. In fact, because the aerospace industry is capital, labor, and technology-intensive, there aren’t many countries that engage in it and the top five countries amass 80% of the global aerospace exports.
In the last couple of years, the aerospace industry has had a lot of good things going for it. The demand for air travel has been growing as lower jet fuel prices helped lower airfare costs, as well as global demographics and higher income in emerging markets helped drive this trend. Over the last decade, the number of passengers that boarded a plane per year jumped to 3.50 billion from 2.0 billion. Deloitte estimates that over the next 20 years, passenger and freight traffic will increase at an average annual growth rate of 4.8% and 4.2%, respectively.
In turn, this has led to increased aircraft production. For example, Boeing Co (NYSE:BA) estimates the production for 737 will increase to 47 per month by the end of this year and will amount to 52 per month next year. According to Deloitte, annual production levels will register an increase of 29.3% over the next decade, while over the next 20 years, the total global demand for new airplanes will amount to 35,155 units.
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Moreover, the developments in technology allow for airplanes to improve their efficiency, increase safety, improve noise reduction and cabin design, which also helped to increase demand. On the back of these trends, commercial aircraft manufacturers have been providing more advanced airliners. Airbus has the A330 neo, Boeing Co (NYSE:BA) has the 777x and Bombardier has the recently-launched C-Series. In addition, as the commercial aerospace market is expected to remain strong over the long run, new players emerge. China is currently testing its own commercial aircraft and Russia has recently announced the test flight of a new medium range passenger plane.
In the defense sector, countries have been increasing their military budgets on the back of international tensions and conflicts that are expected to persist, which leads to many countries placing orders for new fighter jets and helicopters. The US, which has by far the largest military spending in the world, has recently had its Senate pass a $700 billion spending bill for Pentagon for 2018. Lockheed Martin Corporation (NYSE:LMT), which is the largest contractor by the US Department of Defense, is currently working on the F-35 project, which is expected to cost $1.50 trillion by 2070. The US government is expected to buy 2,443 F-35s, with other governments also having placed orders.
Looking at the trends in the aerospace and defense industry, it’s not surprising that publicly-traded companies in the space are getting more attention from investors, particularly billionaires, who have been showing increased interest in aerospace and defense stocks.
Having said that, let’s take a closer look at the 10 countries with the largest aerospace industries in the world. The countries are taken based on the total value of aerospace exports registered last year.
