21 Oct 2020 -
 General

A&D asks: China – In or out?

airline - aviation - aerospace

Aviation Week ran a story called A&D Industry And The Chinese Conundrum: Get In Or Out?

It reported credit agency forecasts of depressed aerospace and defense business activity for up to another 1.5 years. Meanwhile, data continues to portray China as the lone bright spot in the aviation world, says Aviation Week.

“Right now, really, the two areas of traffic that are close to normal are domestic China and the roughly 2,000 all-cargo aircraft out there today,” said AeroDynamic Advisory Managing Director Kevin Michaels to Aviation Week. Otherwise, “it’s a bloodbath, and we’re all aware of that.”

For aerospace and defense (A&D) suppliers, the dichotomy sets up a critical decision: Should suppliers and servicers run toward China—or run away

Proponents of reshoring the A&D industry to the U.S.—or “nearshoring” to Canada or Mexico — say that now is the ideal time. Chinese unit labor costs have risen fivefold in recent decades and by using advanced technologies to replace humans it’s possible to close the gap on higher labour costs. Earlier this year, financial consultants, Duff & Phelps, identified A&D as a top candidate for moving to America.

Many caution against the reshoring, arguing that Western aviation suppliers can only prosper by move closer to the Chinese domestic aviation market, which is valued at more than $1 trillion, according to Yi Zhang, general manager of OCO Global China.

For more help with looking at supply chain options, contact Astute Electronics.

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