The growing role of emerging markets in aerospace

Emerging markets will represent a major source of demand for commercial aircraft over the next two decades. Yet these same markets currently meet only a small portion of the aerospace industry’s sourcing needs—a portion that is much smaller, in fact, than it is in other manufacturing sectors, such as the automotive and consumer electronics industries.
But McKinsey research suggests that this will change in the years ahead. China and Russia are increasingly well positioned to supply Western aerospace OEMs. India has strong potential as well, though it too has further to go.
As new players emerge, Western incumbents will have to focus relentlessly on improving their value-added activities. Forming and managing global alliances and partnerships and coordinating global supply chains will also be essential.

Exhibit 1: Labor in emerging countries can provide major cost advantages.
Exhibit 2: Despite cost advantages, the aerospace industry has moved slowly into emerging markets.
Exhibit 3: To create an indigenous aerospace-manufacturing industry, an emerging econoomy must have a number of characteristics.
Exhibit 4: Interactive chartpack on emerging markets in aerospace.
Exhibit 5: A dynamic view of the aerospace industry suggests that emerging economies will accelerate changes in the value chain.
Exhibit 6: New entrants are already threatening incumbents in the regional-jet market.