AEROSPACE

BASIC INDUSTRY INFORMATION Industry Association/s

The Philippines is a developing player across the aerospace industry value • Aerospace Industries Association of the Philippines (AIAP)
chain, with capabilities in aerospace parts manufacturing, aircraft maintenance
• Aviation Schools Association of the Philippines (ASAP)
and repair (MRO) and aviation/aerospace/engineering trainings.
• The Philippines is a newcomer to the aerospace parts manufacturing
industry, but export figures in the past five years show expansion and Linkages
upgrading in product coverage and markets, as companies from the Tier • Metalworking Equipment • Electronics
1-3 supplier segments invest in new facilities and obtain • Aerospace-Grade Metals • Tourism
standards/certifications to cater to the manufacturing requirements of (Steel, Aluminum, Titanium) • Aviation (Commercial and General)
the global industry. The Philippines is host to three aerospace Original • Chemical, Plastics, Rubber • Air Cargo Logistics
Equipment Manufacturers (OEMs) producing for the requirements of • Auto Parts • Shipping
commercial aircraft industry, across a wide range of products: flight
control actuation systems, interiors, fit-out, galleys and equipment. In Performance (Aerospace Parts Manufacturing Industry)
support of this, a local supply chain capability for aerospace is Indicators 2015 2016
developing, with local Tier 2-3 manufacturers supplying for OEM Exports US$ 542.2 Million US$ 735.8 Million
requirements, with capabilities on precision machining, design, and (Aerospace Parts)
developing capabilities on surface processing and testing. The Philippines Trade
Imports US$ 1.258 Billion US$ 1.817 Billion
was able to export around US$ 580.9 million of aerospace parts in 2016 (Aircraft and Parts)
• The Philippines is host to two major MRO brands catering to the Employment 6,000 Same
requirements of the commercial aviation industry, both domestic and Sources: UN Comtrade Statistics (2016), based on NSO (Jan. 2016)
international. Recent expansion of the industry includes investments in Duke University, The Philippines in the Aerospace Global Value Chain (May
hangars that can accommodate MRO services to widebody aircrafts. 2016) for employment data
• In support of the MRO, parts manufacturing, and aviation industries, the
Philippines has various schools that supply the human resource and Top Exports
training requirements of these key segments. • Flight control actuation systems; servoactuators; servovalves
• Galley inserts, structures and equipment; seat parts; lavatories
Product/Service Coverage • Interior fit-out
Parts Manufacturing • Panel assembly
• Flight control actuation systems; servoactuators; servovalves • Assembled Light-Sports Aircraft (LSA)
• Galley inserts, structures and equipment; seat parts; lavatories
• Interior fit-out Export Destinations (2016)
• Panel assembly 1. United States (US$ 298 M) 6. Netherlands (US$ 23 M)
• Airframes and sub-assemblies 2. France (US$ 185 M) 7. Germany (US$ 20 M)
• Assembly of Light-Sports Aircraft (LSA) 3. United Kingdom (US$ 58 M) 8. Malaysia (US$ 17 M)
MRO 4. Japan (US$ 35 M) 9. Singapore (US$ 15 M)
• Base Maintenance for commercial aviation 5. Spain (US$ 24 M) 10. Ireland (US$ 14 M)
• Line Maintenance for commercial aviation
• Engineering Training Top Imports
• MRO for general aviation • Aircrafts/Airplanes/Helicopters
Aviation Trainings • Aircraft Engines
• Aircraft Maintenance Technology • Aircraft Tires
• Aircraft Maintenance Training (Technician) • Aircraft Launching Gear
• Aeronautical Engineering
• Aviation Management Import Sources (Jan.-Oct. 2016)
• Commercial Flying 1. United States (US$ 521 M) 6. Cayman Islands (US$ 65 M)
• Composites Repair Training 2. France (US$ 432 M) 7. United Kingdom (US$ 53 M)
3. Germany (US$ 280 M) 8. Spain (US$ 34 M)
Major Players 4. Singapore (US$ 119 M) 9. Malaysia (US$ 33 M)
5. Korea (US$ 82 M) 10. Japan (US$ 32 M)
Subsector Major Players
Top Investors in the Philippines
Flight control actuation systems; Moog Controls Corp. (Tier 1 OEM)
• United States (B/E Aerospace: Galleys and Interior fit-out; Moog
servoactuators; servovalves Tier 2 Suppliers:
Controls Corp.: Flight control actuation systems)
- Famous Secret Precision Machining Inc.
- Applied Machining Corp. • Singapore (SIAEP: MRO: Base Maintenance; Line Maintenance;
Engineering Training)
Galley inserts, structures and B/E Aerospace
equipment; seat parts; lavatories JAMCO Philippines • Japan (JAMCO Philippines: Galleys, Panel Assembly and Interior fit-out)
Interior fit-out • Germany (LTP: MRO: Base Maintenance; Line Maintenance; Dornier
Panel assembly Technology: MRO; Assembly of sea planes)
Assembly of Light-Sports Aircraft, Famous Secret Precision Machining Inc. • Philippines (FSPMI, AMC, PADC, Asian Aerospace)
others Philippine Aerospace Development • Hong Kong (MRO: Metrojet Engineering)
Coporation (PADC)
Base Maintenance and Line SIA Engineering Philippines (SIAEP) Industry Data of Capabilities
Maintenance for Commercial Lufthansa Technik Philippines (LTP) With strong capabilities Needed capabilities
Aviation
Parts Manufacturing Parts Manufacturing
MRO for General/Government/ PADC
Defense Aviation Asian Aerospace • Machining • Hard Anodizing; Sulfuric Anodizing;
Metrojet Engineering • Plastic Injection Chromic Anodizing; Vacuum Carburizing;
Aircraft Maintenance Technology PATTS College of Aeronautics • Assembly Sub-Zero Heat Treatment; Induction
Aeronautical Engineering SIAEP • Packaging and Delivery Heating; Non-Destructive Inspection;
MRO Controlled Shot Peening; Brazing;
Composites Repair Training
Aviation Management WCC Aviation Company • Line Maintenance Soldering
• Base Maintenance • Flammability Testing and Light Fastness
Commercial Flying Philippine Academy for Aviation Training
Testing
(PAAT)

Prepared by: MANUFACTURING INDUSTRIES SERVICE (MIS) – BOARD OF INVESTMENTS

Updated as of February 2017
 Government Support
• The government through the BOI (Board of Investments) provides for
INDUSTRY ROADMAP both fiscal and non-fiscal incentives to encourage investments in the
aerospace industry. This includes aerospace parts manufacturing, MRO,
Vision and trainings in support for aerospace. BOI facilitates implementation of
the Aerospace Industry Roadmap.
For the Philippines to be a major hub for manufacturing of OEM parts and allied
• The AS9100 Training Program, a tripartite collaboration project of the
services (MRO) for the global commercial aircraft industry
DTI-BOI, DOST-MIRDC (Metals Industry Research and Development
Center) and AIAP, being implemented this 2017, aims to develop and
Targets widen the local supply base of aerospace parts manufacturers with
• US$ 2.57 billion exports of aerospace parts by 2022 capabilities that are aligned to the international requirements of the
• Employment of 14,900 by 2022 in aerospace parts manufacturing aerospace parts manufacturing industry. This is to integrate the local
• Integrated and complete supply chain of process capabilities/technologies and pool of aerospace supply chain to the requirements of the local and global
qualified workers for the aerospace parts manufacturing and MRO industries aerospace OEM and MRO industries, with the goal of strengthening and
deepening the integration of the Philippines with the aerospace global
Major Roadmap Strategies value chains (GVCs).
Geographical Clustering • DOST-MIRDC Facilities for Gear Making; LIPAD (Local Interventions for
- Develop and promote Clark as Aviation/MRO/Training Hub Philippine Aerospace Development) Program Proposal
- Strengthen supply chain cluster of Aerospace Parts Manufacturing in CALABARZON, and • CAAP: PH obtained Category 1 upgrade – US FAA (2014); EU lifts aviation
develop a cluster of parts manufacturing in Clark eventually ban from PH carriers (2015)
- CAAP identification of potential airfields outside Manila as training hub: Region III and • TESDA Trainings with Moog Controls Corp., SIAEP
Central Visayas • PADC: MRO Capabilities
Technology, Capability, Education and Trainings
- Support current aerospace product exports, upgrading and ten-year business plans Philippine Advantages
- Support investments on process capability building and training in the supply chain • Cost-competitive, relatively young, English-speaking workforce, with a good
- Equip companies and the supply chain for aerospace manufacturing accreditation such percentage of engineering graduates every year
as AS9100 and NADCAP • The Philippines is considered as an ideal hub because it is equidistant (4-
- Strengthen integration of supply chain capabilities on CNC machining and metrology, hour travel time) from all major Asian countries such as Thailand, Korea,
surface processing of metals, non-destructive inspection, chemical test, met lab, gear Japan, Guam, Vietnam, Hong Kong, Singapore, Brunei, Malaysia, Shanghai
manufacturing and metrology, and composites manufacturing and Xiamen in China and Taiwan.
- Establish linkages with the government and private academe institutions to continually • Given the 4-hour flying time constraint, the Japan-Singapore route maybe
improve education and training in the areas of aircraft maintenance, CNC machining more efficiently served by the Philippines.
and manufacturing technology, surface treatment and chemical technology, heat • Clark Airport as twin airport of NAIA to absorb additional demand capacity.
treatment technology, gear manufacturing, AS9100 and NADCAP CDC Master Plan (infrastructure) and CIAC (Clark International Airport
- Support Countertrade and Offset Policy with PAF and DND to acquire technology Corporation) Master Plan from 2016 to 2032 (in four phases of
transfer development) in place.
Ease of Doing Business • Presence of Tier 1 OEMs (Moog for flight control actuation systems; B/E
- Support port expansion outside Metro Manila Aerospace and JAMCO for interiors fit-out, panel assembly and galley
manufacturing) and global MRO brands such as SIAEP and LTP
Priority Plan of Action (2016) • Tier 2 supply base, although narrow, has proven competencies by
Reform Issues delivering support to local Tier 1 OEMs. Also engages in direct export.
• Geographical Clustering:
Product Priorities
- Develop and promote Clark as Aviation/MRO/Training Hub
• Support current product exports; flight control actuation systems; galleys
- Strengthen supply chain cluster of Aerospace Parts Manufacturing in CALABARZON,
and equipment; interior fit-out and panel assembly
and develop a cluster of parts manufacturing in Clark eventually
• Support manufacturing to upgrade into other product segments: wiring
- CAAP identification of potential airfields outside Manila as training hub: Region III and
harness; oxygen systems; thermal and power management; lighting
Central Visayas
systems; potable water and vacuum waste system
Administrative Bottlenecks
• Support market upgrading
• Streamline import/export lead times and procedures for faster transaction processing
• Support functional upgrading: for the local aerospace parts manufacturing
in line with the needs of immediate business processes
industry to supply into the more lucrative MRO market
• Fill the supply chain process capability gaps (both technology/facilities and trainings)
to complete the supply chain integration and develop a pool of available competent
Investment/Market Opportunities
human resources
• Asia Pacific markets project new 14,330 new planes between 2015-2034
Concrete Projects
• Migration of MRO services to Asia due to lower cost and better
• Participation of the Philippine delegation at the 2016 Singapore Air Show to promote
capacity/competency (human resources)
local capabilities in the three segments of the industry: Aerospace Parts
• Increasing usage of composites leading to composite MRO (not solely for
Manufacturing, Aircraft MRO and Aviation Trainings
parts manufacturing)
• AS9100 Training Program to be implemented by DTI-BOI, DOST-MIRDC and AIAP in
• MRO competition between airlines, OEMs, and third party service providers
2016
• MRO partnerships with OEMs
• DOST-MIRDC Gear Making Facility, and Die and Mould Solution Center
- OEMs are aggressively looking for vertical integration into MRO services
• Proposed LIPAD (Local Interventions for Philippine Aerospace Development) Program
in Asia
of the DOST-MIRDC with DOST-PCIEERD
- OEMs going into full-service business model
• Growing domestic and regional demand for local and international travel
(both legacy and low cost carriers) translates to growing demand for MRO
TECHNICAL WORKING GROUP services
BOI Sectoral Champion : Executive Director Ma. Corazon H. Halili-Dichosa(BOI) - Driven by tourism and increasing intra-ASEAN movement of goods and
Industry Champion : Mr. John Lee (AIAP), and Mr. Wilfredo Estoque (AIAP/Moog people
Controls Corp.) - PH to maintain Category 1 Status (local airlines can fly to US and EU
Members : BOI, AIAP (represented by the Tier 1-3 manufacturers and suppliers and MRO skies)
companies), ASAP (WCC Aviation Company), SIA Engineering Philippines (SIAEP), PATTS - 16.5% projected CAGR of MRO demand in PH from 2016-2022
College of Aeronautics, CAAP, PADC, DOST-MIRDC, TESDA, CHED, CDC, CIAC, DTI-PITC, • If fuel prices stay low at US$ 60/barrel, or further fall*:
DND, DTI-EMB, DTI-BPS, DOST-PCIEERD - Airlines will favor older aircrafts to avoid increased ownership costs of
new aircraft in the short run, leading to increase in MRO activities,
mainly life extension programs
• Choice of MRO capacity for A320neo & B737 MAX (both narrow
bodies/single-aisle) looking at projected large orders and fleet commonality
• Big Data to reduce production costs, optimize flight routes, and improve
monitoring and maintenance of aircraft and equipment
Source: Duke University, “The Philippines in the Aerospace Global Value
Chain” (May 2016); Frost and Sullivan (2016)
Prepared by: MANUFACTURING INDUSTRIES SERVICE (MIS) – BOARD OF INVESTMENTS
Updated as of February 2017