WorldCity Business Magazine

(4) Special Report: South FL Aerospace Industry

by WC

In the first of a series of special reports, WORLDCITY examines the depth, diversity and economic muscle of South Floridas aviation and aerospace industries.

Sikorsky Aircraft, the U.S. manufacturer of the fabled Black Hawk helicopter, has added an assembly and testing facility to its current operations in West Palm Beach. Embraer, the worlds third-largest aircraft manufacturer, is investing $17 million in a new service center for the booming executive jet market in Fort Lauderdale, where the Brazilian companys U.S. operations are
headquartered. AAR Corp., the owner of AAR Landing Gear, recently acquired Avborne Heavy Maintenance, a stalwart of Miamis MRO business maintenance, repair and overhaul as it is known.

Sikorsky, a division of United Technologies, Embraer and AAR Landing Gear, are just three of the 61 multinational companies in WORLDCITYS Whos Here database involved in the aviation business. All told, these companies employ 13,500 people in South Florida, oversee a total of 26,444 worldwide from here, and are responsible for more than $25 billion in annual revenues, according to WORLDCITY research. Four oversee revenues in excess of $1 billion.

This is the first in a series of articles focused on key industries within South Floridas multinational business community as part of the second year of WORLDCITYS ongoing research for its Global Economic Impact Study.

Aviation is a natural starting point for the series because, in many ways, it is the springboard from which the Greater Miami area today stretching from Palm Beach County south to Miami-Dade County launched itself as a burgeoning world city. While most global cities in the United States first prospered because their seaports connected them to distant lands, Miami rose to prominence because of it aviation connections. A prime engine as well as beneficiary is, of course, Miami International Airport. The international nature of South Florida is nowhere more clear than at MIA. Almost half of all MIA passengers are international, making it and New Yorks JFK as the only two airports above 30 percent.

A relatively young city, barely 100 years old, it gave birth to Pan American World Airways and Eastern Airlines and the hundreds of companies, most of them not multinationals, that sprung up to serve them. But, based on WORLDCITY research, at least 61 are multinational, and they represent 22 countries around the world. Most of these, 44, have their primary South Florida offices in Miami-Dade County, with 11 in Broward County and six in Palm Beach.

In coming months, WORLDCITY will shed light on other multinationals and the industries they represent, specifically the legal profession, the logistics industry, the media, maritime, technology/communications, financial services and more.

South Floridas 1,183 multinationals in the Whos Here database represent 56 nations from around the world, employ 180,000 workers here, oversee 525,000 worldwide from here, and have direct responsibility for more than $203 billion in annual revenues.

That last number the economic muscle was the key finding of the first year of the Global Economic Impact Study, completed last year. This year, in addition to the industry profiles in this series, WORLDCITY will determine the decision-making structure of the multinationals, cataloging which companies have financial, marketing, legal, human resources and other decision-makers here.

The second year of the study is sponsored by the law firm Diaz Reus, Blue Cross & Blue Shield, the University of Miamis School of Business and the Beacon Council. As was the case last year, the second-year of research, including the research for the profiles in this series, is being spearheaded by WORLDCITYs Tak Takasu.

Aviation is led by four companies with revenues in excess of $1 billion: World Fuel Services, which provides fuel at 1,500 airports in more than 160 nations, with its global headquarters in Miami, had annual revenues of $13.7 billion in 2007; American Airlines, the heir to the Eastern Airlines legacy, is now the dominant airline at Miami International Airport and, by extension, the dominant airline serving Latin America and the Caribbean, with revenues of $3 billion attributed to the Miami operation; B/E Aerospace, perhaps the least well known of the Billion Dollar companies, this Palm Beach County firm is in the business of providing the seats, overhead bins and other features seen in planes the world over, with revenues of $1.7 billion. LAN Cargo, the subsidiary of the successful Chilean airline, has its global headquarters in Miami, and was the first airline to base its cargo operations outside of its home country.

For the WORLDCITY study, we have broken the aviation industry into six primary categories:

Passenger airlines, with 19 in our database; Cargo airlines, 11; Aircraft original equipment manufacturers, six; Component OEMs, eight; Maintenance, repair and overhaul, six; Aviation services, six; Others, five.

As an industry group compared to the entire Whos Here directory, aviation accounts for 5 percent of the companies, slightly more that 12 percent of the $203 billion in total revenues overseen from South Florida, 7.5 percent of the 180,560-person local workforce, and 5 percent of the total global workforce of 524,837.

The four companies with at least $1 billion in revenues overseen from here are among the 41 on the entire list, or slightly less than 10 percent.

The largest local employer is American Airlines, with about 7,000 workers here. It is also No. 1 on the list for total employees managed from South Florida, with 9,000.

The two lists diverge from there. Among the largest local employers, Pratt and Whitneys Rocketdyne is No. 2 with 800 workers. The division, which manufactures rocket engines
used in the NASA space shuttle program, recently announced it was adding a research and development facility to design engines used for GPS, or global positioning satellites.

Upstart airline Spirit is No. 3, with 600 employees. It recently received government approval to add flights from their Fort Lauderdale base to Bogota. Two all-cargo airlines, both founded
and based in South Florida, both part of the historic lore of the international trade community here, Amerijet and Arrow, are Nos. 4 and 5. While air cargo also flies in the belly of passenger
jets, Amerijet and Arrow contribute greatly to the $79 billion in annual import-export trade conducted from South Florida, making it the 13th ranked Customs district in the nation and one of only two with a consequential trade surplus.

When viewed through the prism of employees managed from South Florida, whether based here or not, the ranking changes. Following American Airlines is B/E Aerospace, the world leader in airline cabin interior manufacturing, with 5,000 employees. In addition to its South Florida employee, it has employees in North Carolina and Europe. It is followed by Spirit with 2,200; Miami-based HEICO, a leading generic parts manufacturer with 2,185 employees; and Rocketdyne, with 800, all in Palm Beach County. World Fuel Services, which accounts for nearly half of the multinational revenues in the sector, has 737 employees, according to WORLDCITY research, certainly garnering the prize for greatest revenue per employee.

On the whole, the 61 multinational aviation companies tend to be more local than global, in terms of where their employees are based. The multiplier for the aviation companies is slightly less than two, meaning the total global workforce is not quite double the local workforce. With the complete Whos Here database, the multiplier is almost three.

That said, they are a relatively diverse group of companies, since they represent almost two dozen nations. The most come from the United States, with 30 companies. France is second with six companies followed by the United Kingdom with three. Canada, Mexico and Chile all have two companies, with 16 countries, including three in Asia, having one each.

All these multinational companies, and those hundreds of others that are not multinational, put the Greater Miami area on the map with Seattle, formerly the home to Boeing, and Toulouse, France, the home to Airbus, the No. 1 and No. 2 aircraft manufacturers in the world. Both have pilot training facilities here, Airbus North America and Boeing-owned Alteon Training, creating another significant industry cluster for the area. Airbus trains more than 3,000 pilots and flight attendants here annually.

Even though the top aircraft manufactures do not have a direct presence here, the key players in the regional jet market do. One of the Canadian companies in the Whos Here database is Bombardier, a rival to Embraer in the regional jet manufacturing business, and Italian company Piaggio Aero Industries, an Italian corporate jet manufacturer. The French company Sabena
Technics entered the market through acquisition, purchasing EADS Barfield, a leading MRO company based in Miami. The Asian companies are Korean Air Cargo, the Taiwanese company China Air, and the Chinese company Reserve Fuels.

While we placed 61 companies within the aviation industry, there are countless others who provide services to them, including lawyers, bankers, consultants and others. As much as almost any other industry in South Florida, aviation has put the Greater Miami area on the map.