The Covid-19 pandemic caused overall foreign direct investment (FDI) project numbers to decline by 17.4% in 2020, when compared with 2019 figures. Although most sectors were negatively impacted by the virus, the aerospace industry faced a particularly turbulent period. Country lockdowns caused the grounding of planes, and even with re-openings, flight schedules were limited.

When it comes to greenfield FDI projects in aerospace, GlobalData’s database shows that there were 54 projects in 2020 – the year the pandemic was declared – down from 153 the year before.                      

Out of the 207 aerospace projects tracked over this two-year period, the majority (72.9%) were new projects and the rest were expansion projects.

What are the leading destinations for aerospace FDI?

Asia-Pacific was the leading region when it came to attracting FDI projects in aerospace in 2019–20, with 27.1% of all projects announced or opened globally. However, the number of projects into Asia-Pacific in 2020 (11) was only a quarter of what it was in 2019 (45).

Western Europe ranked only just behind Asia-Pacific, with 55 projects recorded across the two-year period. Its decline was slightly smaller than in Asia-Pacific but still harsh. Inbound FDI projects into western Europe totalled 16 in 2020.

The US ranked as the leading investment destination for inbound aerospace FDI in 2019 and 2020. Although the US received 14 fewer projects in 2020 compared with 2019, it still ranked above the UK (six projects in 2020) and Singapore (five).

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The US saw most of its investments come from the Netherlands (six projects in 2019–20), Canada (five) and the UK (five).

Netherlands-based Airbus announced a second assembly line at its plant in Mobile, Alabama, in this period. With plans to produce between 40 and 50 A220 aircraft per year in the next decade, about 400 new jobs are expected to be created with the expanded facility. Meanwhile, Sweden-based Saab began construction on a new $37m advanced manufacturing and production facility in West Lafayette, Indiana. The production facility will produce the final assembly for its components of the new T-X trainer jet and create up to 300 new jobs.

In May 2022, Airbus announced a third assembly line would be added to the Alabama plant.

What are the top aerospace FDI business functions?

Aerospace FDI tended to focus on manufacturing or maintenance, repair and overhaul (MRO) operations in the 2019–20 period. Sales, administration and marketing was the third-largest business function in terms of inbound projects, accounting for just under one-quarter of aerospace FDI in this time. All three leading functions experienced declines in excess of 60% in 2020.

The US was the leading destination for manufacturing operations, with 12 projects recorded in 2019–20. It also ranked first for sales, administration and marketing types, with seven projects. Germany and Singapore each received six. The UK received the most MRO-related aerospace FDI (nine projects), slightly ahead of the US (eight).

What are the top sub-sectors for aerospace FDI?

Aircraft components was the top sub-sector when it came to FDI projects in aerospace in 2019 and 2020.

One of the most striking investments was from Universal Alloy Corporation (UAC), a US-based global manufacturer and supplier of aerospace components. The company is a subsidiary of Montana Tech Components, a Switzerland-based company. It constructed a new aerospace components factory in Da Nang, Vietnam, with plans to produce 4,000 out of the five million aircraft devices for export to North America, Europe and Asia.

The company is estimated to have invested $170m and will create 3,200 jobs in Vietnam. Revenue estimates are $25m in 2021 and $82m in 2022, before aiming for more than $180m of exports on an ongoing annual basis by 2026.

UAC Vietnam will initially supply fuselage components for Boeing’s 787, 777 and 737 aircraft and engine elements for Rolls-Royce in the Da Nang-based plant for export to North America, the EU and Malaysia.

Where are the leading aerospace investors located?

Our analysis shows that the US was the leading source market for outbound aerospace FDI. US-based companies invested in 48 projects between 2019 and 2020, targeting greenfield operations in Europe more than any other world region. A total of 21 projects were created by US companies in Europe, while 11 were created in Asia-Pacific. The UK was the largest country recipient of US outbound FDI, receiving seven projects.  

Europe was also a key market for outbound aerospace FDI. The Netherlands, Germany, France and the UK rounded off the top five source markets. Combined, these four countries accounted for 29.5% of global outbound aerospace FDI.

Many sectors are expected to have recovered quickly in 2021 as the post-Covid-19 era begins. Aerospace FDI is expected to increase by approximately 50% in the year; however, this will see it still falling significantly short of its pre-Covid numbers. As with other heavily impacted sectors, the recovery for aerospace FDI is unlikely to be quick. The Russian invasion of Ukraine may also impact its growth prospects in 2022.