Index IntroductionEmerging marketsGovernment involvementEnvironmental pressuresConclusionIntroductionThe European aerospace industry is thriving. It is considered one of the EU's key high-tech sectors with a turnover of around €128 billion per year (Analysis). Since the creation of Airbus in the 1960s, Europe has emerged as a major contender in the global commercial aircraft market, clashing with former global powerhouse Boeing and eventually surpassing it in orders. Airbus and other European airlines have succeeded thanks to both globalization and booming domestic markets. Aerospace products manufactured in Europe are exported around the world, resulting in an industrial trade surplus for the EU (Analysis). In addition to sales abroad, Europe has an important market for commercial aircraft with around 5,000 aircraft carrying 1 billion people every year through the European Air Transport System (FWC). Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay The aerospace industry in Europe is largely concentrated in a few specific countries, namely the United Kingdom, France, Germany, Italy, Spain, Poland, and Sweden (Analysis). Each of these countries focuses on the contribution of a few main components (Analysis). For example, France specializes in cockpit technologies and the assembly of wide-body aircraft, while Germany focuses on the supply of avionics, fuselages and complex cabin equipment. This specialization allows countries to focus on core competencies (Analysis). While there are numerous industry players, Airbus is widely considered Europe's pride and joy within the industry (Analysis). Similar to how the US industry consolidated to become dominated by a select few players, the European industry has done the same (FWC). Since the 1980s, numerous mergers and acquisitions have reduced the number of major European aerospace companies from twenty-one to four (FWC). The remaining four include BAE Systems, Finmeccanica, Thales and a company formerly called EADS (FWC). EADS stands for European Aeronautic Defense & Space Co. and is the former name of Airbus' parent company (Michaels). The parent company recently dropped the EADS name and renamed itself Airbus Group NV (Michaels). Airbus is a French-German-British-Spanish multinational company based in the Netherlands that has enjoyed a growing market share in recent years (Michaels). Because Airbus is revered as an extremely important European company, its success is celebrated by the industry. Even though Boeing's 2014 orders are outperforming Airbus', the two global powers have been battling it out for much of the last decade with Airbus slightly ahead (Trefis). Airbus' orders for commercial aircraft in 2013 total 1,503, while Boeing is behind with 1,355 orders (Trefis). Beyond orders, innovation is another competition with Airbus recently overtaking Boeing as the manufacturer of the world's largest civilian aircraft thanks to the launch of their A380 (Analysis). Airbus' A380 was the key to overcoming Boeing's monopoly and allowed Europe to take the leading role in the large civil aircraft market (Analysis). Boeing predicts demand for wide-body commercial airplanes will reach 8,000 in the next two decades (Trefis). This represents a huge sales opportunity worth $2.3 trillion, meaning the two companies will continue to go head to head with Boeing's 777 and 787 Dreamliner models and Airbus's (Trefis) A330 and A350 models. Beyond Airbus instruggle for dominance in the large civil aviation market, few regional aircraft manufacturers in Europe have been able to compete with emerging powers including Brazil's Embraer and Canada's Bombardier (Analysis). The main exception is the Franco-Italian company ATR, which holds the title of the world's largest manufacturer of regional aircraft (Analysis). Furthermore, European companies fail to play a major role in the business and general aviation market for small aircraft, a market largely dominated by American companies (analysis). The main exception in this market is the French company Dassault, which has sold over 8,000 aircraft since 1945 (Vision). In addition to producing complete aircraft, many European companies serve as tier 1 suppliers to major manufacturing companies (Analysis). For example, the British Rolls Royce and the French Snemca produce 40% of the world's engines (Analysis). With Airbus leading the large aircraft market, select companies operating in the smaller aircraft markets and numerous companies supplying components to aircraft manufacturers, Europe is certainly holding its own in the global aerospace industry. Emerging Markets The aerospace industry in Europe is about to experience a decline in market dynamics over the next twenty years due to the emerging economies of China, Russia and India. For decades, the French company Airbus has held the majority of the market share in the sector together with the American market leader Boeing. These together hold approximately 80% of the total market share (Commission). With other supplier markets emerging in low-cost countries, Airbus faces the problem of increased competition in the future. This section will describe the current trends of emerging markets in the aerospace industry and how these emerging markets in China, Russia and India will become global market competitors by 2020. Emerging markets will represent a major source of demand for commercial aircraft in the next two years. decades, similar to how these same emerging markets currently represent a small portion of the aerospace industry's supply needs (Bedier). Investments in emerging markets show short-term benefits such as low labor costs and more flexible regulation, but local governments have started to follow a series of strategies that will help them become leading companies in the future (Bedier). For these emerging markets to become global competitors, they must achieve the following goals: Make the aerospace industry a priority in government funding Have a single integrated player in each emerging market Develop a large capital pool Create partnerships with original equipment manufacturers (OEMs) to create a global supply chain There is minimal current industry globalization due to the complexity of industry technology, differences in regulatory and security requirements, and the importance of protecting intellectual property. This complexity pays off in the long term, showing total expenses from investing in emerging markets being 20-25% lower than using manufacturers in high-cost countries (Bedier). The European aerospace industry will have to strengthen its efforts to stay at the forefront and develop new and innovative products for global markets. Comparing the pros and cons of each of the three emerging markets, the Chinese and Russian markets emerge as the top contenders by 2020. They now produce structural components for industry leaders Boeing and Airbus. China's aviation industry (AVIC I) has begun to not only collaborate with OEMs in the supply chain, but has received government fundingenough to develop a competitive regional jet, the ARJ21. In contrast, Russian markets have yet to create a single integrated player in their local market. In conclusion, as a growing economy, China's success will depend on its ability to understand global requirements, design a compelling and reliable aircraft, and develop program management capabilities, supplier integration and after-sales support (Bedier). If all this holds, by 2020 China will become the main tier-one supplier of aircraft components and achieve leadership in the aerospace sector. Government Involvement The aerospace industry requires manufacturers to take risks every time they invest in research and development without the certainty of creating a successful product and having enough buyers. Research has shown that a company needs to sell 500 units of an airplane it builds to break even after all development and manufacturing costs incurred, but this rarely happens (Eberstadt). Therefore, in order to ensure that aircraft are continually built and improved, national governments find ways to help European aerospace companies stay in business and remain competitive. Government help starts right from the start, with supplies going to planes. Aerospace companies purchase primarily from American suppliers, but government support for European suppliers encourages competition throughout the global market (Eberstadt). The competition encourages lower prices, which keeps costs down for aerospace manufacturers that purchase supplies and help European suppliers. Manufacturers are therefore able to maintain lower costs throughout the process and pass them on to buyers. Although it is an expensive process, aerospace manufacturers are encouraged to participate in research and development because governments help fund projects that may be more difficult to raise capital for in the future. private sector (Eberstadt). By being able to worry less about how to start a project, aerospace manufacturers can act more responsively to market needs and opportunities and increase their competitive advantage. This mindset allows aircraft manufacturers to continuously improve their products and processes and continue to be successful. European governments are involved not only in the aerospace sector, but also in the activities of airlines, many of which are identified as “national” airlines of European countries. . Governments help ensure that aerospace manufacturers have buyers for their aircraft by taking the process one step ahead and influencing airline purchasing decisions (Eberstadt). This is an effective way to reduce the risk that aerospace manufacturers face when making development decisions. Finally, European governments have always felt a sense of identity and pride in their aerospace success story (Eberstadt). Since World War II, manufacturers have provided many jobs to countries such as France, Germany, and the United Kingdom. The aerospace industry has become an integral part of these countries' economies, and their success is so important to governments that French officials are said to be approaching Airbus asking, "How can we help?" instead of the company having to turn to the government (Eberstadt). The success of the aerospace industry in Europe can lead to more jobs, some of which are taken away from companies in other countries, and increase Europe's competitiveness. The aerospace industry has always been important to Europe's economies, and its national governments will likely always find ways to support its success. PressuresEnvironmental In recent years there has been increasing pressure on the aerospace industry to become more aware of its impact on the environment. Various organizations such as the Federal Aviation Association, the Environmental Protection Agency and the International Civil Aviation Organization are setting goals, proposing regulations and assisting in the transition to more environmentally friendly business practices. Examples of these initiatives include the Destination 2025 strategic plan, the Single European Sky ATM research and the Emissions Trading Scheme. These projects seek to create more sustainable operational processes without hindering the financial success of companies. The Destination 2025 strategic plan, conceived by the Federal Aviation Association, set goals that revolve around renewable fuels and the sector's effect on the health of citizens around the world. Destination 2025 hopes to discover replacement fuels for leaded aviation gasoline and use one billion gallons of these fuels by 2018 (Destination). In addition to this, the plan aims to reduce the contribution of aviation emissions to significant health impacts by 50% (Destination). Single European SkyATM research, on the other hand, aims to optimize aircraft trajectories, which would in turn lead to greater overall fuel efficiency (Environment). SESAR aims to reduce aircraft emissions while helping airspace users enjoy lower fuel-related expenses. The Emission Trading Scheme contributes to these efforts by working on the implementation of a cap-and-trade system within the European Union. By assigning emission “quotas”, the ETS is expected to lead to a reduction of 43% between 2005 and 2030 (Emissions). To achieve such ambitious goals and continue to see statistics comparable to these, companies are dedicating research and development funds to the cause and are also finding help from sources like the International Civil Aviation Organization. ICAO is made up of 191 member states and works with businesses to facilitate the transition from traditional to alternative fuels, working with financial institutions to help fuel projects aimed at creating a more sustainable industry (Vision & Mission). Within the organization is the Aviation Environmental Protection Committee, dedicated to analyzing future trends and exploring options that utilize or combat opportunities and potential obstacles (Vision and Mission). As a result of these initiatives, total observed carbon monoxide emissions since 1970 have decreased by nearly 64 percent, sulfur dioxide by 83 percent, and volatile organic compounds (NEI) by 48 percent. Many of these emissions decreases can be attributed to innovative thinking and more advanced technology. Companies like Boeing and Airbus are competing to create new energy-efficient prototypes for use in the near future. Airbus dedicates approximately 90% of its research and development budget to environmental research (eco-efficiency). This investment can be seen through the development of aircraft such as the A320neo. The A320neo uses only a quarter of the fuel burned by current (sustainable) generation aircraft. Boeing's current project is a project called "ghost eye." This aircraft is a hydrogen-powered prototype that is expected to use a third of the energy of an engine powered by conventional fuels (Future). Boeing is making great strides even today, with a 9% decrease in carbon dioxide emissions between 2007 and 2012, while increasing profits by an observed 23% (Summary). In both cases it can be argued that the pressure.