Rep. Peter Welch made an appearance at Burlington International Airport on Thursday to encourage collaboration among Vermont companies that supply the global aerospace industry.
The combined industries of aerospace manufacturing and commercial aviation represent about $2 billion in value, according to the Vermont Chamber of Commerce. The chamber’s Vermont Aerospace and Aviation Association, a special initiative geared toward developing the industry in the state, held an “aerospace summit” Thursday at airport, where Welch spoke.
Representatives from companies as diverse as precision manufacturers, fuel gauge developers, data providers, parts distributors and auditors were among the roughly 200 people in attendance. The statewide industry supply chain is estimated to consist of about 250 businesses.
With only a handful of them considered “large” by aerospace standards — General Electric in Rutland, for example, which produces aircraft engines — Welch said coordination among the smaller players is key.
“The more you can create (a) critical mass, the more it can feed on itself,” Welch said.
The chamber’s aerospace and aviation initiative is trying to pull those smaller players together to help businesses with as few as 10 employees compete for bids to industry giants such as Boeing, Airbus or Sikorsky. The VAAA’s goal is to establish Vermont as a internationally recognized “corridor” connecting industry hubs in Connecticut and Montreal.
Changes brought about by globalization in the industry necessitate the effort, said Martin Hamel of Aero Montreal, a trade group representing Quebec’s roughly $12 billion aerospace industry.
Although the region is considered a leading hub in the global industry, the Quebec supply chain realized years ago it would face the same challenges to the supply chain that the VAAA is puzzling out now.
Hamel said global manufacturing companies that make airplanes or helicopters, for example, used to source parts from hundreds of small businesses. Taking streamlining to an extreme, they may now be looking to do business with just five.
“The time of knocking on Bombardier’s door … is quite finished,” Hamel said.
Hamel is in charge of Aero Montreal’s MACH Initiative, a three-year-old program designed to optimize Quebec’s aerospace supply chain. MACH promotes collaboration among Quebec suppliers and buyers, raises the competitiveness of the region’s smaller suppliers and helps select businesses strive for a higher position in the supply chain.
The VAAA and Aero Montreal formalized their working relationship in December with a memorandum of understanding, signed at a summit in Quebec where nine Vermont companies represented the largest of all U.S. state delegations.
Chris Carrigan, vice-president of business development for the Vermont Chamber, said the MOU paves the way for Vermont companies to plug into the MACH program, which can yield a stamp of approval that makes it easier for small businesses to get a seat at the table with companies at the highest levels.
He said the VAAA is “in talks” with the Vermont Manufacturing Extension Center, which could potentially contribute third-party accreditation to Vermont companies in line with MACH standards.
But Hamel said it’s too early to be specific.
He said more work needs to be done in Vermont to raise awareness and desire for an integrated system among the supply chain providers. The initiative will also require support from public authorities.
And “money,” Hamel said.
Government support can take a lot of forms, he said, but financial support is critical given the broader sources of industry competition. He said countries such as Mexico, China and Morocco, which are building up their aerospace industries, are receiving major infusions of cash from their governments.
Given the international nature of the trade, helpful policies for customs and tariffs also can help, Hamel added.
On that notes, the pending Transatlantic and Transpacific Free Trade Agreements got a nod during the summit from Robert DeCamp, from logistics company Deringer. He said he expects the trade agreements to be “bigger than NAFTA” and offer a lot of opportunity for Vermont businesses.
But high levels of public support from other countries, combined with low wage standards and a cost-saving absence of regulations, will help those burgeoning industries produce cheaper products, Hamel said.
That’s all the more reason for regional coordination that helps solidify and grow established businesses, he believes. If domestic businesses won’t be able to compete globally on price, they’ll need to compete with innovation. And the best way to accomplish that is with a coordinated, strategic plan, he said.
If the market opens up to an even more globalized structure as expected, the VAAA hopes Vermont will be ready to contribute as a well-oiled, unified machine — one that emerging markets can’t catch up to.
Former lieutenant governor and current VAAA chair Brian Dubie summed up the strategy of the summit and the organization.
“We should be thankful for what we have,” Dubie said. “But we should be looking over our shoulder, too.”
