The recession caused customers to defer replacements, but recovery was swift
Los Angeles, CA (PRWEB) May 01, 2012
Over the five years to 2012, the Air Traffic Control (ATC) Equipment Manufacturing industry is expected to grow at an annualized rate of 4.2% to $1.6 billion. ATC equipment is used primarily by air traffic controllers at airports. Thus, demand for newly manufactured ATC equipment diminished during the recession as airlines and airports faced weak demand for commercial flights and airfreight. According to IBISWorld industry analyst Antonio Danova, “Less air traffic eliminated the need to update or replace existing ATC equipment, and many ATC service companies deferred replacement.” Still, ATC equipment manufacturers evaded massive losses, despite a 3.3% decline in 2009, largely because of strong, longstanding contracts with the government.
ATC equipment manufacturers rely heavily on funding from the Federal Aviation Administration (FAA) for research and develop expenditure in an industry with an ever-changing technology climate. When the economy crashed, the government passed the American Recovery and Reinvestment Act (ARRA) to protect some of the country's key industries. The FAA was dealt a significant portion of the act's budget, with “about $100 million in funds dedicated solely to revamping ATC towers and navigational equipment,” says Danova. This government support helped return the industry to growth. With an improving economic climate, higher airline traffic and enduring government support, IBISWorld expects the industry to grow in 2012. This growth will be spread across a industry with low concentration; the three major companies in the Air Traffic Control Equipment Manufacturing industries – Harris Corporation, BAE Systems PLC and General Dynamics Corporation – account for less than half of the industry’s total revenue.
The future remains bright for ATC equipment manufacturers, with revenue projected to grow over the five years to 2017. Industry firms will be gearing up for the FAA's Next Generation Air Transportation System (NextGen), a proposed overhaul of the entire US air traffic control system that will take place gradually through 2025. NextGen is designed to increase flight efficiency and make the airways safer as commercial, freight and military air traffic increases. As such, the need for new technologies in ATC equipment to meet NextGen goals will spur sales at the manufacturing level, benefiting industry firms. Moreover, higher technical manufacturing will facilitate continued implementation of automated processes at production plants. This trend will cause some consolidation of peripheral labor, as firms look to keep their most skilled engineers, programmers and product developers. Average industry profit margins are expected to grow as firms keep operations efficient and as new technologies spur increased activity. For more information, visit IBISWorld’s Air Traffic Control Equipment Manufacturing report in the US industry page.
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IBISWorld industry Report Key Topics
This industry manufactures air traffic control (ATC) and communications equipment. ATC equipment is used by air traffic control officers primarily at airports and other air transportation hubs to make air traffic efficient and to provide information and support to aircraft pilots.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
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Cost Structure Benchmarks
Barriers to Entry
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