SubscribeLeading up to the terrorist attacks on the United States in 2001, the aviation and aerospace industries were feeling the impact of harsh financial times and growing negative numbers on the balance sheets.
After the events of September 11th, 2001, things worsened and both industries suffered great financial losses. This is particularly true for the aviation industry that suffered more losses after 9/11 than the entire history of aviation put together.
Air travel declined significantly leading to cancelled flights, massive airline restructuring, and unprecedented losses impacted by decreased load factors, high fuel, labor, and maintenance costs, as well as increased security costs.
It is believed by many industry experts that approximately five years must pass since the events of 9/11 for both industries to get back to “normal” operations. The future of both industries is impossible to predict but evidence shows that some organizations are recovering more quickly than others.
There is a definite focus on controlling costs, the need to increase productivity, preserve cash, and rationalize capacity. The aviation and aerospace industries are currently operating in an environment of survive, adapt, and recover.
Many changes are expected to occur as a result of past tragic events combined with an emerging new workforce. Employees of the future will require new methods of training creating challenges and opportunities for organizations within aviation and aerospace on a global basis.
This new workforce is referred to as Generation Y. According to the International Civil Aviation Organization (ICAO), there are six main regions of the world: Africa, Asia-Pacific, Europe, Middle East, North America, Latin America and Caribbean.
Each of these regions faces significant changes in both the aviation and aerospace industries despite huge differences between developed and developing countries situated within these regions. It is very important for organizations doing business in these regions to maintain and plan for an experienced and skilled workforce in order to achieve success in two of the most competitive industries. Knowledge of such information will aid corporations in the expansion or relocation process.
The New Workforce
Over the next ten to fifteen years, a new generation of workers will emerge resulting in the need for change within many industries including aviation and aerospace. The new generation workforce is referred to as Generation Y. Such workers could mean the difference between success and failure and companies must plan now to be successful tomorrow. Much of this planning centers on recruitment and training.
The Generation Y employee is educated and highly skilled and it is important for management to let the employee know what they do matters. Honesty will go a long way in terms of increased productivity. In other words, the employee wants to be told the truth and they demand that an explanation be given as to why they are being asked to perform a task. Learning the language of the Generation Y employee is very important for management and training must be implemented immediately in order to stay ahead of the eight ball.
This employee is constantly on the look out for rewarding opportunities and wants to be praised in public. The work place must be a fun environment and the tools must be given to the employee to do the job successfully. It is time for corporations to revisit their corporate culture and restructure the work environment to increase productivity.
As the saying goes, “a happy employee is a productive employee”. Southwest Airlines is perhaps the best corporate example to follow in terms of creating a positive corporate culture.
In order to cater to the changing workforce, organizations must create conditions that attract the best people. This might mean rethinking the role of the core group within an organization. Building and using a large and diversely skilled talent pool is important as is offering quick and intensive training to increase the employee’s value to the company.
Training should be results oriented meaning that everyone should be taught career-effectiveness skills. Managers should be taught to manage and employees should be provided with frequent and coaching-style feedback to identify strengths and improve on weaknesses.
The Generation Y employee is never satisfied with a little knowledge and needs to be given opportunities to pursue continuous training and development. Personal retention plans should be a part of every new employee and the company should offer a resource center for personal growth and development.
What Aviation and Aerospace Companies Should Look for in a Community
For a company within the aviation or aerospace industries seeking to relocate or expand, there are a number of factors that must be considered before any decisions are made. In terms of location, it is important to have access to an educated and skilled workforce. Generally, this means locating in a developed country.
However, there are a few underdeveloped countries providing an exceptionally skilled workforce able to work for much less money. For example, India. This particularly country has an abundance of graduates with MBA degrees willing to work for very little salary.
Many of these workers have been educated and trained outside of their own country. In terms of the local community, it is important for the corporation to have access to training programs that meet the needs of the company.
Such training may be offered through a post secondary institution. Developing good relationships within the local community will open the door to increased resources when needed. It is important for the corporation to tell the local community what its needs are and vice versa.
As the new generation workforce emerges, companies must focus training on the essential elements of management and have access to community resources that permit this. The essential elements are: planning, motivating, controlling, leadership, and contracting. Being able to access training sources that offer a mixture of “business” and “organization” is very important.
How Will This Information Assist Companies in the Expansion or Relocation Process?
There are a number of global trends occurring within aviation and aerospace that might be of interest to organizations considering expansion or relocation.
Major themes include: increased competition, cost reduction strategies, strategic alliances, leasing of equipment versus owning, aircraft fleet management, “virtual” air carriers and increased subcontracting, slot allocation and airport congestion, increased privatization, increased use of the Internet, labor issues, restructuring of management, new corporate departments, recruiting, training, technology, bilateral air agreements, political factors, safety and security, corporate culture, flexible strategies, and diversification. The following section discusses trends occurring within each of the six regions of the world.
Africa
Of all the regions, the least amount of change is expected to occur in Africa due to a low propensity to fly variable, underdeveloped environment, and poorly skilled workforce. Africa does not have the economic means and know how to successfully compete within aviation and aerospace.
This is one region of the world where success is dependent on foreign knowledge including training and development. The African region has low standards when it comes to safety and the environment therefore not enticing organizations to want to do business. Growth is slow but since 1992, the aviation industry has seen increased airline integration, restructuring, and commercialization.
There is a desperate need for new management to cope with global trends and autonomy is needed in civil aviation authorities. Physical infrastructure is lacking and there is great need for personnel training from the Western world.
Asia-Pacific
The Asia-Pacific region has managed to achieve strong growth especially since the events of 9/11. China alone expects 8% airline passenger growth over the next twenty years. This region of the world is now in a stage of managed liberalization and change is somewhat slow due to political influences.
Asia is unique compared to other parts of the world because there is no regional organization particularly within the aviation industry. “Megacarriers” are growing in importance, as are small international carriers. However, there are virtually no regional or feeder carriers at the current time leaving a large gap in terms of competition. The Asia-Pacific region has the largest share of the world’s economy and has witnessed strong growth of alliances in recent years.
Airport and airspace congestion are a growing concern as is increased competition, and the need for advanced navigational equipment. Safety and environmental standards are relatively poor compared to other developed regions of the world. The biggest challenges for this region are competition amongst carriers, Information Technology (IT) and competitive strategy, focus on cost reductions, processing and transmitting information.
Asia-Pacific has a skilled workforce increasing every day but is still reliant on Western resources in terms of increased training and development.
Europe
The European region has experienced many changes within the aviation and aerospace industries in recent years. As of 1997, the European Union (EU) implemented the Third Package creating a liberalized aviation environment where political barriers were removed between EU member countries and member states opening the doors to increased competition between air carriers and other modes of transport (i.e., high speed rail), privatization of airlines, and growth of airline and airport alliances.
Although change has occurred in a relatively short period of time, it has not happened as quickly as many Westerners thought it would. However, it is expected that over the next decade many more changes will occur in the environment in which aviation and aerospace companies operate. The EU region has grown through the addition of new countries. For example, Poland and Hungary.
Western Europe and many of the former Eastern block countries have educated and skilled workforces. This is a very important factor as the EU expands because organizations today can utilize the current environment to plan for the future.
Middle East
The Middle East region has remained fairly stagnant in terms of growth for a number of years. There is a great divide between rich and poor and for the first times in history, the wealthy airlines of the Middle East have felt the pinch of difficult financial times resulting in the implementation of low-cost strategies.
Safety and security have become an increased concern as well. For the most part, corporations wishing to relocate or expand into this region face many barriers mainly due to political constraints.
That being said, there are many opportunities for Western companies to become involved in the redevelopment of particular countries. For example, Iraq, Afghanistan, and Kuwait. One barrier companies face is a lack of skilled workers in some countries while other countries have exceptionally skilled workers often based on expatriates from countries outside of the Middle East.
North America
Many changes have taken place in the aviation and aerospace industries in North America over the last twenty-five years and change will continue. Canada has experienced privatization of the airline industry, airports, and air traffic control (ATC).
There is the possibility that foreign ownership restrictions could be lifted allowing foreign aviation and aerospace corporations to expand into the Canadian market. The United States has experienced the rise of the low-cost carrier, government control of airports, major airline debt, record bankruptcies, mergers, stagnant domestic growth, and increased growth to international destinations.
Mexico, although very much controlled by government, has relaxed many political barriers opening up the doors to increased foreign business. Low-cost airlines are emerging and bankrupt airlines are now a reality. Canada and the United States have highly educated and skilled workforces while Mexico is reliant on foreign training.
Latin America and Caribbean
Latin America and the Caribbean is one of the fastest areas of the world to face change. There is a great trend toward liberalization within aviation and aerospace resulting in increased passenger growth, competition, and alliances. Latin corporations are developing corporate strategy and a competitive strategy to cope with increased competition. There is a great need for training as well as investment for research and development (R&D).
Brand culture is very important to Latin companies resulting in some competitive barriers for foreign companies while safety has become an important aspect of change in this region of the world. South America holds great potential for expansion of business and many analysts argue that this area has greater potential than Asia for massive industrial development.
Recommendations
Organizationswithin the aviation and aerospace industries must plan now for the future in order to achieve success. Many opportunities exist in emerging markets but corporations should be cautious of potential sites in specific communities and countries.
Although the physical site may be desirable, there are other factors that must also be considered. For example, access to specific resources that will only enhance the company’s competitive stance. In terms of the new workforce, Generation Y, companies must be able to identify human resource needs (strategy related to human resource issues), recruit qualified candidates, implement an employee selection process, communicate effectively, offer an effective orientation program, train and evaluate effectiveness of such programs, and compensate fairly.
In-house training programs, full-time training departments, and access to academic institutions and educational organizations such as Corporate Visions’ Global Aviation Training Institute for training, education, research, and consulting purposes are necessary for the new workforce.
