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The ClusTer effeCT NeW oPPortUNitieS iN the AviAtioN AND AeroSPACe SeCtor
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he aviation sector is booming in the Middle East. Even in 2008 and 2009, through one of the worst global recessions in recent history, the Middle East showed a 13% annual increase in passenger trafficmore than any other region. On the military side, the Gulf Cooperation Council (GCC) countries and Jordan combined are expected to invest up to $70 billion in 2011 (QR254.8 billion) – a figure expected to grow by 10% by 2015. As a result, an entire aviation-related industry of supporting businesses has been flourishing around the major airlines’ and Armed Forces hubs. These include maintenance, repair, and overhaul companies (MROs); training centres; catering businesses; ground handling providers; and manufacturing companies, which have leveraged offset agreements or large aircraft acquisitions to gain manufacturing work packages. Such clusters can now be found in all major Middle East cities where aerospace and aviation players have emerged in recent years as leading regional players, and are now expanding 26
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their offerings worldwide. Middle Eastern governments have heavily supported the growth of those clusters. Doing so allows them to diversify their economies and support GDP growth. It also increases the amount-
that knowledge-based sectors contribute to overall GDP, as aerospace-related activities are among the most technologically advanced sectors of the economy. Aviation and aerospace clusters are a way to develop a highly qualified local workforce, as well as attract private development capital and financing.
Offering lessons to policy makers
Political support, heavy subsidisation, and offset programmes are not sufficient to overcome these hurdles and ensure the
exiStiNG roADbLoCkS However, the development of these districts, in terms of both investment returns and time to market, is hindered by several existing and potential roadblocks specific to the region: ● Local populations might have little interest in working in the aerospace and aviation sector, due to its relatively low market wages. As a result, companies have higher costs of labour because they must hire expensive expatriates. ● There are currently limited aerospace and aviation educational programmes, which makes the development of local workforces difficult. ● The region lacks a network of small and medium-sized enterprises (providing such services as carpentry and precision machining) to support the operations of large companies. ● The R&D system is not yet able to support the long-term growth of a technology-driven industry. ● The region’s financial and funding system is not yet mature to provide funding to innovative, and consequently high-risk ventures.
Qatar Today November 10
11/1/10 7:27:56 PM