AEROSPACE
INDUSTRY

20
20

FOREWORD ON METHODOLOGY
The data contained in and employed for the present re-

The data has then been collated and aggregated to build

port was collected by Cerved Group through the exclusive

a complete set that covers the aerospace industry overall

processing of information from both public and private(and also differentiates between the aircraft and thesources. The term ‘public sources’ is intended here as

spacecraft segment). The tables and graphs contained

those available to the public, from institutions including

herein have been developed by Cerved Group based on

but not limited to the OECD, the Italian National Statistics

proprietary data and/or data from the public sources in-

Institute (Istat), the Italian National Aerospace Technolo-

dicated above. With regard to aggregation criteria, thegy Cluster (CTNA) and the European Space Agency (ESA).

following economic activity (Ateco) categories have been

The term ‘private sources’ is intended here as Cerved

included in the analysis:Group’s proprietary databases on the major companies

30.30.01 - Manufacture of seats for aircraftthat operate in the aerospace industry. All data collected

30.30.09 - Manufacture of aircraft, spacecraft andhas been cross-checked to verify consistency, by:comparing different sources (e.g. OECD and Istat);

supplementing and verifying data and information via
direct requests to industry operators.
These checks serve to avoid overlapping and duplications.

related equipment

33.16 - Repair and maintenance of aircraft andspacecraft
This enables our analysis to begin with a brief introduction to the aerospace industry as a whole and then proceed to examine each specific segment.
2

AEROSPACE AT A GLANCE
THE ITALIAN AEROSPACE INDUSTRY IS
7TH IN THE WORLD AND 4TH IN EUROPE
BY REVENUE GENERATEDAGGREGATE SECTOR REVENUE IN ITALY(€ bn)

IN 2018, THE MAJOR COMPANIES INVESTED OVER €1.7 BILLION IN R&D

SEGMENTS(€ bn)

514

47,274

COMPANIESEMPLOYEES

3

AEROSPACE AT A GLANCE
THERE ARE AEROSPACE INDUSTRY DISTRICTS IN 11 DIFFERENT REGIONS OF ITALY

30 UNIVERSITIES AND 53 RESEARCH CENTRES ARE LINKED TO THESE DISTRICTS
ITALY BOASTS 28 START-UPS AND INNOVATIVE SMEs IN THE AEROSPACE SECTOR(a)FDI INFLOWS REACHED €1.095 BILLION IN
2018 (+2.9% FROM 2017)

Total ESA Funding (€ bn)

4.87

France (€ mn)

1,311.7

Germany (€ mn)

981.7

ITALY (€ mn)

665.8

UK (€ mn)

464.3a) companies registered under Ateco category 30.30.09
4

HIGHLIGHTS
The aerospace industry is taking on an increasingly important role for regional economic development in Italy.
The technological skills and know-how if Italian aeronautics and space companies, combined with the increasingly advanced technological knowledge required in
production processes and Italian companies’ growing
participation in major international research programmes, have become critical growth drivers for Italy inthe sector.
The Italian aerospace sector is composed of both leading
manufacturers and small to medium-sized sub-suppliersof high-tech products, structured to ensure that the industry’s highly demanding technology and quality standards are met.
According to the European Space Agency (ESA), Italy is
the 6th leading global space power, with total space industry revenue amounting to €2.23 billion in 2018.
The Italian National Aerospace Technology Cluster (CTNA)
comprises industry districts in 11 regions of the country(Piedmont, Lazio, Lombardy, Campania, Puglia, Abruzzo,
Basilicata, Emilia Romagna, Tuscany, Umbria and Sardinia), along with three national research institutes, two industries and the national aerospace industry association.

Each regional technological district has its own specificstrengths with highly specialised businesses (active inareas such as avionics, component manufacturing andservices). These businesses often collaborate with major
universities and research centres. In addition, other industry clusters, research institutes and technology hubs
work together with the CTNA to develop innovative applied technologies in the aerospace sector and in othersectors, including for instance the important Mechatronics Hub established in the province of Trento.
In the coming years, the key developments in the aerospace sector will be centred around:

digitisation and sustainability



corporate restructuringthe ‘Space Economy’

New technology from aerospace research and programmes is spreading into other sectors. The spacecraft
sector is in fact influencing other markets such as radars
and geoinformation. Meanwhile, technological developments in aeronautics, particularly in the production of5

HIGHLIGHTS
helicopters and airplanes are, thanks to an integrated
production chain, positively influencing not only key industry players but even microbusinesses and SMEs
along the chain.
Advanced know-how required in the sector entails a needfor constant investments in innovation. According to theEuropean Patent Organisation, in the air transport sector
alone, 9,635 European patent applications were submitted
in 2019, a 6.6% increase from 2018; of these, 378 camefrom Italy, putting it in third place behind Germany (2,138
applications) and France (999).

The Italian aerospace sector is developing an ever moreinternational strategic approach.
The main opportunities in the sector are:innovation in the solutions offeredparticipation in international programmes to develop
highly innovative technology
a recovery in global commercial air transport demand

Spending on aerospace technology (including the portionin military budgets) by governments and/or national
agencies and international agencies greatly influences
aerospace sector trends, both globally and in Italy. As
such, it is vital for companies in the sector to invest
heavily in R&D, as technological innovation is one of theleading competitive factors across the entire industry.
Italy’s aerospace districts are thus involved in numerous
R&D projects co-funded by national and international
programmes.

6

HIGHLIGHTS

The critical success factors in the sector are:



R&D investments

Organisational capabilities



Skills & know-how

International partnerships
7

CONTENTS
1. INDUSTRY OVERVIEW
1.1.

Key characteristics

10

1.2.

Key sector data

24

1.3

Main trends

27

2. INTERNATIONAL PERSPECTIVE
2.1.

Investments in Italy33

3. INDUSTRY ATTRACTIVENESS
3.1.

Industry attractiveness-radar

46

3.2.

Opportunities

48

3.3.

Critical success factos

50

INDUSTRY OVERVIEWINDUSTRY OVERVIEWKEY CHARACTERISTICS
The Italian aerospace sector contains 514 active businesses whose aggregate revenue in 2018 came to €16.4
billion (+5.1% from 2017). These businesses employ
nearly 47,300 people combined.
The aircraft segment accounted for an estimated 86% of
total sector revenue in 2018, while the spacecraft segment accounted for 14%.

The aircraft and spacecraft production chain plays a very
important role in Italy’s economic development, especially considering the advanced technological knowledge
and skills required for the production processes.
Italian companies’ know-how in the spacecraft sector
and their participation in major international programmes
are important growth drivers.

According to the National Aerospace Technological Cluster (CTNA), an association that brings together all the
major actors in the Italian aerospace sector, Italy’s aerospace industry ranks seventh in the world and fourth inEurope in terms of revenue. Furthermore, within the
broader integrated systems and high-tech manufacturingsector in Italy, aerospace is the largest sub-sector.

There are aerospace industrial districts in 11 different
regions of the country (Abruzzo, Basilicata, Campania,
Emilia-Romagna, Lazio, Lombardy, Piedmont, Puglia,
Sardinia, Tuscany and Umbria), characterised by an integrated chain of highly specialised SMEs along with major
multinationals .

10

INDUSTRY OVERVIEWKEY CHARACTERISTICS
KEY FIGURES
514

47,27416.4 € BN

COMPANIESEMPLOYEESTURNOVER
2018

KEY BUSINESS AREAS
AIRCRAFTS

SPACE

86%

14%

11

INDUSTRY OVERVIEWKEY CHARACTERISTICS
SUPPLY SIDE
Businesses of all sizes are present in the sector and theygenerally focus specifically on the aerospace industry, inwhich they have amassed advanced technological skills
in both product research and development and in the
production of components and finished products. In addition to the large manufacturers, there are numerous
small to medium-sized sub-suppliers that are capable ofguaranteeing the high technical quality standards required in the industry.
The largest businesses can handle the entire productcycle – from design to construction to maintenance – ofairplanes, space vessels and/or engines, even if many ofthem do outsource a significant portion of these activities. Smaller businesses tend to be more highly specialised in niche areas, such as the manufacture of certain
components.
The presence of foreign operators is limited and maintenance/assembly services are generally outsourced to
Italian businesses. Multinational leaders do have commercial links in Italy, through subsidiaries or sales offices, which take care of relations with institutional clientsand large private sector clients.

DEMAND SIDE
The industry’s end market is naturally international and iscomposed of two types of target clients:public sector clients: armed forces, law enforcement
agencies and national security agencies including
civil protection departments, as well as emergency
rescue services;private sector clients: include first and foremost
commercial airlines, which have sizeable fleets, aswell as other economic actors that use aircraft toprovide their services (such as telecommunications
companies and oil & gas companies) and othersmaller players like flying clubs.

Demand fluctuates and is specific to each client. Greaterattention is focused on the purchase of whole systems
rather than single components.
Many companies in the sector have partnerships with
universities and research centres to collaborate on international-scale projects.

12

INDUSTRY OVERVIEWKEY CHARACTERISTICS
TYPES OF OPERATORS
Most companies active in the sector specialise in theaerospace industry and any other business activity mainly involves technological synergies with related sectors,
such as naval and ground transport. Operators in the
sector can be categorised as follows: integrated global competitors specialised aircraft manufacturers
 specialised manufacturers of spacecraft and related
systems
 engine producers
 component manufacturers/assemblers
 design, assistance and maintenance service providers

Chamber of Commerce database, there are 28 start-ups
and innovative SMEs registered in Italy under the Ateco
business activity code for the aerospace sector; six ofthose businesses are located in the region of Campania.
If we were to include businesses registered under other
Ateco codes in which products and services are applicable to the aerospace industry, there are 65 innovative
SMEs, 53 of which are considered start-ups. Geographically, the highest concentration of these companies is in
Lazio, with 24.5% of the total.
Several large aerospace companies have forged partnerships or even joint ventures with major foreign multinationals and/or universities and international research
institutes, in order to develop new aircraft, spacecraft
and/or components.

It should be noted that the component manufacturers/
assemblers category contains a numerically substantial
and very diverse set of companies in terms of both size
and the types of businesses they run. There are also
some start-ups operating in the sector: according to the13

INDUSTRY OVERVIEWKEY CHARACTERISTICS
R&D AND PATENTSIMPORTS & EXPORTS

Companies in the aerospace sector invest heavily in R&D,
as technology is a crucial competitive factor. In 2018,just taking the companies with over €100 million in annual revenue, total R&D investments exceeded €1.7 billion.

In 2019:


According to data from the European Patent Organisation(EPO), European patent applications in the transport sector rose by 6.6% year-on-year in 2019 to a total of 9,635.
Of these applications submitted, 378 came from Italy,
putting it third behind Germany (2,138) and France (999).

Italian exports of aerospace products reached a valueof €6.193 billion, up 7.6% from 2018;
Italian imports came in at €3.324 billion, up 13.7%
from 2018, showing a faster growth rate than theprevious year.

The United States remained the leading trade partner for
Italian aerospace companies in 2019, accounting for40.3% of imports and 33.5% of exports .

Transport remained the leading sector for patent applications in Italy in 2019.

14

INDUSTRY OVERVIEWKEY CHARACTERISTICS
PRODUCTION CLUSTERS AND
THE CTNAThe Italian National Aerospace Technology Cluster(CTNA) is an association of public and private sector
members that brings together all the major actors in the
Italian aerospace industry: large, medium and small
companies, research centres and universities, government agencies and national platforms, industry federations and regional aerospace industrial and technological districts. The association’s Strategic Plan is alignedwith and runs parallel to European Union policy in aerospace matters, including for 2020.

Source: Illustration of CTNA data

The CTNA’s role is to: establish, through an agreement with and between
the national aerospace industry players, technological priorities and initiatives, as a function of international developments and policies;
 aim to ensure that the Italian aerospace industry has
a robust, proactive global role in both aeronautics
and space research.
15

INDUSTRY OVERVIEWKEY CHARACTERISTICS
Indeed, the CTNA’s strategic goals are: to realise the potential value of Italian technological excellence; to expand andenhance research and innovation networks; to foster the development of all players in the industry; to strengthen theindustry’s competitiveness nationally and internationally; and to increase the quantity and quality of jobs in the sector.
The industry district members of the CTNA are located in 11 different regions of the country: Piedmont, Lazio, Lombardy,
Campania, Puglia, Abruzzo, Basilicata, Emilia Romagna, Tuscany, Umbria and Sardinia. Each regional district has its
own specific strengths and is comprised of highly specialised companies – whether in avionics, components, services
or other niches – that work closely with universities and research centres. Each district is committed to developing an
industry of its own, building a structured production chain in order to offer competitive, cutting-edge solutions.
CTNA figures, which include not just core activities but the entire value chain in the industry, aerospace districts containpredominantly SMEs, and most of them are highly specialised businesses that collaborate with larger global companies.
The regional districts also include universities and research centres, which have partnerships with companies that aim
to develop innovative products.

16

INDUSTRY OVERVIEWKEY CHARACTERISTICSCOMPOSITION OF ITALIAN AEROSPACE DISTRICTS
SMEs

Large
Companies

Universities

Research
Centres

TOTAL

Dominio ICT Aerospazio Abruzzo

15

2

1

3

21

CLAS Cluster Lucano Aerospazio

21

2

1

4

28

119

22

5

13

159

27

1

2

1

31

250

24

5

10

289

RegioneDistrict /Cluster

ABRUZZOBASILICATADAC Distretto Tecnologico Aerospazialedella Campania S.c.a.r.l.
IR4I Cluster Tecnologico Aerospaziale
EMILIA-ROMAGNA
dell’Emilia Romagna S.c.a.r.l.
Distretto Tecnologico dell’Aerospazio del
LAZIO
Lazio
CAMPANIALOMBARDY

Lombardia Aerospace Cluster

209

11

4

3

227

PIEDMONTDAP Distretto Aerospazio Piemonte

280

9

3

6

298

80

9

3

6

98

17

5

2

3

27

PUGLIA
SARDINIADTA Distretto Tecnologico Aerospazialedella Puglia S.c.a.r.l.
DASS Distretto Aerospaziale della Sardegna S.c.a.r.l.

TUSCANY

Distretto Advanced Manufacturing 4.0

30

6

3

4

43

UMBRIA

Umbria Aerospace cluster

25

3

1

-

29

Source: CTNA presentation, 6 February 2020
17

INDUSTRY OVERVIEWKEY CHARACTERISTICS
The leading aerospace districts in terms of revenue generated, are those located in Lombardy, Lazio and Piedmont.

REVENUE OF ITALIAN AEROSPACE DISTRICTS
Revenue(€ bn)

RegionDistrict/Cluster

ABRUZZO

Dominio ICT Aerospazio Abruzzo

n.d.

BASILICATA

CLAS Cluster Lucano Aerospazion.d.

CAMPANIADAC Distretto Tecnologico Aerospaziale della Campania S.c.a.r.l.

2.8

EMILIA-ROMAGNA

IR4I Cluster Tecnologico Aerospaziale dell’Emilia Romagna S.c.a.r.l.

0.5

LAZIO

Distretto Tecnologico dell’Aerospazio del Lazio

5.0

LOMBARDY

Lombardia Aerospace Cluster

6.0

PIEDMONTDAP Distretto Aerospazio Piemonte

3.9

PUGLIADTA Distretto Tecnologico Aerospaziale della Puglia S.c.a.r.l.

1.5

SARDINIADASS Distertto Aerospaziale della sardegna S.c.a.r.l.

n.d.

TUSCANY

Distretto Advanced Manufacturing 4.0

0.35

UMBRIA

Umbria Aerospace cluster

0.4

Source: CTNA presentation, 6 February 2020
18

INDUSTRY OVERVIEWKEY CHARACTERISTICS
Italy and its 11 aerospace districts are involved in many
R&D projects that receive regional, national and European subsidies. The number of district projects by segment (aeronautics and/or astronautics) is an indicationof the region’s particular pursuits. CTNA figures showthat Campania and Puglia are the districts engaged in
the most aeronautics projects, while for astronautics it
is Lazio engaged in the most research projects.

universities and both Italian and foreign aerospace companies.

Another key institution for the sector is the Italian Aerospace Research Centre (CIRA). A company that is majority-owned by the Italian government, CIRA was founded
in 1984 to conduct aeronautical research. CIRA, a member of CTNA, possesses infrastructure such as test facilities that are unique in the world and the most advancedlaboratories used by both Italian and foreign institutions
and industry players. The activities carried out at CIRA
cover some of the most advanced topics in aerospaceresearch. CIRA also participated in major European andother international research programmes, working with

19

INDUSTRY OVERVIEWKEY CHARACTERISTICS
NUMBER OF RESEARCH PROJECTS IN ITALIAN AEROSPACE DISTRICTS
RegionAeronautics

Astronautics

ABRUZZO

2

4

BASILICATA

419

CAMPANIA

82

9

EMILIA-ROMAGNA

-

1

LAZIO

20

30

LOMBARDY

26

15

PIEDMONT

54

10

PUGLIA76

11

SARDINIA

61

TUSCANY-

15

UMBRIA

92

Source: CTNA presentation, 6 February 2020

20

INDUSTRY OVERVIEWKEY CHARACTERISTICSOTHER CLUSTERS AND ENTITIESIn addition to the CTNA member districts, there are otherbusiness clusters and institutions in Italy that, while notspecialists in aerospace, are technological innovatorsthat can have an impact through applications in the aerospace sector.
Most notably, a Mechatronics Hub was recently established in the north-eastern region of Trentino Alto Adige.
This hub is a common space for manufacturing andtesting products, conducting research, developing innovative products and new or more efficient production
processes using a combination of advanced computer,electronic and mechanical technology. This cluster,whose total annual revenue is over €49 million, includes
companies active in the automotive sector, robotics andsmart electronics systems, sensor technology and industrial automation. A few of Trentino’s Mechatronics
Hub companies also develop solutions for the aerospacesector.
In the same region, the Hub for Innovation in Trentino(HIT) was established for the purpose of promoting economic growth in Trentino through advanced technology
transfer and new innovations from scientific research.
HIT has become a partner in numerous initiatives, including National Technology Cluster initiatives in ‘Smart
Factory’ and ‘Smart Communities’ projects. It is also
participating and/or running various EU-level innovation
projects. HIT works to facilitate the transformation of
positive scientific research results into value for businesses and investors (by means of licenses, patents andcontracts) and supports the development of technologically innovative start-up companies.

21

INDUSTRY OVERVIEWKEY CHARACTERISTICS
One of HIT’s founding members, which also plays anactive role in the Mechatronics Hub, is Trentino Sviluppo, an agency of the provincial government that supports sustainable, innovative development across thearea, promoting cooperation between businesses andthe formation of stronger industry networks and strategic clusters in the province. Trentino Sviluppo runs six
Business Innovation Centres within the province. Thesebusiness incubators oversee over 100 businesses (start-ups, other young businesses and research centreaffiliates of larger industrial groups), employ over 700
people and generate over €380 million in annual revenue.
HIT and Trentino Sviluppo have also sponsored anawareness-raising campaign among local businesses
about the potential opportunities in the aerospace industry, particularly regarding applied research and technological advances.

22

INDUSTRY OVERVIEW

KEY SECTOR DATA
In 2018, the aerospace businesses operating in Italy attained aggregate revenue of €16.4 billion, a 5.1% increase from2017, recovering from a decrease the previous year.
According to the Aerospace and Defence Industries Association of Europe (ASD), aerospace and defence sector revenue
in Europe reached €246 billion in 2018 (+7.7% from 2017). The aeronautics and space component (75% of the total aerospace and defence sector value in Europe) grew by 4.9% year-on-year.
Italian companies’ 2018 revenue trend was in line with the European sector trend.
At the global level, based on the latest available data, in 2017 total aerospace industry revenue reached €838 billion,
49% of which was in the United States .

23

INDUSTRY OVERVIEW

KEY SECTOR DATAAGGREGATE REVENUE OF COMPANIES ACTIVE IN ITALY, 2016-2018€ bn

EUROPEAN AEROSPACE AND DEFENCE INDUSTRY REVENUE, 2016-2018€ bna) the Aeronautics and Space sector here includes both civil and military aircraft and spacecraft
Source: Illustration of ASD of Europe data
24

INDUSTRY OVERVIEW

KEY SECTOR DATA
The aircraft segment constitutes the larger area of business, accounting for an estimated 86% of total industry
revenue in 2018. This segment has been positively influenced by growing demand for air travel. This expansion
has had a positive impact on related maintenance andrepair service businesses. In Italy, the aircraft production
chain plays a very important part in the country’s economic development, particularly due to the advanced
technological knowledge required for the manufacturing
processes. This chain is composed of large manufacturers flanked by small to medium sized sub-supplier companies that are capable of guaranteeing that the industry’s high technical quality standards will be met.
The spacecraft segment is not the main segment in termsof revenue, accounting for about 14% of total industry
revenue in 2018, although space programmes in which
industry players are participating have made progress.
Spacecraft does appear, however, to be the more dynamic of the two segments. Several countries have come toview the space sector as strategic for economic development, with technological advances that spread into otherhigh-tech industries, such as telecommunications. The

know-how of Italian space sector companies and their
participation in international programmes thus constitutes
a major growth driver. According to the European Space
Agency (ESA), Italy is the 6th leading global space power,with total space industry revenue amounting to €2.23 billion in 2018. The Italian spacecraft segment is composedof about 600 businesses that employ around 7,000 people. Spacecraft revenue, about 70% of which comesthrough exports, has over the last five years amounted to
1.5% of GDP.

AGGREGATE REVENUE BREAKDOWN BY SEGMENT, 2018
100% = €16.4 bn

25

INDUSTRY OVERVIEW

MAIN TRENDSDIGITISATION AND SUSTAINABILITYCORPORATE RESTRUCTURING

In recent years, many companies in the sector have invested in: digitisation and digital technology in order to construct a production chain with cutting-edge technology that is also cost-effective. As part of the Industry 4.0 programme, enabling inventions are being
developed and applied, including collaborative robotics, additive manufacturing, augmented virtual
reality, calculator-assisted simulations, the industrial internet of things, cloud manufacturing techniques, cyber-security, as well as big data and advanced analytics;
 sustainability, by seeking to develop and implement
manufacturing processes that consume less andless energy, while at the same time using more environmentally friendly and energy-efficient materials
and managing maintenance activities more efficiently.

The supply side of the aerospace sector has undergone aphase of reorganisation in recent years, both in Italy andinternationally, through both actions by companies to focus on their core business and a series of mergers andacquisitions aiming to expand geographical market coverage and/or optimise costs by means of economies ofscale.

26

INDUSTRY OVERVIEW

MAIN TRENDS
THE SPACE ECONOMY
According to the Italian Space Agency (ASI):

Space has for some time become a pervasive superinfrastructure, by definition without boundaries, fromwhich we seize new, intertwined opportunities every day.
Space must therefore be approached as a ‘system ofsystems’ based on the integration of many factors, technologies and services, both from ‘Earthly’ sources andfrom space programmes themselves. This is the new
Renaissance that will come from space, the Space Economy. It is a phenomenon with the potential to increase the€270 billion in global space economy revenue through atransition from manufacturing value chain to a servicebased value chain, which thanks to the internet can bepropagated at a trivial cost. Satellite services will thus
become a low-cost utility that can generate indirect revenue for companies capable of anticipating our society’s
needs. Space technologies will have an increasing, positive influence on our lives.
(Retrieved from: https://www.asi.it/space-economy/La
nuova frontiera dell’economia oltre l’atmosfera terrestre,
2020)
27

INDUSTRY OVERVIEW

MAIN TRENDS
The aerospace sector is developing more and more innovative solutions within the context of international research
programmes, including putting smaller satellites (nanosatellites) and increasingly functional satellites into orbit.
These new satellites are performing useful functions for both civil and military purposes, including geolocation, observations and transmitting more types of information. For example, the Vega launch system (Vega is an acronym for Vettore Europeo di Generazione Avanzata, meaning ‘Advanced Generation European Carrier Rocket’) currently in use by
Arianespace, was developed jointly by ASI and ESA to launch small satellites into orbit.

28

INDUSTRY OVERVIEW

MAIN TRENDS
Meteorological monitoring, global communications andtransportation, imaging, satellite navigation and remotesensing/surveying, as well as many other fields, all relyon the aerospace industry, so constant technologicaladvances in aerospace are influencing other sectors of
the economy to an increasing extent. For example:

the radar market, and especially synthetic apertureradar (SAR): not only has the widespread use ofradar hardware and software in the defence sector
stimulated growth in this market, but radar-based
systems have also been developed for measuring
ocean currents and seabeds, to measure pollution
and small targets, to monitor maritime traffic, forsearch and rescue missions at sea, to locate accumulations of floating waste such as plastic islands,
as well as other applications;

The market volume in this area has risen sharply
thanks to the development of geographical information systems (GIS) applied to the fields of environmental protection, natural disaster mapping for
emergency preparedness measures, marine surveillance systems, logistics and even leisure andtourism.
Regarding the aircraft sector, it should be stressed thatas a result of its solidly integrated production chain,products and solutions have evolved in such a way as
to positively affect upgrades, not only for the biggest
players but even for Italian microbusinesses and SMEs,
which have introduced a huge variety of new mechanical parts and other components onto the market, supported by skilled maintenance, repair and overhaul(MRO) services.

the geoinformation market: geographical information, in today’s world, is an important part of the
global economy, providing added value in daily life.

29

INDUSTRY OVERVIEW

MAIN TRENDS

The helicopter market with cutting-edge avionics(including advanced automatic pilot systems, anticollision systems to improve visibility at night or insmoke, smog or fog) is becoming increasingly
widespread for rescue operations, passenger
transport, law enforcement, offshore transport,
coast guard operations and environmental monitoring activities.



The airplane market is one of the main beneficiariesof the latest aerospace technologies, from precision speed reducers to bionic aircraft design.

The Unmanned Aerial Vehicle (UAV) market is one of
the most promising business areas in the aerospace industry, as its range of application is expanding. Drone use is in fact being extended not
only by armed forces (to surveillance of borders
and seas, and to monitoring migratory flows), butalso in the field of civil protection (support for
emergency response and critical infrastructure

protection operations), by industries (such as drone
inspections of offshore oil platforms and thermographic inspections of photovoltaic plants), by thehealthcare sector (to disinfect public spaces andmonitor compliance with hospital and public healthmeasures), in the agricultural sector (to monitor
crops) and in the commercial sector (civil use of
remote-pilot aircraft).

30

INTERNATIONAL PERSPECTIVEINTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALY
Italy occupies a prestigious position in the global Aerospace, Defence and Security (AD&S) industry by virtue ofthe industrial and technological capabilities of a national
supply chain that takes on significant strategic value.
Italy’s AD&S sector is among the top ten in the world,
and the country has led the way in several major advances in the field. For instance, Italy was the first country in the world to build a certified convertiplane for civilian use, was among the first to have conducted joint
flight operations with both manned and unmanned aircraft, was the third country in the world to launch a satellite into orbit, and more than half of the pressurised
volume of the international module at the International
Space Station was made in Italy. (The above facts weregathered in a report published in September 2018 by The
European House – Ambrosetti, in partnership with the
Leonardo corporation).

R&D EXPENDITURESIn Italy, according to the latest OECD data available (for2016), research and development spending in the‘manufacture of aircraft, spacecraft and related equipment’ sector amounted to €1.21 billion, which is 82.3%
of the R&D spending in the broader ‘manufacture of other means of transport’ sector and 8.6% of the total R&D
spending in Italy. In 2018, the major companies active in
the industry (those with at least €100 million in annual
revenue) reported over €1.7 billion in R&D spending
combined.
The combined R&D spending of the 2,500 largest companies in the world active in the broader aerospace anddefence industry in 2017/2018 amounted to €19 billion(-4.3% from the previous year), making it one of the top
ten economic sectors in terms of corporate R&D expenditures. Within the European Union, the aerospaceand defence sector accounts for 4.4% of total R&D
spending at about €200 billion, up 0.9% year-on-year(according to the European Commission’s ‘2018 EU Industrial R&D Investment Scoreboard’). According to ASD
Europe, R&D investments in the aeronautics segment
reached €15 billion, €9 billion of which was in the civil
aeronautics field, which is attracting a growing numberof private sector investors.

32

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALY
R&D EXPENDITURE IN ITALY

Source: illustration of Istat data on Ateco 2007 (business registry code) 30.30: “Manufacture of aircraft, spacecraft and related equipment”

33

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALY
New developments in the space segment are primarily
connected with national and international space agency
programmes. However, over the past few years, privatesector investments in spacecraft have been growing.

At the European level, ASI actively participates in all
ESA programmes, and its tasks include promoting, supporting and coordinating Italy’s participation in EU
space and aerospace projects and initiatives.

Italy’s agency in the field is Agenzia Spaziale Italiana(the Italian Space Agency, or ASI), while for European
programmes the key institution is the European Space
Agency (ESA).

The ASI and Italy have for some time played an important role in the European and global space researchcommunity, having established relationships and cooperation activities with numerous other national space
agencies.

ASI

Apart from the ESA, the United States is the international partner with which ASI has established the most preferred relations, as it has expanded its cooperation with
US space agency NASA into numerous areas over theyears through bilateral agreements.

The Italian Space Agency (ASI) is a national public bodyunder the Ministry for University and Research. It works
in partnership with other major institutions such as the
ESA and NASA. ASI’s activities consist primarily in allocating public funds earmarked for national space programmes and in participating, on behalf of the Italian
government, in ESA programmes. Operations are therefore planned based on the funding that is effectively
made available to the agency.

34

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALYOver time, ASI has established solid relationships and signed notable agreements with the national space agencies ofnumerous other countries and with their governments, including:














Roscosmos - Russia
JAXA - JapanCONAE - Argentina
ISA - Israel
Luigi Broglio Space Centre – Malindi, Kenya
SRO - India
CNSA, CAS and CMSA - China
CSA - Canada
BSA - Brazil
AMS - Mexico
KARI – South Korea
GISDTA - Thailand

35

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALYESAThe European Space Agency (ESA) outlines and implements the European Union’s space programmes.
ESA also actively cooperates with space organisations outside of Europe.



ESA’s statutory activities (scientific space programmes and general budget activities) are fundedthrough contributions by the agency’s member
states, which are calculated based on national
GDPs. In addition, ESA conducts several optional
programmes. Each member state decides which
optional programmes it wishes to participate in andto what extent it wishes to contribute financially.

For 2020, ESA’s budget is €6.68 billion, 16.8% higher
than in 2019. Funding for its programmes from individual EU member states came to €4.87 billion,
while the remaining €1.81 billion will be fundedthrough other income. Looking at the contributions
from each member state, Italy covers a major role: itis the third-leading contributor with a 13.7% shareof the budget, behind France (26.9%) and Germany(20.1%), and ahead of the United Kingdom (9.5%).
Italy has participated in many ESA projects, including
the Artemis and Egnos satellite programmes, the Mars
Express and Cheops programmes for solar system exploration, the ERS-1 and ERS-2 Earth observation projects, as well as the Vega and Ariane space rocket
launcher ventures.

36

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALYESA
Breaking down ESA’s budget for 2020, the main areas being funded are Earth observation (€1,536.8 billion, 23% of thetotal) and space transport (€1,536.1 billion, 23%).

In November 2019, the ESA’s ministry-level Council held its Space19+ meeting in Seville, approving the various budgets for individual space programmes scheduled for the next three years (until 2022). The total budget for the 3-year
period is €14.4 billion, the highest ever for ESA. Italy has solidified its position as one of the leading participant nations
in ESA by committing to contributions of €2.3 billion, around 16% of the total to be funded by member states, behind
Germany (23%) and France (19%).

37

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALY
THE ESA BUDGET BY SECTOR(a)a) includes activities implemented on behalf of institutional partners
Source: illustration of ESA data38

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALY
DEFENCE SPENDING
Defence spending by governments all over the world greatly affect the aerospace industry, especially as regards investments in modernisation, fleet renewals and research.

GLOBAL MILITARY SPENDING
According to the Stockholm International Peace Research Institute (SIPRI), in 2018 global military spending rose by
2.6% year-on-year in inflation-adjusted dollars to $1.822 trillion, continuing an upward trend seen in recent years.
Most countries’ military spending increased in 2018; exceptions included countries in Africa, Oceania and eastern Europe. The United States remained the top military spender in 2018 after a year-on-year inflation-adjusted increase of
4.6%; the USA accounts for around 36% of global defence spending. It is followed by China (14%) and Saudi Arabia(4%).

Within Europe, western European countries accounted for the lion’s share (73.1%) of military spending in 2018.

39

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALYMILITARY SPENDING OF MAJOR COUNTRIESMILITARY SPENDING IN EUROPE

Source: illustration of SIPRI data40

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALYFOREIGN DIRECT INVESTMENT (FDI)
According to rankings published by the Research on Investment firm, in 2018 and 2019 Italy has been among the 30“best countries for business”. For 2018, OECD data on foreign direct investments (FDI) show that inward direct investment stocks in the ‘manufacture of aircraft and spacecraft and related equipment’ sector in Italy amounted to 0.3% of
all inward FDI. This amount was also 1.1% of all inward FDI in manufacturing (which in turn accounts for about onethird of the total). The year-on-year trend for all inward FDI stocks in Italy was +5.2% in 2018, reaching an amount of€372.4 billion.

ITALY’S INWARD FDI STOCK, 2017 AND 2018
(figures in € mn unless specified)
Inward FDI

Activity
2017

2018

% Change
18/17

as % of2018 stock

98,76897,059

-1.7

26.1

1,064

1,095

2.9

0.3

Other sectors

255,383

275,3687.8

73.9

All sectors

354,151

372,427

5.2

100.0

Manufacturingof which:

Manufacture of aircraft, spacecraft and related equipment

Source: OECD
41

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALYFOREIGN DIRECT INVESTMENT (FDI)
In the aircraft and spacecraft industry, the income (returns) on inward foreign direct investments rebounded from a€40 million net loss in 2017 to a €2 million net gain in 2018.

INCOME FROM ITALY’S INWARD FDI STOCKS, 2017 AND 2018
(figures in € mn unless specified)

Income from inward FDI

Activity

2017

2018

% Change

6,219

5,998

-3,6

-40

2

n.s.

Other sectors

11,186

11,2150.3

All sectors

17,405

17,213-1.1

Manufacturingof which :Manufacture of aircraft, spacecraft and related equipment

Source: OECD

42

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALYFOREIGN-OWNED COMPANIES IN ITALIA
There are 42 companies active in the aerospace industry in Italy that are owned or part-owned by foreign investors, 28(or 66.7%) of which are majority foreign-owned. More than half (61.9%) of these companies are located in northern
Italy. They employ a combined 5,120 people (49.7% of total sector employment) and their combined annual revenue
was over €1.7 billion (54.2% of the total).

43

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALYACTIVE FOREIGN-OWNED OR PARTLY FOREIGN-OWNED COMPANIES, AS OF FEBRUARY 2020
Area
North Centre/South

Total

Number of active companies at least partly foreign-owned- Total:

26

16

42

. Majority foreign-owned

18

10

28

- % majority foreign-owned

69.2

62.5

66.7

5,120

5,176

10,296

4,939

3,442

8,381

96.5

66.5

81.4

1,725.3

1,456.8

3,182.1

1,636.2

979.1

2,615.3

94.8

67.2

82.2

Number of employees of foreign-owned / part-foreign-owned companies- Total:. Majority foreign-owned- % attributable to majority foreign-owned companies
Revenue (2018 aggregate) of foreign-owned / part-foreign-owned companies- Total:. Majority foreign-owned- % attributable

44

INDUSTRY ATTRACTIVENESSINDUSTRY ATTRACTIVENESSINDUSTRY ATTRACTIVENESSRADAR, 2020(a)a) The smaller the area between the five points, which represent attractiveness factors, the more attractive the sector isfor business.

46

INDUSTRY ATTRACTIVENESSINDUSTRY ATTRACTIVENESSRADAR, 2020(a)THREAT OF NEW ENTRANTSBARGAINING POWER OF BUYERS

The likelihood of new entrants is medium to low. Some
new competitors are emerging, located especially inemerging economies, mainly active in local or regional
markets.

The bargaining power of clients is high, with respect toboth armed forces and private sector clients (especially
airlines that have sizeable fleets).

RIVALRY AMONG EXISTING FIRMSBARGAINING POWER OF SUPPLIERS
The bargaining power of suppliers is medium; the power
they have is associated with the fact that the supply market is on a global scale, while basic input materials required for production (especially metals) must meet specifictechnical specifications.

Competition is intense in the various segments of the industry, especially over technological innovations.

THREAT OF SUBSTITUTE PRODUCTS
There is little threat of alternative products, as any potential substitutions would come from within the sector – forexample, unmanned aircraft could be used more frequently in both civil and military contexts.

47

INDUSTRY ATTRACTIVENESSOPPORTUNITIESINNOVATION
Throughout the world, the aerospace industry is considered to be a driving force for the entire economy, both
directly (for sectors such as telecommunications andEarth observation) and indirectly (for example, satellite
production has a positive impact on the development of
nanotechnology and new material businesses). Designing and building innovative solutions is therefore a strategic competitive factor. Over the next few years, trends
in aerospace and defence are likely to be shaped by thefollowing three main areas of innovative developments:
 Electric propulsion aircraft: Given the aerospace industry’s rising carbon dioxide emissions as a result of
growing demand for air travel, some well-establishedcompanies in the sector, along with a number of start-ups around the world, have begun developing electric propulsion systems for aircraft.
 Urban air mobility (UAM): This refers to the development of urban transport systems in the air. More specifically, breakthroughs are expected in drone passenger aircraft in the coming years. However, there
are a series of challenges that must be overcome:urban air transport would require new regulations,

new infrastructure, new traffic control systems andposes major energy requirements. These are some ofthe questions that will need to be solved in the near
future.
Automated flight decks: The transition to automatedflight deck guidance systems will reduce the cabincrew numbers required for each flight, consequently
lowering operating costs for airlines.

Major projects in the aerospace sector involve both
longstanding companies with solid experience in research and very small companies that have extremely
specialised knowledge and skills. For both types of companies, it is crucial to keep pace with technological developments in a rapidly changing production environment.

48

INDUSTRY ATTRACTIVENESSOPPORTUNITIESINTERNATIONAL PROGRAMMESDEMAND FOR AIR TRANSPORTInternational programmes constitute an important business opportunity for the short to medium term for aerospace companies. ESA’s programmes, in which Italy’s
aerospace industry is participating, include the fields ofEarth observation, rocket launchers, scientific research,and human space flight applications. In the years to come, ESA will concentrate its efforts on four main areas:
scientific research, improving the quality of life, cooperation with the EU and national agencies, and promoting
European industry.
CHEOPS (CHaracterizing ExOPlanets Satellite) is an ESA
project to study planets outside of our solar system.
Italy is a key member of this project through the Italian
National Astrophysics Institute (INAF), the University of
Padua and ASI. The Cheops project is in fact using ahigh-tech telescope designed and produced in Italy thatcan detect even tiny changes in the brightness of stars,
caused when planets move even slightly in front of them– that is, by mini-eclipses.

Recovery in global commercial air transport demand,
especially from emerging countries, will have a strong
impact on the entire aerospace industry chain, including
the components and spare parts segments. The futureof air travel is likely to be set in motion by cross-sector
partnerships between aerospace companies and players
in ICT, electronics and other fields, in order to maximise
competitiveness. There is a growing demand to reducegreenhouse gas emissions, so in the future, air transport
will need to become more energy-efficient. The‘decarbonisation’ of the aerospace industry will indeed
be a crucial aspect of global efforts to contain climatechange. Finally, the introduction of automated aircraft
will compel regulatory bodies to provide sufficient guidelines to meet minimum security requirements for suchvehicles.

49

INDUSTRY ATTRACTIVENESS

CRITICAL SUCCESS FACTORS
R&D INVESTMENTS

KNOW-HOW

The market is rewarding companies that invest in research and development in order to: achieve technological innovations that improve performance;
 develop and build product upgrades.
In 2018, the major aerospace sector companies (thosewith over €100 million in annual revenue) spent anywhere
between 5% and 40% of their revenue on R&D, and theaggregate amount spent was over €1.7 billion.

Businesses must continually improve and maintain thecapabilities that Italian companies are widely recognised
as having, in terms of design, production techniques,aircraft integration engineering and systems integration.
In general, such continual improvements are important inorder to compete with emerging players. Companies also
benefit from implementing technological advances togain and maintain a competitive edge. It remains crucial
to develop new skills given the highly complex and rapidly changing technology involved.

50

INDUSTRY ATTRACTIVENESS

CRITICAL SUCCESS FACTORSORGANISATIONAL CAPABILITIESINTERNATIONAL PARTNERSHIPS

It is important for aerospace businesses to maintain andoptimise efficiency in the manufacturing process throughtargeted investments. Companies need to have organisational flexibility so that they can efficiently manage different processes and contain costs. Furthermore, in a market that is paying closer attention to sustainability issues, it is very important to aim to develop production
processes that save energy, as well as to prioritise sustainability in product and service development activities,
including the use of innovative and/or reusable materials.
Both nationally and globally, the sector is characterisedby constant shifts and reshuffles on the supply side.
Such restructuring often takes place when companies
decide to focus on their core business, but there are alsofrequent mergers and acquisitions, where companies aim
to extend their coverage of markets and to optimise
costs by achieving economies of scale.

In order to grow and achieve greater visibility, it is important for companies to participate in international programmes in the sector (for example, by forming a partnership with ESA to develop rocket launchers) as well as
to work with the leading multinational players like Airbus
and Boeing.

51

www.ice.it

Italian Trade Agency@ITAtradeagency

ITA - Italian Trade Agency@itatradeagency

52