Contents
Industry History.................................................................................................................1
Industry Composition..................................................................................................3
Industry Employment and Wages......................................................................6
Industry Perspective....................................................................................................12
Contents
Industry History.................................................................................................................1
Industry Composition..................................................................................................3
Industry Employment and Wages......................................................................6
Industry Perspective....................................................................................................12
Industry History
The Puerto Rico Aerospace and Defense (A+D) Industry
1
began in the early 1990s with
the acquisition by Hamilton Sundstrand (HS) of the operations of an aerospace power
system manufacturer owned by General Electric in the Municipality of Santa Isabel, PR.
HS was eventually acquired by United Technology Corporation (UTC). A few years later,
UTC completed another company merger, and the company began operating under
the brand name of Collins Aerospace.
Ten years after the establishment of HS, other companies began establishing in
Puerto Rico. In 2003, Infotech Aerospace Service entered the Island as a joint venture
between Infotech (India) and Pratt & Whitney. Currently, Pratt & Whitney and Collins
Aerospace became subsidiaries of Raytheon Technologies.
Just over 12 years ago, the Government of Puerto Rico established “AEROSPACE” as one
of the emerging and strategic industrial sectors. Since then and continuing today, the
Department of Economic Development and Commerce (DDEC, in Spanish acronym)
has dedicated great efforts to the development of the aerospace sector in Puerto Rico
from the perspective of aeronautics, defense, and space. The Puerto Rico government
established a public policy: To diversify the island’s industrial mix and attract subsectors
such as research and development, engineering, design and testing, software
development, cyber security, manufacturing, space, and aircraft maintenance.
It wasn’t until 2007 that the Puerto Rico A+D industry took off. An article published on
September 25, 2008, for the Caribbean Business titled Aerospace Investment Takes Off
(2008)
2
the journalist expresses “the investments by two of the largest aerospace
companies in the world have kicked the local aerospace industry into high gear.” The
facts that lead to this article are the establishment of Honeywell Aerospace and
Lockheed Martin in Puerto Rico recruiting local talent in the field of engineering and
information-systems. Honeywell Aerospace began by establishing a pilot program in
the Municipality of Aguadilla, PR under a Job Corps Program. Several years later the
company grew exponentially in both the number of employees and building space
with the construction in 2014 of their World-Class, Electromagnetic and Environmental
Laboratory (EMC) in the Municipality of Moca, PR.
In March 2010, the Governor of Puerto Rico inaugurated AXON Puerto Rico, today
known as DXC Technologies and several hundred employees were hired. Followed by
the arrival of companies such as Lufthansa Technik in April 2014. This was an historical
agreement signed with a German company establishing the first maintenance, repair,
and overhaul facility of the company in the Americas. One year later, Avenger
Aerospace Solutions started operations in April 2015 to provide testing and engineering
services to Lufthansa Technik.
1
This report was written by José Castro-Segarra, Senior Business Development Office with the collaboration of Ivan Roche Morales,
Senior Economist and Yasmin García Martinez, Senior Economist for the Department of Economic Development and Commerce.
March 2023.
2
Thurston, Lawson D. (2008) Aerospace Investment Takes Off. Edition: September 25, 2008. Volume: 36, No: 38.
1
Lufthansa Technik and Avenger Aerospace Solutions joined the A+D local industry at
the historic moment when Infotech, UTC, Lockheed Martin, Honeywell Aerospace,
Florida Turbine, Essig Research and AXON were operating. Today, some of the later
brand names are no longer operating in Puerto Rico or are operating under a different
brand name. Please refer to Table 1 to learn the ones currently operating.
In November 2022, Honeywell Aerospace, After Market Division relocated its HQs from
Phoenix, AZ to San Juan, PR. On the same year, Raytheon Technologies and Collins
Aerospace established their Global Engineering Centers in the Municipality of
Aguadilla, PR to serve both, commercial and defense contracts.
An A+D Historical Timeline was developed to depict the time slot that each company or
division of a company entered the Puerto Rico economic sector.
Diagram 1 – A+D Historical Timeline
Besides the Puerto Rico’s industrial incentives program under the DDEC, and access to
federal grants programs which are excellent tools for company attraction, the success
and rapid growth of the A+D industry can be mainly attributed to the island offering of
a highly educated workforce. These companies also value the ability to provide goods
and services in a U.S. jurisdiction with a competitive wage rate and in compliance with
the International Traffic in Arms Regulation (ITAR) and Overseas Outsourcing
Suitability.
3
3
ITAR means that only U.S. citizens are able to access defense and military-related technologies, eliminating outsourcing to foreign
countries with low operating costs. Puerto Rico also meets all the criteria from the defense segment of the aerospace market for
U.S.-made products based on the Overseas Outsourcing Suitability.
2
Industry Composition
The composition of the A+D industry in Puerto Rico is different from that of the
mainland United States.
In the mainland, the A+D industry are mostly companies producing end-use goods and
services including aircraft, space systems, land vehicles, ships, armaments and cyber,
and are responsible for 52 percent of the total A+D output. The remaining 48 percent
was attributable to the industry’s supply chain, which includes 35 percent from
goods-producing companies and 13 percent from companies that provide services such
as engineering, testing, logistics, and information technology.
4
The total sales estimated of the A+D operations in Puerto Rico is $625 million (as of
December 2022)
5
. The companies that are established on the Island are positioned in the
supply chain category. Tangible goods are only 30 percent of the total estimated sales
and the other 70 percent are shared & outsourced services including but not limited to
sales, engineering, testing, logistics, and information technology.
As of June 2022, and surveyed under the Quarterly Census of Employment and Wages
(QCEW) Data Base under custody of the Department of Labor and Human Resources
(DTRH its acronym in Spanish), the A+D sector in Puerto Rico have grown nearly 6,000
employees (5,983 to be exact). This sector has a business multiplier effect
6
(as per FY
2020-21) estimated in 1.113 for indirect employment, and 0.832 for induced employment,
in other words 6,678 and 4,992 employees respectively, for a total effect of 17,670
employees in economic activity.
An informal industry-survey
7
shows that more than 95% of the employees are local
talent, mostly engineers at an annual average salary of $59,000 (49% over the island
average industrial salary of $29,440). About half of the companies conduct research and
development activities locally and have plans to create new job opportunities within the
next 12 months. As much as 20% of them would create over 100 jobs each. This is
validated by the fact that an average of 785 employees were added between FY 2019 and
2020, right in the middle of the Covid-19 Pandemic.
Puerto Rico’s A+D firms may provide one or more type(s) of goods and services:
Aerospace and Defense: providing aerospace solutions and services to military
and government customers from design, parts manufacturing, and supply chain.
Commercial Aviation: Design, parts manufacturing, and service commercial
aircraft, business jets, helicopters, personal aircraft, unmanned aerial vehicles,
subsystems, components, and maintenance.
Technology-based: High tech services for wearables, additive manufacturing,
specialized imaging, battery technology, cloud computing/cybersecurity,
artificial intelligence (AI), augmented reality (AR), and Internet-of-Things (IoT).
Aerospace Contractors: Small to medium-sized contractors providing tools and
die, CNC, harnesses, electromechanical assembly among others.
4
https://www2.deloitte.com/content/dam/Deloitte/us/Documents/manufacturing/us-eri-2023-outlook-aerospace-and-defense.pdf
5
Data aggregated from companies’ financial statements, annual tax reports, and DDEC’s incentives applications and estimates.
6
DDEC, Industry Profile, Aerospace, Sept 2022, Table 3 – Business Multiplier Effect in the Aerospace Sector.
7
PR Aerospace Technology Consortium, 2022 Industry Survey
3
•
•
•
•
Suppliers: raw materials, services, and sources of information, evaluate
potential new products, track competitor’s actions, and identify opportunities.
A list of A+D firms that comprise the economic sector is in Table 1.
8
In general terms,
there are 11 US-based, and 15 PR-based companies established in Puerto Rico as per the
PR State Department incorporation register. See also Exhibit B -- Aerospace and
Defense Companies -- Brief Description which provides additional information. The
Puerto Rico A+D industry conglomerate is not complete unless we mention the support
and partnerships of major engineering, research centers and technical schools, and
other non-profits (see Table 2).
Table 1 – List of Companies by Location and by Type of Goods and Services
9
Puerto Rico has always stood out as a talent bank and source of continuous recruitment
of professionals in the field of engineering thanks to the graduates of its Minority
Serving Institutions (MSIs).
Engineering
BPO
IT and Software
Manufacturing
MRO
FBO
CNC / Metal Fabrication
Cyber Monitoring
Artificial Intelligence
Encryption
After Market Sales
Satellite Imaging
7Eagle Group Caribe
San Juan X
Accenture
Santa Isabel X
Airport Aviation Services
Carolina X X
AKM Manufacturing
San Juan X
American Tools
San Juan X
Aptima
San Juan X
Arlet Aviation
Ceiba X X
CNC 2000
Caguas X
Collins Aerospace
Aguadilla X
Collins Aerospace
Santa Isabel X
DXC Technologies
Isabela X
EcoLift
San Juan X
EL-COM Systems
Caguas X
EngiWorks
Caguas X
ESSIG Research
Rincon X
Global-Tek Manufacturing
Ceiba X
Honeywell Aerospace
Aguadilla X X
Honeywell Aerospace EMC Lab
Moca X
Honeywell Aerospace, After Mkt
San Juan X
Infosys
Aguadilla X
Lockheed Martin
Aguadilla X
Lufthansa Technik
Aguadilla X
OPTI Manufacturing
Luquillo X
Phoenix Cables
Aguadilla X
Pratt & Whitney
Aguadilla X
Precision Worx
Yabucoa X
Raytheon Technologies
Aguadilla X
Rubidex
San Juan X
Western Aviation Services
Aguadilla X X
Wovenware
San Juan X
8
For a Location Map and a Brief Narrative on each Company please referred to Exhibit A and B, respectively.
9
BPO Business Process Outsourcing, MRO Maintenance Repair & Overhaul, FBO Fixed-based Operator.
4
•
University of Puerto Rico ranks at number 4 in Table 10 of the Top 50 Institutions by Total
Bachelor’s Degrees awarded to Underrepresented Minorities.
10
After the establishment
of the A+D conglomerate in 2007, aerospace engineering field of study began to be
formed and offered on the island.
11
The programs that stand out are:
1. The master’s degree in mechanical engineering with a certification in
Aerospace Engineering at the Interamerican University, Bayamón Campus.
2. The master’s degree in mechanical engineering with a certification in
Aerospace Engineering at the Polytechnic University of Puerto Rico; and
3. The bachelor’s degree in mechanical engineering with a certification
in Aerospace Engineering at the University of Puerto Rico, Mayagüez Campus.
Table 2 – List of Engineering Schools, Research Centers, and Other Entities
Entity City Type of Support
Aeronautic & Aerospace Institute of PR
Aguadilla
Talent Development
University of Puerto Rico
Aguadilla
Academic
Arecibo Observatory
Arecibo
Research
Inter American University
Bayamon
Academic
University of Puerto Rico
Bayamon
Academic
INTECO
Caguas
Regional Economic Dev
Mech Tech School
Caguas
Talent Development
Puerto Rico 5G Zone
Carolina
Research
Ana G Mendez University
Gurabo
Academic
Universidad de Puerto Rico Nanotech Lab
Humacao
Research
PR Photonic Institute
Manati
Research
CAUSE
Mayaguez
Research
PR Technoeconomic Corridor
Mayaguez
Regional Economic Dev
Turbo/Lab
Mayaguez
Research
University of Puerto Rico
Mayaguez
Academic
LIFT Puerto Rico San Juan
Technology & Talent Development
Polytechnic University of Puerto Rico San Juan Academic
PR NASA Space Grant Consortium
San Juan
Research
PR NASA ESPCoR Program
San Juan
Research
PRIMEX San Juan Technical Assistance
10
(2021) American Society for Engineering Education (ASEE). Engineering & Engineering Technology By the Numbers. ASEE 2020
Edition. Profile of Engineering and Engineering Technology. Washington, DC.
Top 50 Institutions by Total bachelor’s Degrees awarded to Underrepresented Minorities. Table 10. Document available accessing
https://ira.asee.org/wp-content/uploads/2021/11/Total-by-the-Number-2020.pdf.
11
The MSIs are institutions of higher education that serve minority populations. Through Presidential Executive Orders and special
legislation enacted over the past 20 years, MSIs have accessed Department funds and leveraged other Departmental resources on
behalf of their students and communities.
5
Industry History
The Puerto Rico Aerospace and Defense (A+D) Industry
1
began in the early 1990s with
the acquisition by Hamilton Sundstrand (HS) of the operations of an aerospace power
system manufacturer owned by General Electric in the Municipality of Santa Isabel, PR.
HS was eventually acquired by United Technology Corporation (UTC). A few years later,
UTC completed another company merger, and the company began operating under
the brand name of Collins Aerospace.
Ten years after the establishment of HS, other companies began establishing in
Puerto Rico. In 2003, Infotech Aerospace Service entered the Island as a joint venture
between Infotech (India) and Pratt & Whitney. Currently, Pratt & Whitney and Collins
Aerospace became subsidiaries of Raytheon Technologies.
Just over 12 years ago, the Government of Puerto Rico established “AEROSPACE” as one
of the emerging and strategic industrial sectors. Since then and continuing today, the
Department of Economic Development and Commerce (DDEC, in Spanish acronym)
has dedicated great efforts to the development of the aerospace sector in Puerto Rico
from the perspective of aeronautics, defense, and space. The Puerto Rico government
established a public policy: To diversify the island’s industrial mix and attract subsectors
such as research and development, engineering, design and testing, software
development, cyber security, manufacturing, space, and aircraft maintenance.
It wasn’t until 2007 that the Puerto Rico A+D industry took off. An article published on
September 25, 2008, for the Caribbean Business titled Aerospace Investment Takes Off
(2008)
2
the journalist expresses “the investments by two of the largest aerospace
companies in the world have kicked the local aerospace industry into high gear.” The
facts that lead to this article are the establishment of Honeywell Aerospace and
Lockheed Martin in Puerto Rico recruiting local talent in the field of engineering and
information-systems. Honeywell Aerospace began by establishing a pilot program in
the Municipality of Aguadilla, PR under a Job Corps Program. Several years later the
company grew exponentially in both the number of employees and building space
with the construction in 2014 of their World-Class, Electromagnetic and Environmental
Laboratory (EMC) in the Municipality of Moca, PR.
In March 2010, the Governor of Puerto Rico inaugurated AXON Puerto Rico, today
known as DXC Technologies and several hundred employees were hired. Followed by
the arrival of companies such as Lufthansa Technik in April 2014. This was an historical
agreement signed with a German company establishing the first maintenance, repair,
and overhaul facility of the company in the Americas. One year later, Avenger
Aerospace Solutions started operations in April 2015 to provide testing and engineering
services to Lufthansa Technik.
Universities in Puerto Rico are also part of the U.S. Department of Education's list of
postsecondary institutions enrolling populations with significant undergraduate
minority students and of the Hispanic-Serving Institutions (HSIs).
12
In 2020, 5,218
students graduated from an engineering-related major, which represents an increase
of 2.1% or 105 students when compared to the previous year (5,113 students in 2019).
13
Industry Employment and Wages
Another way to looked at the industrial composition of the A+D sector in Puerto Rico is
by aggregating business establishments by type of economic activity under the North
American Industry Classification System (NAICS) and depicting where several industrial
sectors and subsectors meet (see Diagram 2). The sectors are:
Aerospace product and parts manufacturing (NAICS 3364),
Other support activities for air transportation, aircraft maintenance and repair
services (NAICS 488190) and
Professional, scientific, and technical services sector which aggregates custom
computer programming services (NAICS 541511),
Administrative management and general management consulting services
(NAICS 541611), and
Engineering consulting services (NAICS 541330)
Diagram 2 – The Aerospace and Defense Sector
Lorem ipsum
12
HSIs is an institution of higher education that is an eligible institution and has an enrollment of undergraduate full-time equivalent
students that is at least 25 percent Hispanic students at the end of the award year immediately preceding the date of application.
13
Department of Economic Development and Commerce, September 2022, Industry Profile – Aerospace
6
•
•
•
•
•
Of particular interest is the subsector of the professional, scientific, and technical
services, which is engaged in business processes where human capital is the major
input. These firms make available the knowledge and skills of their employees, often on
an assignment basis, where an individual or team is responsible for the delivery of
services to the client. Each company’s mission is based on their expertise and training
in the services provided. The A+D conglomerate’s employees design, develop, and
conduct engineering work and testing services for software and hardware
components.
It is notable that the workforce has become in the past decade a competitive
advantage for established companies. This advantage was published in July 2016: The
aerospace promise grows on the Island
14
and in the Business section interview by El
Nuevo Día “Luis Ramos: talento local aeroespacial”.
15
Selected engineering occupations (related to A+D) are depicted in Graph 1. In 2020, the
highest average paying job was aerospace engineer with $87,540, followed by
mechanical and electrical engineer with $69,800 and $64,140, respectively, and custom
computer programming with $57,751.
Under engineering services occupations (which include both related and non-related
A+D occupations), it reflects a lower average salary. It means that A+D firms are paying
higher wage rates than general engineering firms. The average wage for engineering
services occupation in 2020 was $46,969.
Graph 1 - Average Annual Wage per Selected Aerospace Related Occupations
14
El Nuevo Día. Published on July 26, 2016.
15
Gómez, Antonio R. (2017) Luis Ramos: talento local aeroespacial. Business section. El Nuevo Día. December 10, 2017. Document
available accessing to https://www.elnuevodia.com/negocios/empresas-comercios/notas/luis-ramos-talento-local-aeroespacial.
7
To benchmark the competitive position of our employees’ occupations versus other
occupations jurisdiction, we use the Location Quotient (LQ).
16
It is a measure of the
concentration of employees on one occupational category and where 1.0 is comparable
to the national average. The selected occupations which are related to A+D Industry
show that Puerto Rico still needs to catch up with jurisdiction that are strong in hiring
A+D employees.
The jurisdiction with the concentration of employees most alike to Puerto Rico is the
State of Florida, still it shows that there is room for improvements in all engineering
occupations (see Table 3). One of the features of Florida is the government-run
spaceport and the cluster around it. Puerto Rico will move to the next level with the
establishment of its spaceport which will help improve its LQ standing. Currently, PR
Ports Authority issued a Request for Proposal (RFP) to secure a spaceport managing
company to attract space-related companies (see details in the Industry Perspective
section). The table also shows that the State of Alabama engineers LQs are off the chart
because it is a State where defense commands and agencies have a stronghold, and
many companies strive around them and unlike Puerto Rico which has no comparable
activities.
Table 3 – Location Quotient
While the academia sector may be doing a good job in developing engineering talent,
they still need to make best effort in creating new aerospace courses and technical
short programs. The aerospace engineering and operations technologists and
technicians will be needed by the industry. These technicians usually work in
manufacturing plants, offices or laboratories and usually run and maintain equipment
used to develop, test, produce, and sustain aircraft and spacecraft. Industry outlook
expects a 6 percent grow in this occupation in the upcoming decade (from 2021 to 2031)
as indicated by the Bureau of Labor Statistics, Occupational Outlook Handbook
17
.
Occupational Title
PR AL TX CA FL
Aerospace Engineers 0.51
4.98
1.12 1.18 1.34
Computer Hardware Engineers 0.45
0.85
0.79 N.D. 0.72
Electrical Engineers 0.52
1.62
0.94 1.29 0.60
Mechanical Engineers 0.39
1.40
0.86 0.87 0.44
Aerospace Eng. and Ops.Technologist ** 5.19
1.43 0.88 3.74
Location Quotient (LQ)
Source: Bureau of Labor Statistics. May 2021. Selected occupational categories related to the aerospace and defense cluster in
Puerto Rico. Note: ** Estimates not released. Data for Aerospace Engineers is for Year 2020.
16
Location Quotient (LQ). The location quotient (LQ) is a valuable way of quantifying how concentrated a particular industry, cluster,
occupation, or demographic group (or other chosen characteristic) is on a region as compared to the total aggregate of a country,
state, or a major geographic or political subdivision. It can reveal what makes a particular area or region unique in comparison with
the aggregates selected. Thus, location quotients are a valuable tool for public policy decisions.
17
Bureau of Labor Statistics. Occupational Outlook Handbook for Aerospace Engineering and Operations Technologists and
Technicians. https://www.bls.gov/ooh/architecture-and-engineering/aerospace-engineering-and-operations-technicians
htm#:~:text=Aerospace%20engineering%20and%20operations%20technologists%20and%20technicians%20install%2C%20run%2C%
20and,of%20these%20vehicles%20and%20systems.
8
A criterion of great significance, and a key competitiveness factor for the Puerto Rico
A+D sector is the occupations wages (or salary) when they are compared with U.S.
jurisdictions. This advantage, which translates into the payroll, is a positive
reinforcement for companies that analyze the opportunity to establish themselves in a
newer jurisdiction. Puerto Rico outperforms most U.S. jurisdictions, and in some cases,
it could represent a competitively lower wages up to 50% depending on the skill set of
the occupation analyzed. The annual salary depicted in the wage distribution Table 4
shows the wages difference for a selection of occupations of jobs associated with the
A+D sector. The higher the skill set of the occupation, the wider the difference in salary
for the benefit of companies established in Puerto Rico.
Table 4 -- Wages Comparison for Aerospace Related Occupations as of May 2021
The occupation of an aerospace engineer was first recorded in Puerto Rico after 2011
when the survey began collecting this data in the US Bureau of Labor Statistics (BLS)
publications. Based on the results of the survey conducted by the BLS, an aerospace
engineer started with an average salary of $53,600 and reached $87,540 in 2020. U.S.
national estimates reported for that same year (2020) shows the average salary of an
Aerospace Engineer at $121,110 (38% higher than Puerto Rico). This salary represents 29%
less than its counterpart in Alabama ($123,200); 31% less than its counterpart in Arizona
($126,850) or California ($126,650) and 20% less than its counterpart in Florida ($109,540).
Other examples of occupational categories such as mechanical, electrical and software
engineering are shown in the Wages Comparison (Table 4) with numbers updated as of
May 2021. Further data research has shown that the occupation with the highest
demand in the local A+D sector is engineering followed by the services offered by
computer systems specialists such as systems engineers, and application engineers.
Compensations may also vary by industry, region, and employee’s experience. Graph 2
shows the Wage Percentile Distribution of aerospace engineers in Puerto Rico. It
depicts the wage compensation for the year 2011, about four (4) years after the
conglomerate was established and it is compared to the latest data collected for the
year 2020.
Standard
Occupational
Classification
Number
Selected Occupational Category PR AL AZ CA FL
17-2011 Aerospace Engineers* $87,540 $123,200 $126,850 $126,650 $109,540
17-2061 Computer Hardware Engineers $87,840 121,780 $121,900 $169,970 $114,720
17-2071 Electrical Engineers $64,140 109,090 $99,830 $126,640 $94,270
17-2072 Electronics Engineers, Except Computer $65,410 115,800 $120,750 $130,330 $104,630
17-2112 Industrial Engineers $72,300 93,640 $100,800 $109,460 $93,320
17-2141 Mechanical Engineers $69,800 96,930 $100,010 $113,130 $90,060
17-2199 Engineers, All Other $58,600 126,070 $117,480 $117,990 $103,980
17-3012 Electrical and Electronics Drafters $32,640 58,260 $70,250 $73,150 $61,400
17-3021 Aerospace Engineerin
g and Operations Technologists and Technicians $53,700 64,820 $58,910 $82,420 $77,860
17-3022 Civil Engineering Technologists and Technicians $33,240 48,410 $55,040 $74,020 $54,510
17-3023 Electrical and Electronic Engineering Technologists and Technicians $44,440 65,550 $68,570 $73,910 $61,010
17-3024 Electro-Mechanical and Mechatronics Technologists and Technicians $40,350 ** $67,530 $63,530 $58,170
17-3026 Industrial Engineering Technologists and Technicians $46,370 58,960 $68,180 $69,420 $58,490
17-3027 Mechanical Engin
eering Technologists and Technicians $31,160 53,670 $61,970 $69,870 $61,420
17-3029 Engineering Technologists and Technicians, Except Drafters, All Other $42,640 61,080 $61,480 $68,460 $64,720
Source: Bureau of Labor Statistics. May 2021. Selected Occupational categories related to the Aerospace and Defense cluster in Puerto Rico. Data for the Aerospace Engineers Wage, category
code 17-2011 for Puerto Rico belongs to year 2020. Wage data not available for year 2021. Wage data for comparison purposes with the
AL, AZ, CA & FL jurisdictions were used for year 2020. All
other wage data is for May 2021. Notes. Estimates for detailed occupations do not sum to the totals because the totals include occupations not shown separately. Estimates do not include self-
employed workers. Annual wages have been calculated by multiplying the hourly mean wage by a "year-round, full-time" hours figure of 2,080 hours; for those occupations where there is not an hourly
wage published, the annual wage ha
s been directly calculated from the reported survey data. If table show the relative standard error (RSE) is a measure of the reliability of a survey statistic. The smaller
the relative standard error, the more precise the estimate. The location quotient (LQ) is the ratio of the area concentration of occupational employment to the national average concentration. A location
quotient greater than one indicates the occupation has a higher share of em
ployment than average, and a location quotient less than one indicates the occupation is less prevalent in the area than
average. Note: Asterics denotes (**) data not released.
9
Graph 2 -- Wage Percentile Distribution for Aerospace Engineers
The annual percentile distribution can be an indicator of experience in the industry.
Where employees below the 10 percentiles can be referred to as the entry-level salary of
an engineer just out of college with $34,130 in 2011 and rose to $49,500 in 2020 (an
increase of 45%). Anyone above the 90 percentiles may have over 5-year experience in
the industry got a $75,060 salary in 2011 and commanded a salary of up to $150,870 in
2020 (an increase of 100%).
The Aerospace Engineer’s total wage compensation based on hourly rate plus fringe
benefits is depicted in Table 5. The total wage compensation represents an hourly rate
of $42.09 plus fringe benefits of $8.30 (almost 20% of hourly earnings) totaling $50.39
per hour.
10
Table 5 -- Compensation Cost Puerto Rico Jurisdiction
Employment in the Industry
1
180
Annual Average Earnings (= $87,540 X 2,080) 87,540.00
Average Hourly Earnings (US Bureau of Labor Statistics)
2
42.09
Weekly Compensation Per employee (= 87,540/52) 1,683.46
Total Mandatory Fringe Benefits Per Worker Per Year 10,734.17
Social Security (7.65% up to $61,200 per year) 6,696.81
Unemployment Insurance (6.2% up to $7,000) 434.00
Workmen's Compensation ($3.25 per $100) 2,976.36
Disability Insurance (0.3% up to $9,000) 27.00
Christmas Bonus (6% up to $10,000) 600.00
Average Mandatory Fringe Benefits Per Worker Per Worker Per Hour 5.16
Other Mandatory Benefits Included in Worker's Compensation Per Worker Per
Year 6,531.24
Vacation leave (up to 6 days per year) 2,020.15
Sick leave (up to 12 days per year) 4,040.31
Maternity leave (8.5 weeks for female employees at half pay) (32.9% of
manufacturing work force for which 10% received the benefit) 470.78
Average Other Mandatory Fringe Benefits Per Worker Per Hour 3.14
Total Mandatory Fringe and Other Mandatory Fringe Benefits Per Worker Per Hour 8.30
Average Total Compensation Per Worker Per Hour 50.39
Total Fringe Benefits as a Percent of Hourl
y Earnings 19.72%
Total Fringe Benefits as a Percent of Total Compensation Per worker Per Hour 16.47%
Fringe Benefits as a Percent of Earnings and Compensation Percent
1. Actual employment for the PR Industrial Sector is 4,624 for Engineering Service industrial sector.
2. This amount count employees at the Engineering Service Sector for the May 2021 National Industry-
Specific Occupational Employment and Wage Estimates. NAICS 541330.
Source: US Bureau of Labor Statistics May 2021. Avg Hourly Earning for the Aerospace Engineers
occupational code 17-2011. Data modified for March 2023.
AEROSPACE ENGINEERS (Year 2020)
Earnings, Compensation and Fringe Benefits Dollars
11
Industry Perspective
The economic sector identified as the Puerto Rico A+D Industry is part of the Global
A+D industry which was impacted by the COVID-19 pandemic. After years of steady
growth, civil aviation was grounded in 2020 as the world contended with COVID. The
A+D supply chain, comprising thousands of small and medium-sized companies
located here and abroad, were faced with huge financial and logistical challenges to
support existing defense contracts and replace losses in civil aviation sales. On February
24, 2022, Russia’s invasion of Ukraine would profoundly complicate the global A+D
industry scenario and further stress the supply chain.
The global A+D Industry is still navigating uncertain times, as shown from the PwC
analysis, where industry revenue was 6% below the 2019 record of $754 billion and
operating profit was 24% below the 2018 record of $82 billion.
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This year (2023) is an
opportune time for the industry to capitalize on the changes and trends. A Deloitte’s
outlook survey shows that 88% of surveyed senior executives believe the general
business outlook for the A+D industry is “somewhat to very positive.”
19
There are
several reasons for this optimistic outlook including growth in new technologies and
segments such as Advanced Air Mobility (AAM), evolving business models in areas such
as Space, and the use of digitalization and automation. For that reason, Puerto Rico’s
A+D conglomerate are positioning themselves to capitalize on these trends.
18
https://www.pwc.com/us/en/industrial-products/publications/assets/pwc-aerospace-defense-annual-industry-performance-outlook-
2022.pdf
19
https://www2.deloitte.com/content/dam/Deloitte/us/Documents/manufacturing/us-eri-2023-outlook-aerospace-and-defense.pdf
20
https://www.asme.org/topics-resources/content/5-aerospace-technologies-and-trends
12
1. Supply chain: Focusing on supply chain visibility and resilience to mitigate
a broader set of risks.
2. Digital transformation: Accelerating digitalization and conversion to automation
to drive improved efficiencies.
“Digitization is one of the most ubiquitous buzzwords in the aerospace industry
for a reason. With new capabilities that quickly capture incredible amounts of
data and thoroughly analyze it, digitization technologies enable the industry to
predict and identify what needs to be repaired or replaced, often before a part
breaks or fails, and then pinpoint the best time and employees to do the work.”
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Puerto Rico’s A+D companies are focusing on creating visibility deep into their
supply chains to improve supply control and coordination and to better
manage third-party risk. Companies like Honeywell Aerospace and Collins
Aerospace are managing the risks of their supply chain internally, and through
Business Process Outsourcing (BPO) providers such as Infosys and Accenture.
Moreover, three industry players, Lockheed Martin Corporation, 7 Eagle
Group Caribe, and Rubidex are reinforcing their needs for cybersecurity,
cloud privacy, and the resilience of the systems and automation to avoid risks in
core operations and with key suppliers.
Lufthansa Technik is quickly moving to provide airlines customers with the ability
to track and monitor aircraft parts that need repairs or replacement. Already,
Collins Aerospace is hard at work in the automation transformation of its
manufacturing operation in the Municipality of Santa Isabel, PR. And LIFT
Puerto Rico, a new stakeholder (managed by the American Lightweight Material
Manufacturing and Innovation Institute of Detroit, MI), brings world-class
advanced manufacturing technology development capabilities to the
Puerto Rico’s A+D and the Medical Devices conglomerates, thus providing a
significant economic asset that will expand competitiveness, manufacturing
readiness, economic, and workforce growth (http://www.lift.technology).
The PR Aerospace Technology Consortium (the official A+D conglomerate
organization, https://www.aerospace.pr) and its members are focused on
branding the A+D industry as a talent destination. This means leaning into the
strength of A+D as a mission-driven industry, which has a unique appeal that
many other industries can’t match. The A+D sector is building talent pipelines,
reaching deep into communities and schools through partnerships, internships,
co-investment; and close, sustained collaboration between industry and
education on specific workforce skills and capacity needs. Also, the A+D
companies are incorporating greater flexibility into workforce schedules,
environment, and career paths to meet workforce expectations.
Three major announcements broke early this year (2023) for developing top
talent.
The first announcement, Pratt & Whitney, dedicated to the design and
manufacture of aircraft engines, and the University of Puerto Rico, Mayagüez
Campus opened Turbo/Lab, its first aerospace center of excellence in Puerto Rico
and the Caribbean. This initiative seeks to train students and faculty in concepts
relevant in aerospace engineering (gas turbines, controls, embedded systems,
and computer-aided design). According to its director, Eng. Sheilla Torres, PhD, “it
is a space for cross training where students can be exposed to other areas of
specialty and achieve multidisciplinary competence [i.e., in mechanical, electrical,
and software engineering].”
The second announcement, the U.S. Congress approved an allocation of $7.5
million for the construction of the Aerospace Research Institute (AIR) at
the University of Puerto Rico, Mayagüez Campus (UPRM). This project is a
concerted effort of many public and private stakeholders to strengthen the
aerospace sector and help in the development of the local industry. This facility is
the next level to better train students to become future engineers, and to
continue undergraduate and graduate research on topics of interest for the
industry.
13
3. Talent: Reversing the post-Covid challenges of attracting, retaining, and
developing top talent (in engineering and manufacturing).
The third announcement, LIFT Puerto Rico began operations in the last quarter of
2022 with the cooperation of the Department of Economic Development and
Commerce, and it is geared to prepare local workforce with advanced
manufacturing skills enabling local industry to commercialize innovative
technologies and manufacture tomorrow’s products thereby creating a more
diverse, equitable and inclusive national manufacturing ecosystem which will
attract additional high-tech assets to the region, and to promote and assist with the
local development of advanced manufacturing technologies.
As the industry strives for lighter, stronger components in aircraft bodies, fuselages,
and engines, it has steadily replaced aluminum (as much as 50 percent) with new
composites and alloys, including titanium, graphite, fiberglass, reinforced epoxy,
and ceramics. Besides being stronger and stiffer than aluminum, the materials are
corrosion and chemical resistant, and maintain their qualities in extreme
conditions.
21
In October 2021, members of the International Air Transport Association (IATA)
released a target to achieve net-zero greenhouse gas emissions by 2050. Emissions
reductions are expected to be attained through the shift to sustainable aviation fuel,
new electric and hydrogen technologies, industry efficiencies, carbon capture
technology and carbon offsets.
22
The trajectory of the sustainable aviation fuel sector is evolving quickly, especially for
small craft, carrying 10 to 40 passengers for flights up to 500 miles, powered by
lithium-ion or hydrogen batteries (including fuel hybrids). Experts agreed that
electric aircraft could cross the threshold to mainstream acceptance in as little as
three years. Sustainable aviation can revolutionize PR’s short-haul flight in the
Caribbean by connecting the network of small, regional airports, and decentralizing
the existing hub (like the SJU airport).
University of Puerto Rico, Bayamon Campus (UPRB) presented its vision of the
proposed Center of Excellence for Climate Change at the U.S. Department of
Commerce, Round Table Event on February 7, 2023, focused on Training &
Mentoring, Innovation, and Sustainability, the proposal is currently under review by
the National Science Foundation.
Also, UPRB presented a collaborative Applied Research Laboratory around the
topics of sustainable aviation and AAM. The lab can potentially be an economic
engine and major driver of STEM workforce development for the Caribbean and
Minority Serving Institutions in the mainland U.S., and thus positioning Puerto Rico
as a major aerospace and defense development site for NASA and DoD.
21
https://www.asme.org/topics-resources/content/5-aerospace-technologies-and-trends
22
https://www.iata.org/en/programs/environment/flynetzero/
14
4.
Decarbonization:
Lowering emissions in aircraft and implementing
sustainable
manufacturing and services operations remain business priorities.
Due to the importance of the space sector, the Governor of Puerto Rico issue an
Executive Order 2022-026 to create the Aerospace and Aeronautics Council
for Puerto Rico. The council will develop an integrated plan for the development and
implementation of a commercial spaceport in coordination with the pertinent state
and Federal agencies. The council prepared a report titled: Space Hub Borinquén /
Why Puerto Rico is the Ideal Location for the Space Industry.
24
23
https://en.wikipedia.org/wiki/Commercial_use_of_space
24
Puerto Rico Aeronautical and Aerospace Council, September 2022, Space Hub Borinquen, Why Puerto Rico is the Ideal Location
for the Space Industry
15
5.
Emerging markets: Investing in innovation and applied research accelerates
1. The space industry is big. It is growing rapidly and will become one of the largest
industries in the world. Today, the space economy is $469 billion, bigger than
Singapore’s GDP. Bank of America predicts the industry will grow to $1.4 trillion
by 2030 and $4 trillion by 2040.
growth in emerging areas like space and hypersonic.The space sector is utilizing
emerging technologies including 5G, advanced satellite systems, 3D printing, big
data, and quantum technology to upgrade and scale activity and operations in
space. Puerto Rico 5G Zone, a non-profit organization with a Zero Trust
Architecture (ZTA), is making a difference with enabled research lab for
development, testing, training, and research on next generation (5G)
communications applications in an open innovation platform, publicly owned,
and connected to resident interface of foreign/domestic, terrestrial/non-terrestrial,
and cooperative/non-cooperative networks.
Moreover, new space tech trends such as smart propulsion, space robotics and
space traffic management are gaining traction in the emerging space industry.
Several global startups are developing technologies that will ease movement,
operations, and communications between Earth and space.
What space economy entails? Wikipedia defines commercial use of space as:
“The provision of goods or services of commercial value by using equipment sent
into Earth orbit or outer space. This phenomenon – aka Space Economy – is
accelerating cross-sector innovation processes combining the most advanced
space and digital technologies to develop a broad portfolio of space-based
services. The use of space technologies and of the data they collect, combined
with the most advanced enabling digital technologies is generating a multitude
of business opportunities that include the development of new products and
services all the way to the creation of new business models, and their
configuration of value networks and relationships between companies. If well
leveraged such technology and business opportunities can contribute to the
creation of tangible and intangible value, through new forms and sources of
revenue, operating efficiency and the start of new projects leading to
multidimensional (e.g., society, environment) positive impact.”
23
2.
Puerto Rico already has all the elements needed for a successful
16
In conclusion, Puerto Rico is well-positioned to capture a large share of activity in
A+D-related research, innovation, engineering, service, and production. Also, the A+D
industry is ready to take on space economy opportunities. Experts agreed that the
Space sector has the potential to double the size of the A+D employment and
increase sales and taxable base exponentially within the next 5 years in Puerto Rico.
and competitive Space Hub. Puerto Rico has top quality STEM talent, world-class
researchers, modern infrastructure, advanced manufacturing capabilities,
excellent tax and economic incentives, dominance in the life sciences, excellent
deepwater ports, proximity to mainland U.S. where most rockets are being
developed, strong presence of aerospace companies, and one of the best
geographies in the US for space activities (located in Parallel 18, near the
Equator) along with a strategic location for national security.
ignore. Benchmarking Space Hubs located in Scotland and Australia, the
island could see close to $0.5 to $1.2 billion in salaries alone, creating over 8,000 –
20,000 jobs over the next 10 to 15 years. This is in addition to the significant
infrastructure investment and ongoing economic activity that Space Hub will
generate. A Space Hub would also have positive impact on the local economy
with increase in commercial and industrial tax revenue, and a wider base of
high-skill and high-income workforce.
3. The upside economic benefit to Puerto Rico is too large to
17
Exhibit A
Exhibit B – Aerospace and Defense Companies -- Brief Description
Collins Aerospace - Specializes in aerostructures, avionics, interiors, mechanical
systems, mission systems, and power and control systems that serve customers across
the commercial, regional, business aviation and military sectors. In Puerto Rico, Collins
Aerospace manufactures electrical power systems to manage several critical aircrafts’
systems.
Pratt & Whitney - Designs, manufactures, and services the world’s most advanced
aircraft engines and auxiliary power systems for commercial, military and business
aircraft. In Puerto Rico, P&W designs turbines for commercial and military aircraft.
Raytheon Intelligence & Space - Specializes in developing advanced sensors, training,
and cyber and software solutions —delivering the disruptive technologies its customers
need to succeed in any domain, against any challenge. In Puerto Rico, RIS designs and
develops military systems.
Raytheon Missiles & Defense - Provides the industry’s most advanced end-to-end
solutions to detect, track and engage threats. In Puerto Rico, RMS designs and develops
military systems.
Honeywell Aerospace - Innovates and integrates thousands of products and services to
advance and deliver safe, efficient, productive experiences and comfortable on every
aircraft commercial, defense, and space worldwide. Also, they have a world-class
laboratory for conducting electromagnetic and environmental testing of their products.
Lockheed Martin is a global security and aerospace company principally engaged in
the research, design, development, manufacture, integration and sustainment of
advanced technology systems, products, and services. In Puerto Rico they have an IT
Center and software development for advanced systems.
DXC Technologies is a trusted IT service provider for the world’s leading private and
public sector aerospace and defense organizations. DXC’s solutions modernize
mission-critical systems for these organizations to shorten time to market, gain insight
from data and accelerate innovation across digital manufacturing operations and value
networks.
Infosys A+D practice offers digital commerce solutions to augment quote-to-fulfillment
processes. Automated order generation enables aircraft manufacturers to initiate
engineering activities, including new product development whenever required.
Accenture optimizing and running supply chains, designing, and implementing
technology, and building resilient operating models and cultures for the A+D
customers.
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Wovenware is an artificial intelligence (AI) and software development company
conducting work for the Defense. The company has Secret Clearance from DoD.
Recently, it became one of the success stories when Maxar Company bought the
company and retained staff and management. Maxar is a satellite imagery company.
7Eagle Group Caribe is a cyber security monitoring agency. Its business model is to train
and hire retiring veterans.
EngiWorks is an engineering, CNC and metal fabricator conducting work for the Life
Sciences and Aerospace sectors. Is a small-owned and operated company with several
Federal designations.
PrecisionWorx is a contract manufacturing supplier to the Puerto Rico Global
Aerospace, Life Sciences, and Industrial sectors. It is a small company whose owner has
44 years of experience in manufacturing complex components and assemblies in
Puerto Rico.
RUBIDEX is a startup, technology-based company with a patent pending process that
employs a proprietary tunnel encryption method that makes proprietary file system
secured outside of a database.
OPTI Manufacturing manufactures and services Aircraft Cable Tensiometers under the
highest quality standards. It is a small company conducting work with the department
of Defense and is a Mentor Protégé of other small businesses.
Phoenix Cable is a subsidiary of a small U.S. company that is certified ISO9001 for
harnesses.
Global-Tek Manufacturing is a CNC shop that two years ago was bought by Crawford
United Corporation. Another success story of a small company with great products and
people.
Lufthansa Technik is a leading provider of aircraft maintenance, repair, overhaul, and
modification services for civil aircraft, from commercial to VIP and special mission
aircraft.
Aptima develops software to measure, analyze, understand, and optimize human
performance in space or military conditions using Artificial Intelligence (AI), Augmented
Reality (AR), and Machine Learning (ML) technologies.
EL-COM Systems is a leader in electronic interconnect manufacturing and solutions.
They specialize in custom wire harnesses and cable assemblies for high-reliability
products for the aerospace and defense industry.
AKM Manufacturing has served a broad spectrum of industries concentrating on the
design, implementation and manufacturing of sheet metal products and electrical
projects.
Arlet Aviation provides aircraft MRO and FBO services, like airplane annual inspection,
propeller overhaul, aircraft avionic service, and aircraft paint job.
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CNC 2000 is a production machining and contract manufacturing for medical,
electronics, aerospace and defense, and pharmaceutical industries.
American Tools is a versatile, fully equipped machining facility providing quality
machined components. They work with a variety of materials including (but not limited
to!) Carbon Steel, Alloy Steel, Brass, Nickel Alloys, Stainless Steel, Castings, Aluminum
and Plastics.
ECOLIFT Aeroespacial is the authorized Service Center for MD Helicopters in the
Caribbean. It is the premier center for rebuilding, refurbishing, accessorizing, and
installing the latest avionics systems for helicopters.
Airport Aviation Services is a fixed-based Operator (FBO) for corporate aircraft services
as well as pilot and passenger care.
Western Aviation Service Corp. is a fixed-base operator (FBO) providing fuel, aircraft
maintenance and other quality services for all types of aircraft, commercial and private.
ESSIG Research is a leading provider of high-tech engineering (in both OH and PR),
manufacturing and product lifecycle management (PLM) services and solutions.
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