In an interview, Jeffrey Lam, Commercial Aerospace President at ST Engineering, talks to Payload Asia about its biggest market outside Singapore and what the prospects are for the aerospace company amidst the current business environment.
Can you tell us about your US operations? What makes it a key market for ST Engineering?
ST Engineering’s operations span over 50 cities in 23 states in the US, providing innovative products and solutions to commercial and government customers across diverse market segments from aerospace, smart city to defense and public security. The US is the Group’s largest market outside Singapore.
ST Engineering’s aerospace operations in the US comprise three airframe MRO facilities in Florida, Texas and Alabama, an engine nacelle centre of excellence and an engine wash solutions provider. It is one of the largest airframe MRO solutions providers, if not the largest in the region, catering to a wide clientele including airlines, freight forwarders and aircraft lessors.
ST Engineering is very active in introducing scholarship and training programmes in aerospace. How important are these programmes in ensuring that the next batch of engineers are well adept? Are there any skill gaps that need to be addressed?
Given the current mechanics shortage in the industry, scholarships and training programmes are important not only in attracting but also retaining talent by way of a rewarding career path. Working with airlines customers on some of these traineeship or on-the-job training programmes also help ensure that the trainees are exposed to the latest requirements and MRO work so that they pick up relevant skills that match market demands.
With very tight competition in the US market, do you see more demand for aircraft cargo conversions? What’s the outlook?
Amid global macroeconomic pressures, 2022 is still shaping up as one of the air cargo industry’s strongest years with cargo revenues nearly double those before the pandemic according to IATA. Cargo volumes are projected to rise this year even as cargo yield moderates with the additional belly capacity from passenger aircraft returning to service. We hence remain positive on the demand outlook for freighter conversion.
Amongst your other products and services, which of them do you foresee will see increased demand based on the current macro environment?
With e-commerce here to stay, we foresee the growth of our freighter conversion business to continue strong in the near to mid-term before moderating to a steady state level. The other key business that we expect to pick up is MRO, which in the near term will be driven by flying activities recovering to the pre-pandemic levels. Over the longer term, as the global middle-class population expands, air travel demand is expected to also increase, leading to higher demand for MRO services.