AIA forecasts modest growth for 2009

Dec. 14, 2008
WASHINGTON, 13 Dec.2008. Leaders of the Aerospace Industries Association (AIA) forecast growth for 2009 in the aerospace industry despite the current economic downturn.

WASHINGTON, 13 Dec.2008. Leaders of the Aerospace Industries Association (AIA) forecast growth for 2009 in the aerospace industry despite the current economic downturn.

"Aerospace is a bright spot in a bleak economic landscape," said Marion Blakely, president and chief executive officer of the AIA during the AIA Year-End Review and Forecast at the Mayflower hotel in Washington this week. The forecast includes data on commercial, space, and military sales.

The forecast is for 4.8 percent growth for next year with sales of $214 billion, Blakely said. The amount would be only 2.2 percent growth if 2008 had been a better year.

She also touted the positive foreign trade balance of $61 billion, adding that it is the highest of any U.S manufacturing sector.

Numbers were up for 2008, but were not as high as they could have been due to a Boeing machinist strike and the "current economic challenges," she continued. Still, total sales for 2008 were $204 billion, a record fifth straight year, she added.

According to the AIA Research Center's report – "2008 Year End Review and 2009 Forecast – An Analysis" – the civil sector was "up almost $400 million to $80.6 billion. Transport aircraft made up the most significant portion of civil aircraft sales by value in 2008, and dipped temporarily due to the Boeing work-stoppage. Helicopters and general aviation aircraft shipments were up considerably over previous years, resulting in a net positive trend."

New aircraft orders began to slow in 2008 and "rapidly deteriorating market conditions hastened the decline. Slumping corporate profits and customer financing problems have impacted short term demand for business jets," according to the report.

Blakely said the large aircraft backlog especially in international sales is a main reason for the positive outlook for 2009.

According to the AIA report the backlog in 2008 will be at $404.5 billion, largely comprised of civil transport aircraft, "valued at $293.4 billion for 3,721 aircraft," as of the September. The foreign order backlog is about "81 percent of the backlog value with 2,878 aircraft on order. Boeing alone has a backlog approximately seven times the current production rate," according to the AIA report.

2009 is looking positive because the funding levels for defense and space "are largely set for the next fiscal year," Blakely said.

She referred to the defense appropriations bill for 2009 that was passed this fall. "The same bill also provides funding for NASA through March at largely the same levels as fiscal 2008," she continued. "We anticipate funding levels to remain steady – without any major adjustments – for the next 18 months, or even longer."

"Sales of military aircraft were up in 2008 to $54.7 billion," according to the AIA report. "This segment reflected the gradual rise in aircraft research and development, aftermarket labor and materials, and UAV (unmanned aerial vehicles) production and support. For aircraft production, fighter planes are responsible for the largest share of revenues, followed by helicopters and military transports."

The AIA report also stated that future supplemental budgets will decrease with weaker research and development funding expected as well.

The missile segment is "up 6.7 percent to $13.2 billion," according to the report. "U.S. Army, Navy, Air Force, and Department of Defense-wide spending on missile research and development increased 11 percent this year. Procurement stayed fairly level, up slightly to $7.9 billion total."

In space, sales were up 4.2 percent to $33.4 billion and made up primarily of research and development, and production and services, the report stated. "Although research and development in the space sector was fairly flat in 2008, production and services was up 15 percent, accounting for most of the segment's growth. U.S. commercial satellites and launch services business grew dramatically, with NASA and Defense Department space contracts up only slightly."

Blakely also called on the U.S. Congress and President-elect Barack Obama to continue to not look to aerospace and defense as the "bill payer" for other programs, but to continue to invest in these markets.

She went on to say that AIA officials are pressing the government for more modernization and recapitalization in defense. "We need a stable and predictable procurement budget of between $120 and $150 billion each year."

She also advocated the modernization of the air transport system, or NextGen. "We are strong advocates for NextGen. The technological backbone of NextGen – Automatic Dependent Surveillance-Broadcast (ADS-B) – will first come into use in Florida after 11 ground stations are deployed. Plans call for nationwide implementation of the technology by 2013."

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