U.S. aerospace industry rides record sales wave

 - December 28, 2007, 5:19 AM

With total sales expected to hit nearly $200 billion by the end of last year and a backlog of $360 billion, the Aerospace Industries Association (AIA) sees a strong U.S. aerospace manufacturing sector continuing to set records over the next few years.
Preliminary figures released last month indicate that total sales reached a record $198.8 billion last year, an increase of $15.5 billion over the final figures for the previous year. Those sales were buoyed by sustained growth in the civil aircraft market.

The civil aircraft category continued its rapid climb, increasing by $7.3 billion, to reach $53.3 billion, as a result of solid increases in commercial transports and business jets. Strong future orders and a growing backlog should support a thriving civil market in the years ahead.

Former FAA Administrator Marion Blakey, who took over as president and CEO of AIA in November, said aerospace also logged a $56.5 billion positive trade balance, testimony to the industry’s position as a leader in the increasingly global marketplace. With exports soaring to $92.5 billion and imports reaching $36 billion last year, the aerospace industry continues to help offset the nation’s chronic trade deficit.

“With good news in nearly every sector, I am pleased to see the American aerospace industry’s strong international presence continuing to keep pace with our domestic successes,” Blakey said. “Our impressive trade balance and surging sales in the civil aircraft market have laid a foundation for the industry’s continued vitality. Additionally, a 19-percent increase in the backlog of civil orders indicates good days ahead.”

Most of the major statistical categories AIA tracks showed growth last year. Military aircraft increased 10 percent, to $54.8 billion; space increased $605 million, to $39.1 billion; and related products went up $1.9 billion, to $33.8 billion.

Blakey said the outlook for next year remains strong, with sales forecast to leap over the $200 billion threshold and hit $211 billion. If her expectations are realized, this year will be yet another record year for the aerospace industry.

Overall, AIA expects “robust growth” to continue through this year. Aerospace industry sales are projected to grow nearly $12 billion, spurred by civil aircraft sales and engines and parts deliveries, which are likely to jump another 13 percent.

Shipments of complete civil aircraft continued their upward climb in number and value last year. The value of shipments was expected to reach $29 billion, on the strength of delivery of 443 large commercial aircraft. GA aircraft shipments also will register solid gains, with billings jumping 20 percent, to $11.7 billion.

In addition to record exports, imports also set a record, increasing from $30.5 billion to $36 billion. One third of that increase is related to greater imports of commercial transport aircraft, which in turn is related to increased imports of regional jets, mainly from Embraer and Bombardier.

Of course, these jets include U.S. engines and avionics, which in turn are booked as increases in U.S. exports of engines and parts. Another half of the overall increase
in aerospace imports relates to aircraft and engine parts, a good portion of which are incorporated into aircraft and engines that are, in turn, exported.

This year deliveries of civil transports will likely top 480 aircraft, for a value of $33.5 billion, and general aviation–particularly business jets–will add another $12.8 billion to sales.

“Looking beyond 2008, the current backlog of commercial aircraft orders gives us confidence that the civil aircraft sector will continue on an upward trajectory for at least an additional three or four years,” AIA noted. “On the other hand, sales to the Defense Department will show modest gains in 2009 from funds already appropriated, although how this Congress will handle FY08 supplementals could affect procurement accounts.”

Blakey presented the numbers during AIA’s 43rd Year-End Review and Forecast, addressing about 300 members of the media, industry and government.