San Diego Union Tribune

December 14, 2006

Aerospace industry's sales, profits soar

More growth on radar following record year


WASHINGTON – The aerospace industry enjoyed record-high sales and profits this year, with a surge in orders for commercial aircraft, engines and parts adding to modest gains in spending on defense and government equipment, the industry's top official said yesterday.


Total sales jumped $14 billion, to $184.4 billion, the third straight year of gains, Aerospace Industry Association President John Douglass said. Profits grew more modestly.

“The good news is, next year we know we're going to grow by about $11 billion” in sales, Douglass said in the industry's annual progress report and forecast.

He predicted additional growth over the next several years based on a sharp jump in the backlog of commercial aircraft on order.

The breakdown of the various types of aerospace products released by Douglass showed civil aircraft sales jumping $7.4 billion, to $54.6 billion; while military aircraft nudged up $700 million, to $53.5 billion; and space systems gained $800 million, to $39.4 billion.

Although there are concerns in the industry that efforts to control the federal budget deficit could force cuts in defense spending, Douglass said he was confident that neither party would reduce support for the military while troops are fighting in Iraq and Afghanistan.

A key benefactor of the surging airliner sales is Boeing, which has regained its lead in commercial aircraft sales over Airbus, a European aerospace giant that has suffered from stumbles in major new programs, including the super-jumbo A380 airliner.

The booming market for commercial airliners also helped boost aerospace industry employment by about 23,000 jobs, to a total of 636,000. That continues the slow recovery from the deep drops in employment triggered by the 1990s defense cutbacks and the plunge in U.S. airliner sales after the Sept. 11, 2001, terrorist attacks.

Employment in the industry is only two-thirds of what it was at the beginning of the 1990s. Douglass noted the recent growth in employment was in “high-paying production jobs,” while administration and support positions dropped, improving the industry's efficiency and international competitiveness.

Despite the jump in sales, the industry's profits increased modestly, from $12.6 billion to $13.3 billion, which Douglass said was partly because of working on government contracts.

Although U.S. airlines are beginning to order new aircraft, orders from foreign airlines and air cargo carriers were the main drivers of the expanded commercial sales. Those orders, plus increased foreign sales of military airplanes, helicopters and missiles, drove international sales to a record $81.8 billion, Douglass said.

Those foreign sales, offset by only a slight increase in imports to $29.6 billion, produced a record-high trade surplus in aerospace products of $52.2 billion. Aerospace is one of the few U.S. industries with a trade surplus.

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