Sales expand for third time in a row due to modest defense
and major commercial spending.
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 Wednesday.
Total sales jumped
$14 billion, to a new high of $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 fight 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-based aerospace giant that has
suffered from some well-publicized 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 following the
Sept. 11, 2001, terrorist attacks.
Employment in the industry is only two-thirds of what it
was at the beginning of the 1990s.
But Douglass noted that 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 due to working on government
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
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 sectors of the U.S. economy
that has a trade surplus.
"The increasing trade surplus in the industry shows its
importance on the global stage and positive impact on the
U.S. economy," Douglass said.
Douglass emphasized that the foreign sales of aerospace
products continued to be restricted by export control laws
that are relics of Cold War efforts to prevent the Soviet
Union and its allies from improving their military
capabilities by buying U.S. technology.
Although the industry is committed to keeping advanced
weapons out of the hands of potential enemies, Douglass said
the export controls restrict sales of mundane components
that are used in military equipment, although they are
widely available on the international markets.
Douglass said the industry would continue to press
Congress and the White House to change the restrictions, one
of the association's top legislative goals for years. He was
optimistic that with Democratic control of Congress,
progress could be made on that issue and in stopping the
push for "buy American" restrictions, which came mainly from
House Republicans, including outgoing House Armed Services
Committee Chairman Duncan Hunter, R-Alpine.
Douglass also pleaded for a return to previous levels of
federal investment in aerospace research and development --
which he called key to maintaining the U.S. lead in the
field -- and for major funding for the long-planned next
generation of air-traffic control systems.