Aerospace Industry Economic Forecast

The turbulent economy has reached the U.S. aerospace sector through the airline crisis, but how much does it affect the short- and long-term outlook of aerospace manufacturing and design? According to multiple sources and experts, it may not be such a long, dark road.

Soaring fuel prices and apprehension over the economy are dampening the near-term projection of the general aviation industry, but the long-term outlook remains positive. According to Datamonitor's "Aerospace & Defense Global Industry Guide," the Americas account for 53.5% of the global market by value. In the near future, the U.S. aerospace industry is expected to grow typical of years past.

The Aerospace Industries Association (AIA) suggests that 2008 will extend the trend of increased sales in almost every industry sector, up to $210.6 billion by yearend. This increase of 6% over 2007 figures will mostly be spurred by civil aircraft sales and engines and parts deliveries, which are likely to rise by 13% over 2007 sales in these areas. In fact, the Federal Aviation Administration (FAA) predicts that in 2009, 500 units will join the Very Light Jet (VLJ) fleet, with that figure growing 450 to 500 per year through 2025. AIA shows similar prognostics, estimating that deliveries of civil transports will likely top 480 aircraft in 2008 for a value of $33.5 billion. The current backlog of commercial aircraft orders suggests that the civil aircraft sector will continue on an upward trajectory for at least an additional three to four years, AIA says. The FAA agrees that U.S. commercial aviation is on track to carry one billion passengers by 2016.

The defense segment of the global market is the most lucrative, accounting for 75.6% of the market by value, according to the "Aerospace & Defense Global Industry Guide." The same report shows that the global aerospace and defense market grew by 5.4% in 2007 to reach a value of $636.8 billion. By 2012, the global aerospace and defense market is forecast to have a value of $716.4 billion, an increase of 12.5% since 2007. Sales of military aircraft, engines, parts and services increased 11% to $548 billion in 2007 over 2006's sales, but AIA is predicting a slight slip in 2008, related to slips in the tanker and the combat search and rescue (CSAR) program, as well as lower exports in fighter aircraft. However, sales to the Defense Department will show modest gains in 2009 from funds already appropriated; although how this Congress will handle FY 08 supplementals could affect procurement accounts.

The space sector sales increased a modest 1.6% in 2007 to reach $39.2 billion, according to AIA. NASA and other non-DoD federal agencies, the private sector, and DoD all contributed to that increase. The U.S. space sector appears to be on an upward cycle, particularly as demand for commercial satellites is increasing.

AIA estimates that U.S. foreign sales of aerospace products totaled $92.5 billion in 2007, up $7 billion over 2006. The increase was dominated by civil aircraft exports, which account for more than 40% of total U.S. aerospace exports. General aviation aircraft exports also enjoyed a good year, increasing to $3.6 billion in 2007. Imports increased an estimated $5.5 billion to $36 billion in 2007, according to AIA. One-third of the increase is related to larger imports of commercial transport aircraft, which is related to increased imports of regional jets.

Overall, the future outlook of the aerospace manufacturing industry is favorable. Virtually every sector is continuing to grow despite the housing and credit crisis in the United States.