Aerospace Market Forecast

Barr Group Aero Indicator
Putting it all together into one indicator, the overall trend is gaining positive strength. The indicator points to an annualized growth rate of 2.76%, up from 1.59% in January. Q2 of 2011 is predicted as a better quarter for many than Q1 of 2011.
 

1. Aerospace Industrial Production
Since the end of last year through February, overall U.S. manufacturing grew by about 3%, while aerospace industrial production was off by about 2-1/2%. Aerospace industrial production continues to lag behind overall U.S. manufacturing and still is not back to its 2009 level.


2. Aerospace Capacity Utilization
How much of our plant capacity is utilized each and every day is key. Since the end of last year through February, aerospace manufacturing capacity is still at or near 70%, while overall manufacturing has steadily grown up to almost 75% in last few months.


3. U.S. Aircraft Production Workers
Since 2005, the number of aircraft production workers has grown by about 20% and, more recently, in the first two months of 2011 more than 1,000 net jobs have been added.


4. U.S. Air Passenger Market
U.S. carriers experienced an increase of about 2 million more passengers from 2009 to 2010, or about a 3% rate of growth. Even though traffic is up, airlines continues to get the squeeze as revenue passenger miles are down by about 2-1/2%. The good news is, that after several years of bad news, the U.S. airlines are adding jobs.


5. US Air Cargo and Air Mail
Air freight tonnage slows. It is running higher than 2009 and in 2010 it was higher by about 1-1/2%. The U.S. air cargo tonnage began to slow at the end of 2010 and into early 2011. Cargo is off to a slow start but should pick up momentum in 2011.


6. U.S. Aerospace Net Profits
Large firms large recovery; small firms small or no recovery, yet! Take a look at the facts. Large firms (assets more than $25 million) prior to the end of 2008, were earning around $4 to $5 billion after tax each quarter, then they lost collectively about $100 million in Q4 2008. They are now back to the 2008 earnings levels. Small firms (assets less than $25 million) made between $50 to $250 million after tax just prior to Q4 2008, but then they collectively lost $18 million in Q4 2008. Large firms should listen to what smaller firms are saying if they hope to sustain their supply chain, which makes up about 70% of their supply chain.


7. DoD Spending and Aerospace
Aircraft budgets grew by about 9.7% between FY2010 and FY2011, but are projected to fall by about 4.5% in FY2012. Aircraft engines and parts grew by 6.9% between FY2010 and FY2011, but are projected to fall by 5.8% in FY2012. Guided missiles and space vehicles grew by 8.4% between FY2010 and FY2011, but are projected to fall by 4.5% in FY2012. In general, DoD aerospace manufacturers should continue to see growth out for the next six months but then begin to experience a downward trend.


8. Aerospace Trade
The trade balance in aerospace is also key as it is an indicator of global U.S. market competitiveness. A surplus indicates a superior relative price and product competitiveness, while a deficit indicates the reverse. Throughout 2010 aerospace products and parts exports have significantly exceeded imports with exports exceeding imports in Q4 2010 by 61%.


9. Sales of Civil Aircraft and Engines
This forward looking indicator is positive. Between January and February civil aircraft sales rose by about 27% and, at the same time over the same period, aircraft engine sales rose by 7.2%. Together their sales were higher than the same months in 2010.


Barr Group Aerospace recommends those companies who want to learn more about improving their own manufacturing competitiveness visit: bga-aeroweb.com/LEAP/LEAP-V2.pdf