Wednesday, December 14, 2011

AIA Issues Gloomy Forecast, Despite Strong 2011

Aerospace industry sales were a projected $218 billion in 2011, an increase of more than 3.5 percent, the Aerospace Industries Association reported at its annual Year-End Review and Forecast luncheon on Dec. 14. Despite the robust numbers, the association is estimating a decline of $400 million in spending for 2012, with a decline of $1.4 billion in military aircraft spending partially offset by a rise in civil aircraft purchases.
The numbers reported by the AIA for 2011 showed growth in every market segment, with military aircraft spending up 6.6 percent to $66.5 billion, civil aircraft spending up 3.1 percent to $49.7 billion, missile spending up 2.0 percent to $25.6 billion, and related products and services up 1.0 percent to $30.0 billion. The cumulative increase marked the seventh consecutive year of sales gains.
Even with the positive reports, AIA president and CEO Marion Blakey said that the momentum won't carry into 2012.
"Given the number we're projecting for 2011, you might imagine that we'll roll right on into 2012," she said. "Not so."
The organization's estimate of 2012 sales anticipates declines in military aircraft ($1.4 billion), space ($1.3 billion) and missile ($500 million) spending.
Employing much of the same language used at the rollout of the AIA's Second to None campaign in September, a public relations effort aimed at combating the momentum building to cut defense budgets, Blakey emphasized potential job losses, citing a report commissioned by the organization that claims more than 1 million jobs would be at risk as a result of sequestration. The number has been called into question by some experts, citing the conflict of interest in having a study funded by the organization.
When asked about the relative merits of job numbers as a result of government spending in the defense industry as opposed to other sectors, Blakey said that discussions she's been a part of haven't focused on picking winning and losing industries.
"No one I hear in Washington is talking about trading off jobs," she said. "It's about cuts."

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