Missile Industry Sees Growth In 2008, Expects Slowdown in 2009

Space Industry Sales Seen Gaining 4.4 Percent This Year, Easing To 2.1 Percent Next Year

Obama Urged To Refrain From Cutting Aerospace, Defense Program Funding

The U.S. missile industry continued a years-long streak by posting still more solid sales growth in 2008, but that growth will slow sharply next year, according to the Aerospace Industries Association (AIA) annual report.

To be sure, large order backlogs should keep the total aerospace industry in solid shape during 2009 and perhaps beyond, but after that the outlook may be uncertain.

Marion C. Blakey, AIA president and CEO, delivered the year-end report before hundreds of industry leaders and journalists.

For the missile industry, sales rose like a rocket in recent years, but will level off to remain in orbit next year.

Getting to the specific numbers, missile sales totaled $9.1 billion in 2005, $11.3 billion in 2006 (a whopping 24.2 percent advance), $12.4 billion last year (up 9.7 percent), and then jumped to a projected $13.2 billion this year, a slower 6.5 percent advance.

But next year, missile industry sales will inch up only to $13.3 billion, a weak 0.8 percent gain.

Still, that is a rise in sales, at a time when many U.S. industries have seen profits disappear and losses threaten to demolish some household names in the insurance, automotive, banking and other sectors.

Space Industry Healthy

In the space industry, the figures also showed continued robust health.

Space industry sales were $33.5 billion in 2005, then slipped slightly to $32.9 billion in 2006 (a 1.8 percent decline), and down to $32 billion last year (a 2.7 percent drop), before rallying to $33.4 billion this year (up 4.4 percent). A slower 2.1 percent advance to $34.1 billion in space sales is seen next year.

The total aerospace industry is in sound health and likely to remain so for the near term, the AIA report predicted.

But that assumes that President-elect Obama won’t choose to make gigantic cuts in funding for defense, space, missile and other programs dependent upon federal funding, Blakey warned.

Rather, he should consider at least sustaining, and in some cases increasing, funds for some industry programs.

For example, "we would like to see increased investment in space funding," though currently she characterized it as "stable," likely to remain steady for the next 18 months.

These are extraordinary economic times, and the industry that supplies jobs for 655,500 workers requires continued dependable support to ensure the industry and workers continue to bolster the overall economy, she said. (That, however, is down 20.6 percent from roughly 825,000 jobs in 1993.)

The aerospace industry directly and indirectly supports 2 million jobs, both with direct employment in its companies and indirectly through 30,000 suppliers in 50 states and retailers patronized by industry employees. The industry also provides for strong national security, and leadership in space, while modernizing aviation infrastructure, the AIA report noted.

Barring a loss of support, total industry sales of $204.4 billion this year should advance to $214.3 billion next year, a respectable 4.8 gain in a year when most economists are projecting a recession gripping the U.S. and global economies.

Indeed, the $204.4 billion of sales racked up this year represents a new record, the fifth record-setting year in a row.

Results would have been even stronger this year, but for the strike at The Boeing Co. [BA], she said.

"We do not anticipate a severe downturn" for the overall economy, she said. Still, "I think there’s good reason for the uncertainty" gripping many Americans during the economic downturn.

For the aerospace industry, "we are in a good position to weather" the weak economic times, she said.

One sign of continued busy aerospace industry factories is that companies enjoy a huge backlog of $404 billion in unfilled orders.

However, new orders for aerospace business declined from $271 billion last year to $234 billion this year, a 13.7 percent drop.

The industry as usual remains a bright spot in the dismal U.S. trade balance picture.

Although overall U.S. trade in goods and services with other nations tallies as high as an $800 billion annual deficit, adding to the huge U.S. foreign debt, the aerospace industry racked up a $60.6 billion trade surplus: the result of $38.6 billion of imports being outweighed by $99.2 billion of exports.