AIA Chief Douglass Sees Need For NASA Budget To Roughly Double

Missile Sales Decline In 2006, But Space Sector Up 3 Percent

The annual NASA budget eventually will have to rise to roughly double the approximately $16 billion of outlays currently, John Douglass, president and CEO of the Aerospace Industry Association, said.

Douglass, in presenting annual performance figures for the industry, decried what he sees as a move to underfund NASA science programs, research and development work that he sees as vital to continued U.S. leadership in the aerospace arena.

He was asked by Space & Missile Defense Report how much the NASA budget would need to grow to support, adequately, the R&D programs as well as the vision of launching manned explorations going to the moon, Mars and beyond.

Douglass said that AIA doesn’t wish to advocate for specific funding levels. However, he said that if funding for NASA is to be kept at a percentage of total U.S. gross domestic product matching historical levels, and adequate to support both the vision and R&D programs, then annual outlays eventually would have to be “in the 30s” — meaning in the $30 billion to $40 billion range.

“Will space and aeronautics remain as underfunded as it is today?” Douglass asked the audience of hundreds of industry professionals and commercial/defense/space journalists. “Sooner or later this is going to reach a crisis,” he said.

Douglass decried the “collapse of federal R&D for the civil sector,” such as NASA. As far as NASA R&D programs, “That money is not there right now,” he said.

Those programs must be supported financially, but so too must the government fund the vision of space exploration, he said. “Americans do not want to see America retreat from a leadership position in exploration of space,” he said.

During his annual presentation of 2006 aerospace industry performance figures and forecasts for performance next year, in a huge and well-filled hotel ballroom near the Pentagon, Douglass said that AIA would oppose any move to strip out part of NASA programs, such as R&D, and put them in another agency. “We’ve got faith in NASA,” he said.

He also said AIA hopes that the vision of manned space exploration of the moon, Mars and beyond, enunciated years ago by Republican President Bush, will be supported by the newly-elected Congress that will be run by Democrats. The elections last month brought an end to a dozen years of Republican control of the legislature.

The ambitious goal of Americans embarking on expeditions through the solar system shouldn’t be seen as partisan, or belonging to one party, Douglass indicated. “It’s a national vision, not a Bush vision,” he said.

Among key issues for the industry next year, he said, will be support for aeronautics, the space shuttle flyout and that vision for space exploration.

Douglass also repeated for the audience his statement last week that current NASA funding of roughly $16 billion is inadequate, while also saying that the U.S. aerospace industry trade surplus rocketed up by about one-fourth, to more than $50 billion this year from $40 billion last year. (Please see Space & Missile Defense Report, Monday, Dec. 11, 2006, page 4.)

According to AIA, the aerospace industry trade surplus shot up 30 percent this year, to an estimated $52 billion. That’s the net result of U.S. industry exports jumping by $15 billion to a total $82 billion in 2006 from $67 billion last year, while meanwhile U.S. aerospace imports advanced modestly to $29.6 billion this year.

The aerospace industry is one of the few U.S. industries still running a trade surplus (agriculture is another). Most U.S. industries pile up trade deficits, with America rolling up red ink totaling in the hundreds of billions of dollars each year.

“This [2006 performance] continues the track record of the industry as a major net export earner for the U.S., helping to offset the overall chronic trade deficit,” according to the AIA report.

Space, Missiles Performance

Missile sector sales slipped a bit, easing by $400 million to $14.9 billion this year, according to the AIA. But the association sees a rebound coming next year.

Space sector sales rose about 3 percent to $38.5 billion this year, a $1.2 billion advance from sales last year, according to the AIA Aerospace Research Center.

In missiles sales, the slippage “was in spite of an increase in exports of missiles, rockets and parts,” according to the AIA figures. “AIA anticipates that this account, which includes ballistic missile defense research, development, test and evaluation … of around $9 billion a year, will rebound in 2007,” the association predicted.

Meanwhile, the space gains were broadly based, enjoyed by many areas of the industry, including those working under Department of Defense (DOD) contracts.

“NASA and other non-DOD federal agencies, the private sector and DOD and exports all contributed to that increase,” AIA reported.

Aside from assessing the soon-ending 2006, AIA also looked ahead. “It would appear that we are on a modest upward cycle for the space sector, particularly as demand for commercial satellites is on the increase,” the report predicted.

Total Aerospace Industry Results

Overall, the total aerospace industry set a record for the third consecutive year, Douglass said.

Total 2006 deliveries are seen at $184 billion, up a robust $170 billion last year, according to AIA numbers.

Looking ahead, Douglass sees a further $11 billion rise to $195.4 billion next year, which would be an 8.6 percent gain.

“AIA projects aerospace industry sales will grow another $11 billion to over $19 billion next year, as the [Department of Defense] purchases and the space sector increase slightly while commercial aircraft, engines and parts deliveries jump another 15 percent,” the report projected.

And he also predicted that the value of deliveries will surpass the $200 billion mark in 2008. which would be two years earlier than he had predicted in a prior annual forecast.

The robust industry advances were driven largely by gains in civil sales. The Boeing Co. [BA], for example, has enjoyed hot sales performance of its new 787 Dreamliner, which is being snapped up by airlines in the United States and overseas. That advance includes civil aircraft, engines and related parts.