The U.S. aerospace industry booked a relatively strong performance in 2011, remaining one of the most significant contributors to the national economy. Despite persistently sluggish market conditions around the globe, annual sales are expected to top $218 billion in 2011, marking the eighth consecutive year of growth. The industry’s robust workforce also points to the vital role played by aerospace in the U.S. economy. Directly and indirectly, aerospace employs more than two million Americans. Strong aircraft orders and the rollout of major new products have contributed greatly to the industry’s performance. At year’s end, annual sales are expected to be up across the board in 2011. Civil and military aircraft, missiles and the space sector are all expected to top their respective 2010 totals. Given that the demand for aftermarket products and services is closely tied to upstream market conditions, the U.S. aircraft maintenance, repair and overhaul (MRO) sector also experienced somewhat of a resurgence in 2011, capturing a significant share of the nearly $50 billion global MRO market. Absent a major economic downturn, the U.S. MRO market is expected to regis- ter a 3.8 percent compound annual growth rate (CAGR) over the next five years. 2011 YEAR-END REVIEW AND FORECAST
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2011YEAR-END REVIEW AND FORECAST · of the nearly $50 billion global MRO market. Absent a major economic downturn, the U.S. MRO market is expected to regis-ter a 3.8 percent compound
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The U.S. aerospace industry booked a relatively strong
performance in 2011, remaining one of the most significant
contributors to the national economy. Despite persistently
sluggish market conditions around the globe, annual sales are
expected to top $218 billion in 2011, marking the eighth
consecutive year of growth. The industry’s robust workforce also
points to the vital role played by aerospace in the U.S. economy.
Directly and indirectly, aerospace employs more than two million
Americans. Strong aircraft orders and the rollout of major new
products have contributed greatly to the industry’s performance.
At year’s end, annual sales are expected to be up across the
board in 2011. Civil and military aircraft, missiles and the space
sector are all expected to top their respective 2010 totals.
Given that the demand for aftermarket products and services
is closely tied to upstream market conditions, the U.S. aircraft
maintenance, repair and overhaul (MRO) sector also experienced
somewhat of a resurgence in 2011, capturing a significant share
of the nearly $50 billion global MRO market. Absent a major
economic downturn, the U.S. MRO market is expected to regis-
ter a 3.8 percent compound annual growth rate (CAGR) over the
next five years.
2011YEAR-END REVIEWAND FORECAST
2
After a disappointing 2010, the U.S. civil aircraft sector
returned to a growth position. U.S. civil aircraft sales
are expected to total $49.7 billion in 2011, a 3.2 percent
annual increase. Looking forward, the sector is likely to
grow at a CAGR of some 3.4 percent during 2011-2013.
Orders for civil aircraft are expected to rise sharply in
2011, reaching nearly $107 billion, a gain of 23 percent.
The amount is far below the recent high of $224 billion in
2007, but is well ahead of the 2009 low of $23 billion.
Industry drivers in 2011 include several factors that have
influenced the market for a number of years, such as the
aging U.S. regional jet fleet and a growing demand for
fuel-efficient aircraft that has been driven by persistently
high and variable fuel prices. The introduction of new
aircraft has also created demand in the commercial
segment.
The U.S. large commercial aircraft market continues
to ramp up at a respectable pace, yet sagging airline
demand in the U.S. and Europe means that manufactur-
ers will necessarily depend more heavily on exports to
Asia, the Mideast, and other fast-growth markets. The
U.S. civil industry will be lifted as Boeing ramps up 787
and 747-8 production, now that the two new aircraft have
entered into service over the past few months.
The key market driver in 2012 will be the price of fuel.
High fuel prices create demand for new fuel-efficient
aircraft, while at the same time eroding airlines’ ability
to purchase new planes. This situation places renewed
emphasis on developing commercially viable alternative
fuels, which could potentially dampen the volatility of fuel
costs faced by operators while lessening the global airline
industry’s environmental impact. The U.S. is a leader in
alternative aviation fuel research and development, and
U.S. producers have successfully completed test flights
using fuels from a variety of feedstocks and are moving
toward commercial production.
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Aerospace Industry Sales
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Civil Aircraft
$199.5 $208.9 $210.6 $218.1 $217.7
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KEYRelated Products& Services
Space
Missiles
Military Aircraft
Civil Aircraft
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Aerospace Industry Sales By Product Group
The U.S. military aircraft sector expanded by nearly 6.7
percent over last year, with sales estimated at $66.51
billion. The Department of Defense ordered more F/A-18
E/F Hornets and V-22s for the Navy and Marine Corps.
Future sales also look promising, as exemplified by the
$35 billion contract awarded to Boeing to build 179 KC-
46A refueling tankers.
While 2011 was a strong year for military aircraft,
domestic purchases are expected to decline in the
coming years due to federal deficit reduction measures.
These measures are likely to become even more
significant factors as much of the U.S. military aircraft
fleet nears maximum service-life limits. Anecdotally,
ground crews have pointed out that today’s pilots
are now flying the exact same equipment as did their
fathers. The recent grounding of several combat wings
due to equipment stress is impacting U.S. combat
readiness. The current U.S. Air Force fleet, whose
planes are on average more than 23 years old, is the
oldest in USAF history. Many transport aircraft and aerial
refueling tankers are more than 40 years old, and it is
expected that some may reach the 70-80 year mark
before they are finally retired.
As the U.S. increasingly seeks foreign buyers of military
aircraft, it faces competition from other nations that are
targeting the same opportunities. A case in point is the
The U.S. civil rotorcraft market is diverse, with the bulk of
new deliveries coming from mature production lines. The
market encompasses emergency medical service (EMS)
providers, offshore oil and gas exploration, and law en-
forcement applications. Following two years of significant
decreases in sales, U.S. civil helicopter shipments are
expected to increase to 454 aircraft in 2011, representing
an annual increase of 5.3 percent. This upward trajectory
is expected to continue into 2012 as demand deferred
during the economic downturn reaches the market.
Military Aircraft
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The U.S. aerospace industry continued to show
reasonable international strength in 2011 despite the
lingering effects of the global economic downturn. In
2011, the industry contributed $87 billion in export sales
to the domestic economy. The industry’s positive trade
balance of $57.4 billion places aerospace in the lead,
representing the largest positive trade balance of any
manufacturing industry.
U.S. aerospace exports are expected to increase to
nearly $90 billion in 2011, up 12 percent after falling for
two years. The increase is due primarily to strengthened
civil exports, which are expected to grow by 14 percent
in 2011, reaching nearly $77 billion. U.S. aerospace
imports are also expected to increase in 2011, driven
primarily by increased purchases of foreign aircraft
engines and engine parts. Overall, aerospace-related
imports are expected to reach $29.6 billion, an increase
of 12 percent.
In recent years, Near- and Middle Eastern governments
have steadily increased purchases of U.S. military
aircraft. Most recently, the sale of 24 refurbished F16-C/
Ds to Indonesia, along with the possibility of other sales,
came out in President Obama’s announcement that the
U.S. will expand its military ties in Southeast Asia. As
tensions rise with Iran and Syria, the UAE has stepped up
purchases to secure its borders and maintain the abil-
ity to deliver its recent $304 million purchase of “bunker
busting” weapons in response to Iran’s nuclear program.
Additionally, Saudi Arabia bought 85 F-15E fighter jets
valued at $29.4 billion and the Iraqi government has
agreed to purchase 18 U.S. F-16 fighters, worth about $3
billion.
Trade
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2011 EXPORTS87.0
2011 SURPLUS57.4
2011 IMPORTS29.6
2007 PEAK60.6
2007 PEAK97.2
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Aerospace Foreign Trade
recent India fighter competition. That the U.S. entrants
failed to win the competition is a sure sign of how
effective competitors in this market can be.
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This year has been a particularly challenging one for the
U.S. space industry. Developments in 2011 that have
directly impacted the industry include: retirement of
the space shuttle, which caused the loss of thousands
of high-tech industry jobs; the near cancellation of the
James Webb Space Telescope; and reductions in NOAA
polar orbiting weather satellites and national security
space programs. Despite these roadblocks, there were
some bright spots including an agreement on a way for-
ward for an important new NASA exploration initiative, the
Space Launch System, which will develop a new launch
system to enable human exploration beyond Earth orbit.
SpaceBudget cuts will continue to menace the U.S. space in-
dustrial base, and an anticipated increase in competition
from Indian, Chinese and Russian space programs will
exacerbate the situation. Likely impacting U.S. industry’s
competitive stance is the U.S. government’s increasing
dependence on commercial systems to enhance U.S.
space programs and launch capabilities, fostering new
opportunities for the private sector.
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Orders
2008 Peak515.0
2007 Peak316.4
ORDERS204.8
SHIPMENTS184.2
BACKLOG462.7
Shipments
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Aerospace Shipments, Orders and Backlog
As in 2010, 2011 proved to be a challenging year for
general aviation. Lingering effects of the financial crisis
of 2008 and the European banking crisis continue to
General Aviation
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Aerospace employment is likely to register a slight in-
crease in 2011, as the hardest-hit sectors of the industry
find firmer footing. Total year-end employment is
expected to be 624,400, up from 624,000. According
to a recent study by the U.S. Department of Commerce,
aerospace supports more jobs through exports than any
other industry. The U.S. aerospace industry directly em-
ploys about 500,000 workers in scientific and technical
jobs across the nation and supports more than 700,000
additional jobs in related fields.
Employment
2011 Total:624.4
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Search, Detection & Navigation Instruments
Guided Missiles, Space Vehicles & Parts
Aircraft, Engines and Parts
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Aerospace Employment
restrict financing for the sector. Further, several initiatives
are under consideration that are tied to new taxes and
increased regulations that may limit the sector’s growth.
However, bright spots do exist, including a strong de-
mand for new equipment by regional airlines operating in
developing airline service markets.
As private air travel becomes more commonplace, larger
business jet aircraft are leading market sales within the
sector, particularly in Southeast Asia. China represents
another growing market, and it has been estimated that
by the end of the decade the nation will account for 20
percent of global business jet deliveries, up from today’s
7 percent. Light and medium business jets remain an
area of concern, with a three-year downturn threatening
to extend into 2012, and deliveries depressed for several
key U.S. companies.
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Looking forward to 2012, aspects for growth are positive
in commercial aerospace and neutral in the defense
sector. That said, both the commercial and military
sectors remain vulnerable to numerous variables that are
capable of overturning current expectations and trends.
A mounting sense of urgency to address high levels of
deficit spending by the U.S. is expected to induce cuts
to the U.S. defense budget. However, rising commer-
cial aircraft sales (up 7.5 percent year-over-year through
September 2011) could offset these drags on the market
and may spur the commercial aviation sector to increase
capital spending on new equipment.
Volatile fuel prices continue to spur world airlines to re-
place older, less fuel-efficient aircraft with newer models.
This demand, combined with rapid growth in air travel in
Asia and the Middle East, continues to feed a growing
demand for new aircraft. Moreover, the global air traffic
market is expected to increase annually at a rate of 4.9
percent over the next 20 years, considerably higher than
the global GDP growth rate. Consequently, in order to
keep pace with the growing demand for air travel, esti-
mates predict that by the end of 2029, the world’s airlines
will take delivery of 29,000 commercial aircraft with a total
value of $3.2 trillion.
Order books at Boeing and Airbus contain six to seven
years of commercial aircraft production at current levels.
Both companies have announced significant produc-
tion rate increases that began late last year and stretch
through 2014. It is expected that the business jet market,
which has been battered both by difficult market condi-
tions and political headwinds, will improve modestly in
2012. The aftermarket parts and service business for
business jets and large commercial airplanes is staging
a solid recovery, driven by increased flight hours for both
categories.
As for the defense segment, both the FY2012 base and
supplementary (“OCO”) defense budgets authorize
funding for aerospace and defense procurement at
increasing rates. In addition, the aging of conventional
military equipment such as planes, ships and tanks
necessitates equipment replacement and repair. Howev-
er, the magnitude of cuts to global defense budgets is still
uncertain as the U.S. Congress and national legislatures
around the world attempt to reduce deficits and overall
governmental spending. While the U.S. defense industry
remains very concerned about potential budget cuts,
2011 deliveries reflect the strength of previous years’
budgets.
While outlays are currently positive for military fixed-wing
aircraft and rotorcraft programs, funding for new program
starts is highly uncertain. Missile and munition demand
also looks vulnerable, as weapons stockpiles are often
cut first when combat operations and defense budgets
trend downward.
In space, the market continues on a reasonable plateau,
driven by ongoing satellite replenishment and launch
services demand. While cuts to NASA’s FY2012 budget
will have a negative impact, they were less severe than
those advocated by some policymakers.
The U.S. aerospace industry continues to provide
significant contributions to the country’s economy and
provides capabilities vital for national security. With
employees in every state of the union, it generates the
highest positive trade balance of any U.S. manufactur-
ing sector. This is particularly relevant given the na-
tion’s challenges of high unemployment, a stagnating
economy and a crippling national deficit. AIA’s 2011
Year-End Review and 2012 Forecast reports increases
in almost every category – from civil aviation to space.
In the years following 2012 our industry will face signifi-
cant challenges, particularly in the defense sector, as
the government seeks solutions to an ongoing budget
crisis. Our position has been firmly established – we will
continue to educate the public and elected officials on the
need to maintain an aerospace industry that is Second to
Percent of Total Backlog:Number of Aircraft 75.3% 77.8% 79.5% 77.8% 71.6%Value 78.8% 81.1% 82.9% 81.6% 76.7% Number of Aircraft 2,581 2,891 2,682 2,679 2,519 Value (in millions $213,418 $240,092 $218,208 $216,701 $217,018
Missiles, Rockets & Parts 1,359 1,425 1,509 1,741 1,509 Spacecraft, Satellites & Parts 114 139 189 133 107
Source: Aerospace Industries Association, based on data from the U.S. Department of Commerce and AIA estimates. Note: Totals may not equal sum of terms due to rounding.
P. Preliminary.
D. Civil aerospace export data suppressed by U.S. Census Bureau beginning first quarter 2009.