U.S. aerospace manufacturers closed the books on last year headed for a record trade surplus, but the industry is showing early signs of a slowdown in orders and backlogs, according to the Aerospace Industries Association. Presenting the association’s annual Year-end Review on December 15, AIA chief David Melcher reported that the trade balance has grown by nearly $19 billion over the past five years to $62 billion and “is on a path this year to set a record surplus level.”
Through the first three quarters of the year, the aerospace manufacturing sector exported $92 billion in goods, which is up 5.8 percent from the same period in 2014. Of that, $81.3 billion involved civil aircraft, engines, parts and space systems. Total aerospace shipments through the first nine months also were at a record $230 billion. This was up 9 percent from the first nine months of 2014 and included $187 billion in aircraft and parts manufacturing. Aerospace backlogs also reached a record $731.7 billion, a 6.8-percent climb from 2014.
But new orders were down 32 percent to $210.3 billion, led by a 40-percent drop in nondefense aircraft and parts. The rate of backlog expansion also was down and the workforce continued its downward trend by 1 percent.
Government Support Needed
The aerospace trade balance cannot be taken for granted, Melcher warned. “The government’s support for trade promotion is crucial,” he said, calling for promotion of a level playing field in the global marketplace and passage of the Trans-Pacific Partnership trade agreement.
He praised the passage of a measure to renew the Export-Import Bank charter (see article on page 14), saying that four months ago few would have thought a deal could be reached. But Melcher reiterated, “Our work is still not done. We’re encouraging the President and Congress to ensure the Bank’s board has a working quorum, so that loans over $10 million dollars can be approved.”
The industry also needs to continue to work with the FAA to improve certification processes and ensure continued implementation of NextGen, he said. But when asked about proposals to separate out the ATC organization, Melcher did not take a position. Instead he said he found it interesting that the two key arguments from Congress for the change center on lack of stability in the authorization and budget cycles, both of which are controlled by Congress.
As for moving NextGen forward, he said, “the single biggest thing that has to happen…is for operators to equip.” Melcher, who joined the AIA on June 8 after serving as president and CEO of ADS-B contractor Exelis, emphasized that the infrastructure was put in place on time and on budget.