Aerospace industry enjoys lift in 1996 Prospects said to be even better for 1997

December 12, 1996|By Greg Schneider | Greg Schneider,SUN STAFF

WASHINGTON -- After crying in its Alka-Seltzer for most of the 1990s, the aerospace industry enjoyed "a turnaround year" in 1996, a major trade association leader said yesterday.

What's more, "the prospects for 1997 look even better," said Don Fuqua, president of the Aerospace Industries Association, during an annual year-end review and forecast luncheon at the Washington Hilton.

Industry sales increased in 1996 for the first time in five years -- by 6 percent, to $112.4 billion, according to association figures. Employment rose for the first time in six years -- by 20,000. Net profit hit record levels, reaching $7.6 billion, up 65 percent from $4.6 billion in 1995.

The abrupt change in fortune is powered mostly by the commercial aircraft business, Fuqua said.

Next year, in fact, the trade association projects more than $29 billion in jetliner sales -- a 54 percent increase that amounts to a record high. And the market during the next 20 years could easily reach $1 trillion, Fuqua said.

Most of this success is tied to Boeing Co. of Seattle, which has been hiring at a rapid pace and has even retained longtime rival McDonnell Douglas Corp. to help it meet a flood of orders.

Fuqua said overall employment should grow by another 17,000 workers next year.

Boeing and civilian aviation in general are doing well enough to make up for lingering problems in other parts of the aerospace industry.

Most notably, defense contracting remains a troubling question.

"While we have a fairly clear and bright picture of what to expect in commercial business, the view of future government sales is extremely murky," Fuqua said.

He said that in constant dollars, Department of Defense business in 1996 was less than half that of the peak year of 1987. Defense spending should decline another 6 percent next year, Fuqua predicted, and then level off.

"But beyond 1997, the outlook is blurred," he said.

Total missile sales dropped to $5.6 billion last year, marking a 60 percent plunge since 1990, according to the association.

Military aircraft increased in sales, primarily because foreign governments have been eager to buy U.S. equipment after the video-game glory of the Persian Gulf war.

And while sales to NASA and other government agencies rose by 9 percent last year, the association expects those sales to drop in 1997.

Fuqua praised the wave of consolidation that has transformed the defense industry over the last few years, calling it "pleasantly LTC ironic" that the often painful process has resulted in "increased competitiveness and savings to the government."

Pub Date: 12/12/96

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