Uncle Sam no longer dominates aerospace Nongovernment sales reportedly achieve historic equality


December 18, 1997|By Greg Schneider | Greg Schneider,SUN STAFF

WASHINGTON -- The aerospace industry reached a historic turning point this year, selling as much to commercial and foreign customers as to the U.S. government, a major trade association leader said yesterday.

"While the direction of our industry has been clear for some time, the crossover brings with it a faint touch of cultural shock as we pass a significant milestone," said Don Fuqua, president of the Aerospace Industries Association.

U.S. government sales have dominated the industry every year since 1908, Fuqua said, with the exception of 1934. It was about that time the DC-3 and the Boeing Stratoliner ushered in the era of major commercial air travel.

Otherwise, the government has accounted for as much as 90 percent of aerospace industry sales, according to AIA statistics.

Fuqua released the statistics yesterday at the 33rd annual AIA year-end review and forecast luncheon, held at the Capital Hilton for the media and trade representatives.

The AIA has more than 50 member companies, including Maryland firms such as Lockheed Martin Corp., AAI Corp. and Northrop Grumman Corp.'s Electronic Sensors & Systems Division.

Even the menu for yesterday's luncheon provided evidence that times are flush for aerospace executives. "I was just observing that things must be getting better in the industry because we had steak and not tuna fish or broiled chicken," Fuqua said.

Led by Boeing Co.'s assembly-line-busting backlog of orders for commercial jetliners, the industry posted overall sales of $129.6 billion for 1997, he estimated. That's an 11 percent increase over the $116.5 billion posted last year.

Sales of civilian aircraft, engines and parts made their biggest one-year increase ever during 1997, to $38.6 billion from $12 billion, the association's statistics showed.

Next year, Fuqua predicted, commercial sales will pull ahead of government sales and claim 55 percent of the industry's business.

"That shows you how much the defense budget has come down for aircraft," said Lee Whitney, spokesman for Lockheed Martin's Aeronautics Sector.

The association said sales of military aircraft, both foreign and domestic, dropped 8 percent this year compared to last, reaching $30.5 billion -- the lowest level since 1983.

While Fuqua said he expects U.S. military spending to hold steady for three or four years and then possibly increase, he nonetheless expects aerospace companies to continue to do increasing business in the commercial sector.

One of the most lucrative commercial areas, he said, will be space.

The other trend Fuqua noted was the rise of international business. Aerospace companies exported more goods in 1997 than ever -- $50.3 billion worth, he said. They also enjoyed a record trade surplus of $34 billion.

To help preserve that position, Fuqua called for giving President Clinton fast-track authority to negotiate foreign trade agreements and urged the establishment of normal trading relations with China.

Adding that economic sanctions should only be used as "the carrot rather than the stick," he said the nation must stay involved around the globe.

Pub Date: 12/18/97

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