The aerospace industry was boosted in 2006 by a surging civil aircraft market, the Aerospace Industries Association (AIA) reported in its state of the industry analysis released last month.

Most of the major AIA statistical categories showed growth in 2006. Military aircraft increased $2.8 billion to total $52.8, space jumped $1.3 billion to $38.6 billion, and related products went up $2.4 billion to $30.7 billion. But the civil aircraft category stood out, increasing $8.3 billion to hit a total of $47.5 billion.

Total sales increased by $14 billion, reaching a record $184.4 billion, a record level for the third year in a row. That represents a jump of 8.4 percent over 2005's final sales totals.

Very strong future orders and backlog point to a thriving civil market for years to come.

Moreover, aerospace tallied a $52 billion positive trade balance. "The increasing trade surplus in the industry shows its importance on the global stage and positive impact on the U.S. economy," AIA President and CEO John Douglass recently said in a press release. "It would be hard to overstate aerospace's positive contributions to our national economy, as evidenced by these very strong indicators."

Douglass said the outlook for 2007 remains strong, with sales forecast to reach $195 billion, an increase of 6 percent — yet another record year.

In London, however, analyst Ben Fidler of Deutsche Bank expects orders for the civil aerospace segment to decline globally in 2007.

In a research note published Monday morning, Fidler mentioned that civil aerospace equities are expected to witness several challenges this year, including a decline in orders and lack of support from the U.S. dollar over the medium term.

The analyst added:

Although the key U.S. airlines are likely to resume orders in the civil aerospace segment during 2007, it is unlikely to have a significant impact on the order cycle.

Consolidation?
General Electric Co., the world's largest aircraft engine maker, agreed Monday to buy the aerospace business of Smiths Group PLC, Britain's third-largest aerospace company, for $4.8 billion in cash.

At the same time, the two companies are merging their respective detection and homeland detection business into a joint venture called Smiths GE Detection. Smiths Aerospace is one of Europe's leading aerospace equipment suppliers with interests ranging from avionics and electrical power systems through to engine components. For GE, best known in the aerospace sector for its huge engine business, the move is in line with a strategy of looking to expand in areas beyond propulsion, reported Defense News:

The Smiths Aerospace acquisition will make it a significant player in an area of the market where it has had little interest previously. The bulk of its business is based in the U.S., where it has a significant manufacturing presence following a string of acquisitions in the past decade and more.

The acquisition could be the first move in a new phase of consolidation in the aerospace industry, particularly among the big players in the systems supply market.

Smiths Group Chief Executive Keith Butler-Wheelhouse said the decision to sell the aerospace division had been taken in the light of the changing circumstances in the sector. "The structure of the aerospace industry is changing — in particular its increased capital requirements and the growing importance of supplier scale, especially as the next generation of large programs kicks in," he said in a statement picked up by The Associated Press.

Workforce
The American Institute of Aeronautics and Astronautics (AIAA) hosted a half-day panel discussion entitled "Preparing for the Next Generation Aerospace Workforce" at its Aerospace Sciences Meeting in Reno, Nevada, last week.

According to the organization's announcement:

Issues examined included the dynamism and complexities presented by the increasingly globalized pool of students and workers; teacher preparation; the impact of U.S. export controls; the quality of engineering school graduates; and how best to motivate students at both the K-12 and college levels to pursue engineering as a career.

George Muellner, president of Advanced Systems for Integrated Defense Systems at The Boeing Company and one of the panelists, suggested that although there is generally no shortage of American workers qualified to work in the aerospace field at this time, "indications exist that as older members of the workforce retire, we need to work harder at preparing their successors through mentoring and increased job experience."

AIAA noted that preparing the future aerospace workforce will involve "a complex mix of effectively communicating to students and their parents the opportunities available; adequately preparing teachers; maintaining the right financial and regulatory environment; and drawing on the strengths inherent in the nation's uniquely diverse workforce." Concrete action at both the micro- and macro-levels of academia, industry and government will be required to ensure that the national aerospace industry prospers.

"I don't think that we need to adapt our educational strategies to the short attention span of today's students," stated Dr. Lisa Porter, the Associate Administrator for Aeronautics Research Directorate at NASA. Rather, Porter thinks that today's students need to be taught discipline and perseverance. "We need to coach them not to expect instant gratification, but to recover from failure and keep going — a quality shared by productive aerospace engineers," she said

According to AIA's state of the industry analysis last month, the industry last year added about 23,000 new jobs, reaching a total of 635,000.

What future trends do you expect to see in aerospace?