Canadian Aerospace Faces Declining Industry
The Conference Board of Canada’s Autumn 2011 industrial outlook report was released today revealing that the total manufacturing output from the Canadian aerospace industry is expected to see decline for its third consecutive year.
The good news is, in 2012, production growth in aerospace is expected to resume. This is due to the slight economic increase seen in North America, leading to a potential increase in demand for business and commercial jets. Additional growth in emerging companies is outlined in the report explaining that the industry anticipates an optimistic medium and long-term picture. Additionally, the Canadian aerospace industry’s expansion into new country sales, such as China, Brazil and India, improves the outlook, although this expansion also includes new competition in these markets.
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“The Canadian industry is facing growing and fierce competition as new players enter the market. For example, China and India are building their own aircraft, with the strong financial and regulatory support of their national governments,” said Lin Ai, Economist, in a release. “The Canadian aerospace industry must continue to improve the quality of its products and to develop leading technology if it is to compete more effectively in the global marketplace.”
The news of decline isn’t a complete surprise as profitability in the aerospace industry depends largely on the economic cycle. Fortunately, in 2011, the industry was able to continue revenue growth as the additional cost increases were offset despite the decline. This led to a profitability of $264 million in the industry for the year.