Order cancellations lead to production declines in aerospace industry

www.conferenceboard.ca

OTTAWA, Dec. 1 /CNW Telbec/ - Canada's aerospace industry has fared better through the recession than many other manufacturing industries, but production is now declining because of reduced demand primarily for business jets, according to the Conference Board's Canadian Industrial Outlook: Canada's Aerospace Product Manufacturing Industry-Autumn 2009.

"The industry had a backlog of orders equivalent to nearly two years of production going into the recession. However that backlog is quickly disappearing, due to order cancellations," said Michael Burt, Associate Director, Canadian Industrial Outlook.

Production is forecast to decline by 2.1 per cent this year, and is expected to fall again in 2010. Net new orders for the industry have been negative in four of the past five months. If this trend persists, it may lead to additional production cuts.

Despite decreased demand, pre-tax profits are expected to reach $461 million in 2009, thanks to the weaker Canadian dollar at the beginning of the year, which translated into higher effective prices given that many of the industry's products are priced in U.S. dollars. With prices and production now falling, profits are forecast to decline by nearly 20 per cent next year. However, both business confidence and profits are showing signs of improvement, so a recovery in demand is expected to begin by the end of 2010. Profit levels are forecast to improve starting in 2011, but low margins will keep the industry's profits below their 2001 peak for the foreseeable future.

SOURCE Conference Board of Canada

For further information: For further information: Brent Dowdall, Media Relations, Tel.: (613) 526-3090 ext. 448, E-mail: corpcomm@conferenceboard.ca


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