The military and aerospace (mil/aero) market has recently suffered some fiscal setbacks. It may come as a surprise that the economy was not to blame; rather, it was design and production delays.
This interesting, and somewhat jarring, tidbit comes from Richard L. Aboulafia, vice president of analysis at Teal Group Corp., team of aerospace and defense industry analysts in Fairfax, Va. He shared several more thought-provoking mil/aero market insights during his informative, if not eye-opening presentation, “Aircraft and defense markets: outperforming the economy,” at Mentor Graphics’ Integrated Electrical Solutions Forum (IESF).
The overall mil/aero market decline has been minor, especially compared with declines being felt in other industries. Some sub-segments of the mil/aero industry have suffered considerably since 2008. Business aircraft were hit harder than any other aerospace market, falling 28 percent (measured by value of deliveries) between its market peak of 2008 and 2010, Aboulafia admits.
It’s a bit perplexing: Sales of the most expensive aircraft grew, while less expensive business jets took a proverbial nosedive (forgive the pun). The top half of the market, selling jets priced at $26 million and above, grew during that period—with a 1.5% increase in deliveries in 2008 through 2010. The lower half of the market, offering jets priced in the range of $4 million to $25 million, fell by a catastrophic 57.1%, Aboulafia explains.
Why the dichotomy? Aboulafia and other industry pundits, including this geek, have some thoughts (which are explored in the next installment). Be sure to read on, and certainly weigh in on what you’re seeing and experiencing in the mil/aero market.