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Mon, Dec 17, 2012

Profit Growth Grounded In Canada's Aerospace Industry

Economic Conditions Expected To Push The Bottom Line Down In 2013

A slowdown in new orders earlier this year and the ongoing global economic uncertainty are pushing profit levels down in Canada's aerospace product manufacturing industry in 2012 and likely will again in 2013, according to The Conference Board of Canada's Autumn edition of its Industrial Outlook. Industry profits have been on a turbulent ride since the 2008-09 recession.  After reaching a recent high of $710 million in 2010, profits fell in 2011 and are projected to dip again in 2012 and 2013. At the end of next year, profits are expected to be slightly more than $500 million - a decline of 30 per cent since 2010.

"The aerospace industry is still coping with the lingering effects of the 2008-09 recession," said Maxim Armstrong , Senior Economist. "And while new orders indicate that the industry is showing signs of recovery, the financial turmoil in Europe is creating uncertainty and making the comeback difficult. Growth in global demand for air transportation can currently be described as modest at best, which is delaying the need to expand capacities or to replace existing aircraft worldwide."

The outlook mirrors global economic trends, with modest growth this year and next, followed by progressive improvement in the later years of the five-year forecast. U.S. economic growth remains slow, but American companies have improved their financial position - which is expected to lead to increased demand for business jets.

The improved outlook in 2015 and beyond will coincide with the anticipated arrival of Bombardier's CSeries jets on the market. The CSeries development fueled industry growth in research and development in recent years.

(Image of CSeries aircraft provided by Bombardier)

FMI: www.conferenceboard.ca/e-library/abstract.aspx?did=5250

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