Exports in the aerospace and defense (A&D) sector grew last year led by commercial aircraft, despite an overall decline in total exports from the United States, according to a new study by Deloitte.
In the face of currency headwinds gross A&D exports increased $5 billion in 2015 to $143.3 billion, accounting for 9.5 percent of all U.S. exports, up nearly 4 percent from $138.3 billion in 2014, the audit and consulting firm said in the report, US Aerospace and Defense Export Competitiveness Study. In 2010 A&D exports were 7.1 percent of total U.S. exports, the study said.
The study said that gross commercial aerospace exports grew $6 billion in 2015 with defense exports down $800 million “largely due to regulatory approvals, contractual delays and a decline in global defense spending in 2015.”
The A&D sector will continue to show strength this year, with Deloitte forecasting a $4.6 billion increase, up 3.2 percent, in these exports in 2016. The increase this year will be driven by defense sales with commercial aircraft orders flattening ahead of another rise in 2017, the study said.
“However, this outlook could be at risk if the U.S. dollar accelerates its strength, low oil prices cause affordability challenges for key customers or a global recession occurs,” Deloitte said. “On the other hand, low oil prices may contribute to increased airline profitability, allowing for accelerated aircraft fleet renewals.”
Deloitte also said that instability in certain regions may also boost international defense exports.
The vast majority of the A&D exports in 2015, 83 percent, were for civilian aircraft, engines, equipment and parts. Military aircraft, engines, equipment and parts accounted for just over 8 percent, the study said.
Total U.S. industry exports in 2015 were $1.5 trillion, down 7 percent from $1.6 trillion in 2014, but still up from nearly $1.3 trillion in 2010, the study said.
Some other tidbits from the study include the U.S. remained the largest exporter of commercial and defense products worldwide with China the largest export market followed by the United Kingdom and France. The U.S. also accounted for 33 percent of global defense exports in 2015.
The report also said the A&D sector posted the largest net trade balance in 2015, $76 billion, followed by agricultural products at $27 billion. The transport equipment sector had most exports in 2015, $274.7 billion, but higher imports resulted in a negative $109.3 billion net trade balance, Deloitte said.
The largest exporter to the U.S. of A&D products was France, which delivered $12.6 billion in goods accounting for nearly 19 percent of the total of these imports, Deloitte said. Canada was the second largest A&D exporter to the U.S. with $11.8 billion in products shipped followed by Japan, $7.9 billion, Germany, $7.5 billion, and the U.K., $4.1billion.