Bombardier
Cuts in defense spending and weak demand for business jets will help delay a rebound in the Canadian aerospace sector until next year, according to a Conference Board of Canada study.
While market conditions for commercial jets are improving slightly, resulting in new orders for the industry, there is renewed weakness in business confidence that has held back the recovery in demand for business jets, Tuesday's report said.
The aerospace industry's pre-tax profits are forecast to fall by 47 per cent in 2010, to $152-million, due to slumping sales and declining prices. But the study points out that most of the drop in sales occurred at the end of 2009. Profits have started to come back on a quarter-over-quarter basis, though they remain below 2009 levels, says the analysis, entitled Canadian Industrial Outlook: Canada's Aerospace Product Manufacturing Industry - Autumn 2010.
The Conference Board predicts that production levels should improve starting next year as order books gradually expand and existing inventories are sold off.
Production is expected to surpass its pre-recession peak by 2014, says the study.
For 2011, profits are forecast to rise to $308-million, although margins are expected to remain thin due to the continued strength of the Canadian dollar.