Conference Board expects aerospace production to face slow rebound in 2012

The Conference Board of Canada expects aerospace production will slowly rebound next year amid fierce global competition after the sector suffered its third year of decline in 2011.

The think-tank says production of commercial and business aircraft should improve thanks to a modest economic increase in North America.

Growing demand in emerging economies also creates optimism over the medium and longer term, said the board’s fall industrial outlook.

Countries such as Brazil, China and India offer new markets for Canadian manufacturers, but they are also developing their own aerospace industries that will add competition for Canadian companies.

Companies such as Bombardier and Pratt & Whitney are developing new products, a step needed to compete more effectively.

The sector should end 2011 with the third year of production decline. But revenue growth more than offset cost increases, leading to a near doubling of profitability to $264 million, the board said. However, profits were well below their 2009 level of almost $500 million, and profit margins are expected to remain thin over the next five years.