U.S. aerospace urges Obama to keep its flame bright

WASHINGTON (Reuters) - The chief trade group for arms makers and others in the U.S. aerospace industry said it was a job-creating bright spot in a bleak economy and urged President-elect Barack Obama to keep it that way.

U.S. aerospace sales are projected to grow a modest 2.2 percent in 2009 from an adjusted basis this year, and the sector "deserves sustained support from our elected leaders," said Marion Blakey, president and chief executive of the Aerospace Industries Association.

"Aerospace and defense must not become a bill payer for other areas of the federal budget," she said on Wednesday at the AIA's annual year-end review and forecast luncheon.

Previewing bruising budget battles that may trim lucrative arms programs, the head of a House of Representatives subcommittee with oversight responsibility meanwhile said military spending would be under "severe pressure" in coming years.

"Our job will be to manage the current and future threats under a constrained defense budget," Pennsylvania Democrat John Murtha, who chairs the Appropriations subcommittee on defense, told a forum at the Center for American Progress, a Washington research group that is home to many Obama supporters.

Navy Adm. Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, told reporters on Wednesday that the Pentagon must get a grip on the spiraling cost of many of its arms programs "or we won't be able to buy them in the quantity we need."

The industry group said its members' sales -- including civil and military aircraft, missiles and space-related hardware -- are expected to hit $204.4 billion this year, following sales of $200.3 billion in 2007.

This would be a rise of 2.1 percent, a lower growth rate than in recent years but a record for the fifth year in a row, the trade group said.

For 2009, sales should reach $214 billion, "about 2.2 percent more than the total the industry would have achieved this year had a work stoppage not impacted the 2008 bottom line," the AIA said in a statement.

A 58-day strike by Boeing's 27,000 machinists shut down the company's commercial aircraft plants from September 6 to November 2.

Since new procurement spending is basically locked in for the 2009 fiscal year that started October 1, "and the new administration will have limited impact on FY 2010, aerospace companies will likely see defense sales growth continue on pace through calendar year 2012," the AIA said in its forecast.

U.S. aerospace exports are expected to rise 2.1 percent in 2008 to $99.2 billion, from $97.2 billion last year, fueling a foreign trade surplus of about $61 billion, little changed from 2007, AIA said. It referred to this as the largest trade surplus of any U.S. manufacturing sector.

The group -- whose members include Lockheed Martin Corp, Boeing, Northrop Grumman, General Dynamics and Raytheon Co -- has begun playing up the number of jobs it creates in a bid to protect lucrative arms programs under Obama.

In an advertising and lobbying campaign launched this month, the association argues that the U.S. aerospace industry supports more than two million middle-class jobs with 30,000 supplier companies in all 50 states.

Boeing, the Pentagon's No. 2 supplier after Lockheed, "looks the most exposed" to possible cuts on arms-related spending, Rob Stallard of Macquarie Securities said in a note to investors on Wednesday.

(Reporting by Jim Wolf; additional reporting by Andrea Shalal-Esa, David Morgan and Bill Rigby; editing by Tim Dobbyn)