2010 was a terrible year for the Arkansas aerospace industry. In terms of export dollars, the industry had grown at a rapid clip throughout the last decade. But it took a nosedive last year, with export values tumbling nearly 70 percent from the 2009 record of more than $1.67 billion.
(Click here to see the Largest Aerospace Companies list. A spreadsheet version is available.)
According to estimates from the Arkansas Economic Development Commission, about 10,000 people are currently employed in the aerospace industry in the state, down from a high of about 12,000 in 2007.
Two related factors are to blame for most of the decline, said Robin Pelton, existing business resource sector manager for the Arkansas Aerospace Alliance. The AAA is a division of the AEDC and is made up of aerospace and aviation companies, state and local government agencies and educational institutions.
The first factor, not surprisingly, is the Great Recession. The second cause for aerospace industry pain is related to the recession, although indirectly.
"There was quite a bit of less-than-desirable publicity from the federal level when the [automotive] executives flew to Washington, D.C.," Pelton said. "That really did create a backlash for corporate jet orders."
But it was not all bad news in 2010 for Arkansas aerospace companies. Some of the companies serving the defense industry saw increased revenue last year.
"Actually this was a record year for us as far as business," said Tony Johnson, president of two Triumph Fabrications manufacturing facilities, located in Hot Springs and in Fort Worth, Texas.
"We’re pretty heavy into military rotorcraft, and some fixed-wing, but specifically rotorcraft," he said. "There’s been high demand to replace existing rotorcraft fleet, because many were so old and getting worn out every day."
Triumph Group, the parent company of Triumph Fabrications and Triumph Airborne Structures, also located in Hot Springs, does not disclose revenue for individual segments of its business. The company hasn’t reported full-year revenue for the fiscal year that ended March 31, but in the three quarters that ended Dec. 31 Triumph Group’s revenue was nearly $2 billion – fully twice as much as in the same the previous year.
And while aerospace certainly took a major hit in 2010 in Arkansas, Pelton said many of those in the industry are telling her they’re expecting significant recovery this year.
She many of the smaller aerospace companies were so busy with orders that they had a hard time breaking away to attend the third annual Governor’s Aerospace Workforce Summit last month.
At the summit, John Miller a senior manager with the Dassault Falcon Jet completion center in Little Rock "made the comment that June and July is when they expect to ramp up," Pelton said. "I think they’ve already made a few hires, but June and July, and then next year will really be the rebound year from everything that I’m reading and hearing from the companies."
Miller did not respond to a call from Arkansas Business.
Hawker Beechcraft saw a drop in revenue for 2010, but Ron Gunnarson, vice president of marketing, said business looks like it will improve this year, though it will likely be 2012 before any significant recovery begins.
The company is seeing stable prices in the used aircraft market and increased interest in new aircraft from the Chinese market. But rising oil prices, unrest in the Middle East and European economic uncertainty mitigate those positive factors somewhat.
"You roll all that together and throw it on the table and it looks like 2011 will be at least a stable year," Gunnarson said.
Dick Holbert, president of Central Flying Service Inc. of Little Rock, said revenue was up about 10 percent in 2010.
But, he said, "We’re talking about from a low base in ’09. I mean, we were barely in the black in ’09 after a disastrous ’08."
Holbert didn’t disclose any dollar amounts, but said revenue dropped about 40 percent between 2007 and 2009. This year is shaping up to be as good or better than 2010, but "we’re a long way from ’07 levels," he said.
Another positive development is that the stigma associated with private jets stemming from the auto executives’ trip to D.C. seems to have diminished, Holbert said.
"There was a real chilling effect on general aviation with that situation," he said. "But I think that’s passed."
Arkansas is fortunate in that within its aerospace industry, "we have several different sections represented and they typically are not all down at the same time," Pelton said.
"So you have the defense industry, you have the completion centers like Dassault Falcon Jet and Hawker Beechcraft. And we have a good portion of maintenance repair operations in Arkansas, so if folks aren’t buying new equipment, they’re needing to get it repaired."