DENVER—The nation’s aerospace industry is holding up better than the rest of the slumping economy, and that’s likely to offer support for Colorado’s economy.
Experts expect Colorado’s aerospace sector to weather any downturn better than industries such as retail, manufacturing, telecommunications and construction.
They point to the lucrative, long-term contracts Colorado aerospace companies have won and strong Pentagon spending.
During the Bush administration, military spending has jumped about 40 percent—although that spending could taper some because of the unfolding financial crisis and a new occupant in the White House.
Colorado Gov. Bill Ritter recently told Colorado Public Radio’s Colorado Matters that the state’s aerospace industry appears “inoculated” against an economic downturn.
Experts also are relatively upbeat.
“It’s certainly going to hold up better than most industries,” said University of Colorado economist Rich Wobbekind. “The headwinds are so strong that there will be sectors of the economy that are going to have a tough time next year.”
Patty Silverstein, economist with Development Research Partners, expects that Colorado’s aerospace business will “hold up through the challenges of 2009.”
But she doesn’t expect the aerospace industry—or any sector—to put in a “stellar performance.”
Silverstein is forecasting overall job growth in Colorado next year of 1.5 percent, with aerospace outpacing that performance.
“Given the softness we’re expecting in the economy next year, every little bit of job growth will help keep our economy moving forward,” Silverstein said.
According to a report prepared by Silverstein for the Denver Metro Economic Development Corp., Colorado ranked No. 2 last year for the size of its aerospace work force, behind California.
Colorado’s private aerospace work force in 2007 stood at 26,650. The state is home to more than 300 aerospace companies.
Among companies with large local presences are Lockheed Martin Corp., Raytheon Co., Centennial-based United Launch Alliance, Northrop Grumman Corp. and Boulder-based Ball Aerospace & Technologies Corp.
Lockheed Martin’s Space Systems unit in Jefferson County is working on an $8.2 billion NASA spacecraft contract that has generated hundreds of high-paid engineering jobs.
In May, the company landed a contract worth up to $3.6 billion to design and build a fleet of next-generation military navigational satellites for the Air Force.
Lockheed Martin Space Systems—which employs 5,000 in Colorado, mainly in the Denver area—will build and test the satellites at its Waterton Canyon campus in Jefferson County.
“We have a very strong backlog,” said Lockheed Martin Space Systems spokeswoman Joan Underwood.
The company also hopes to land a major contract in coming months from Uncle Sam to build a fleet of new weather satellites, dubbed GOES-R.
Raytheon’s Aurora campus is competing to work on the ground system that would control the GOES-R satellites. Raytheon, which employs about 2,100 in Aurora, also hopes to land a big Air Force contract next year to build the ground system for a fleet of next-generational GPS satellites.
The company has raised the possibility of adding a new building at its Aurora campus, should it win the two deals.
“These contacts would add new jobs to the Aurora and Colorado economies,” said Raytheon spokesman Keith Little. He could not specify how many jobs would be added.
Despite the faltering economy, the aerospace industry has been reporting respectable earnings.
Last month, for example, Raytheon said third-quarter profits jumped 43 percent. It credited higher international sales of border-security equipment and Patriot air-defense systems.
The Waltham, Mass.-based company also announced that its 2008 profits would be higher than previously forecast and that results next year may top Wall Street estimates.
Los Angeles-based Northrop Grumman said higher sales of surveillance systems and aircraft electronics helped lift third-quarter profits.
Lockheed Martin, based in Bethesda, Md., reported higher profits but lower revenue.
“Compared to a lot of other segments of the economy, we’re doing pretty well,” said Todd Mosher, director of advanced systems at MicroSat Systems. “It doesn’t look like we’ll be losing our jobs soon.”
The Jefferson County company is a key member of a team that won a $117 million contract in May to build 18 small satellites for a New Jersey company. MicroSat will build the satellites here.
But experts don’t expect the government spending that has fueled the aerospace sector—including the wars in Iraq and Afghanistan—to remain as strong as it has.
They point to the imminent entrance of a new president as well as the $700 billion financial rescue package that is putting a squeeze on Uncle Sam’s piggy bank.
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On the Net:
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Lockheed Martin Corp.:
Raytheon Co.:
United Launch Alliance:
Northrop Grumman Corp.:
Ball Aerospace & Technologies Corp.:
MicroSat Systems:
