A new Deloitte report says the growth in U.S. aerospace and defense exports decreased from 4 percent in 2015 to 1.7 percent in 2016.
The “2017 Deloitte U.S. Aerospace and Defense Sector Export and Labor Market Study” found that A&D comprised about 10 percent of total U.S. exports and grew $2.5 billion in 2016, the company said Thursday.
“The slower pace of growth is due to a decline in export financing, the strengthening of the U.S. dollar, and global competition,” said Robin Lineberger, a principal at Deloitte’s consulting arm.
“While American-manufactured A&D products remain attractive to foreign customers, U.S exports are more costly in the international market,” he added.
Lineberger, leader of Deloitte’s global and U.S. aerospace and defense practice, also noted that global competitors’ increased proficiency in A&D manufacturing, competitive currencies and lower labor cost will continue to affect U.S. A&D export growth.
The U.S. A&D sector added approximately $85 billion to the positive trade balance in 2016, which makes A&D the top contributor to the U.S. trade balance among major sectors, according to Deloitte’s report.
Employment in the A&D sector has dropped over the last five years but the rate of decline slowed from 2.2 percent in 2014 to 0.3 percent in 2016, the study revealed.
Foreign military sales decreased by 28 percent or $13 billion in 2016 after a three-year growth trend, but FMS deals could grow in 2017 due to helicopter, missile and other military sales to the Asia Pacific and Middle East regions.
Defense exports and FMS could account for more than 40 percent of total A&D exports in the next two years, the report found.