Like other manufacturing industries, the worldwide recession is weighing heavily on aerospace manufacturing. This is especially true for commercial aerospace companies and their suppliers, which are being buffeted by the significant decline in global air travel, resulting in a sharp drop in new orders for aircraft and parts. The aerospace industry's commercial side anticipates difficult business conditions for the near and medium term, but long-term projections by Boeing, for instance, are positive, with airlines expected to need 29,000 new planes valued at $3.2 trillion between 2009 and 2028. For now, the defense segment of the aerospace sector has offset the downward trend because it still benefits from continuing government expenditures for military aircraft. Aerospace industry analysts nonetheless predict that there could be tough times ahead for producers of military aircraft. The international market for aerospace manufacturing is also rapidly changing, and it raises the question of what impact nascent competitors in countries such as China and Russia will possibly have on the future competitiveness of U.S. aircraft manufacturers. As an industry, aerospace manufacturing in 2008 directly supported over 500,000 high-skilled and relatively well-paid private sector manufacturing jobs nationwide. The private sector aerospace manufacturing workforce in 2008 earned an average wage of $79,700, or about 47% more than the annual average manufacturing wage of $54,400. Many jobs in aerospace manufacturing require at least a bachelor's degree in a specialized technical field such as engineering, which largely explains the significant wage differential. As a result of collective bargaining agreements negotiated by major aerospace unions, including the International Association of Machinists and Aerospace Workers and the Society of Professional Engineering Employees in Aerospace, 21% of aerospace workers were union members or covered by union contracts in 2006, compared with 13% of all workers throughout private industry. The U.S. aircraft manufacturing industry is composed of major firms such as Boeing, United Technologies, Northrop Grumman, Gulfstream Aerospace, and Textron, among others. Established aerospace manufacturing centers are located in Washington state, California, Texas, Kansas, Connecticut, and Arizona (with a combined workforce of more than 305,000 in 2008, comprising over 60% of the aerospace workforce nationwide). Aerospace manufacturing clusters are also present in Florida, Georgia, Ohio, Missouri, and Alabama. Other states, such as South Carolina, are also seeking to increase their aircraft manufacturing production base. In October 2009, Boeing announced it would locate a second final production assembly line in North Charleston, South Carolina, to produce its new 787 mid-sized aircraft, dubbed the Dreamliner. Ground was broken on the Boeing Charleston plant in November 2009, with the production line expected to be operational in July 2011 and delivery of the first plane scheduled for the first quarter of 2012. Boeing anticipates the South Carolina facility will add over 3,800 new jobs within seven years. This would be a significant jump for the state's aerospace manufacturing industry, which currently accounts for less than 1% of South Carolina's manufacturing workforce. For the most part, the ongoing contraction in aerospace manufacturing does not appear in the 2008 data used predominately in this report since the full impact of the economic downturn did not hit the U.S. economy until late 2008. However, the effects have been felt strongly on the commercial side of the industry, and the end of production of key aircraft platforms such as the F-22 and C-17 bodes ill for defense aircraft manufacturing. The aerospace industry by its very nature is cyclical—with industry-specific cycles seemingly occurring approximately every 10 years—and highly susceptible to changing international situations and market forces that are often beyond its control. Commercial aircraft manufacturing sales are directly tied to the health of the airline industry, and a host of factors can influence demand for air travel, including increased economic activity, regional conflicts, terrorism, and disease outbreaks. Full-year 2009 aerospace industry sales statistics are presently unavailable from the aerospace industry trade group, the Aerospace Industries Association (AIA), or from government sources, but many believe considerable evidence indicates a weakening aircraft market, which most likely will reverse the strong market upturn and the lucrative period for aerospace manufacturing that extended back to 2003. Aerospace manufacturing, unlike other industries, entered the current recessionary period from a strong starting position, with limited debt and a strong backlog of orders, according to AIA. AIA in its 2008 Year End Review and 2009 Forecast reported an increase in industry-wide estimated sales of $204.4 billion in 2008, compared to $200.3 billion in 2007 (in current U.S. dollars). As of 2008, aerospace manufacturing by sales accounted for 1.4% of U.S. gross domestic product (GDP). This was down from 1.5% in 2000 and 1.7% in the late 1990s. The commercial market and defense market are the two major industry segments that comprise aerospace manufacturing. Commercial aircraft and parts shipments totaled $96.6 billion in 2008, comprising 63% of total industry shipments, down 4% over 2007, which was a change in direction from the positive growth recorded in commercial aerospace manufacturing shipments dating back to 2003. At the same time, new orders in 2008 for civil aircraft and parts fell for the first time since 2003, dropping from $184.5 billion to $124.1 billion between 2007 and 2008, down by 33%. Defense is the smaller of the two, and this segment depends on the U.S. government for a significant share of its sales. Government agencies including the Department of Defense (DOD) and the National Aerospace and Space Administration (NASA) are the aerospace industry's single largest customers. Defense aircraft and parts accounted for 37% of total aircraft and parts shipments of $152.4 billion in 2008. These shipments were up 40% year-over-year between 2007 and 2008, rising from $39.7 billion to $55.8 billion. The strength of this segment is an important offset during downturns because aerospace companies can often rely upon government business to buoy the commercial sector through its cyclical highs and lows. Aerospace products and parts, including aircraft engines made by firms such as General Electric and United Technologies, are manufactured at large production facilities and hundreds of smaller, but not necessarily small, manufacturers, which are suppliers of parts and components to U.S. and overseas aerospace manufacturers. Main suppliers include the privately held Vought Aircraft Industries, a major subcontracting partner on many commercial and military aircraft programs. Other supplier firms would include Spirit AeroSystems, a major supplier of commercial assemblies and components, and Crane Corporation, a designer and manufacturer of critical systems and components to the aerospace and defense markets. For many decades, the U.S. large commercial jet manufacturing industry was dominant worldwide. Today, the world market has evolved into the highly competitive duopoly of Airbus and Boeing. At the same time, the U.S. aircraft industry now depends on many non-U.S. firms for contributions to their own products. Parts of Boeing's newest aircraft, the 787 Dreamliner, have been outsourced to a global supplier network including firms in Australia, Canada, China, Italy, and Japan. Of concern to many lawmakers in the large commercial aircraft market segment is the current dispute pending before the World Trade Organization (WTO) between Airbus and Boeing. The unfair subsidization case, which dates back to a May 30, 2005, WTO filing by the United States, alleges that member states of the European Union (EU) provided Airbus with illegal subsidies from 1970 to 2004, thus giving the European aircraft manufacturer an unfair advantage in the large commercial aircraft market. The counterclaim by the EU is that Boeing received billions of dollars in industrial subsidies by way of research and development programs dating back to the 1980s through U.S. military and space programs, along with state-level tax breaks. Aerospace manufacturers like Boeing depend heavily on the international market for sales. For example, about 70% of Boeing's commercial airplane sales (by value) are sold to customers outside the United States. Industry-wide exports (including defense and space products) by U.S. manufacturers of aerospace vehicles and equipment increased for five consecutive years, from $53 billion in 2003 to $97.4 billion in 2007. This growth was followed by a slight decrease in aerospace exports in 2008, dropping 2%, according to data compiled by the U.S. Department of Commerce. Japan, France, the United Kingdom, Canada, and Germany were the top five export markets for U.S. aerospace products in 2008, accounting for 36.2% of total aerospace exports worldwide. Outside of these major markets, the United States increased its aerospace vehicle and equipment exports to emerging markets such as Brazil and China. U.S. aerospace exports to China more than doubled between 2003 and 2008, growing from $2.7 billion to $5.5 billion. U.S. aerospace exports to Brazil rose 320% during the same time period, to $5.8 billion. France, Canada, the United Kingdom, Germany, and Japan were the leading aerospace suppliers to the United States in 2008, accounting for almost 75% of all aerospace imports, for a total of $27.9 billion. U.S. aerospace exports made a contribution to reducing the U.S. merchandise trade deficit by offsetting deficits in other areas of trade. The U.S. aerospace industry trade balance stood at over $57 billion in 2008. Boeing and Airbus entered the ongoing recessionary period with a considerable backlog of undelivered aircraft on their books (Airbus recorded a backlog of 3,715 and Boeing 3,714). Both firms have continued to deliver significant numbers of new aircraft to their airline and/or leasing firm customers, and both are profitable.