The largest areas of NASA and federal government space cuts were in the areas of research and procurement, said John W. Douglass, AIA president and CEO. The drop in government space spending brought total U.S. space sector sales down $1.2 billion from last year, to a projected $31.1 billion.

The growth in commercial space was created mainly by steady increases in sales of U.S. launch vehicles, due to a major reduction in exports of American-made satellites and related parts. Efforts at selling satellites to foreign customers were hampered by what Douglass called a "crisis in export licensing." He said that AIA projected a 41 percent drop in satellite exports during 1999, due to tighter export regulations mandated by Congress.

"Space is still growing at a rapid rate, despite the congressional action in transferring satellite export control from the Commerce Department to the State Department, " Douglas said Wednesday at a Washington luncheon. "As a result of those tighter policies, weve seen commercial satellite sales down more than 40 percent since the change."

Congress ordered the change following a series of hearings where the Commerce Department was accused of being lax in monitoring unauthorized transfer of missile and space technology. Republicans in Congress charged that such transfers had harmed U.S. national security interests. The State Department added to its new authority by stiffening export requirements for satellites, which are treated under the same export control regime as munitions, bombs and missiles.

Douglass said that Congress had heard the complaints from AIA and the space industry over the harmful effects of the new rules, and was beginning to propose changes in the law that would ease the restrictions, helping the industry to recover. "We need to modernize our export control process, and we have made major progress with the DOD [Department of Defense] and Congress," he said. "But most of that commercial space growth was due to sales of our boosters."

The picture may brighten somewhat next year. AIA was forecasting a slight rise in government space spending in 2000 to $11.6 billion, a $203 million increase. Overall, Douglass said that the space sector should grow next year to a record $32.588 billion over the $31.122 billion projected for this year.

Again, AIA is predicting that commercial space launch sales will steadily expand in the early part of the new decade. The organization also said that selling space and related products abroad was key to the industrys sustained health.

"Our industry has got to have access to the global economy to survive, " Douglass said.

He noted that exports of commercial space products had steadily risen, from $436 million in 1995 to $670 million last year. Because of the satellite export license declines, sales of commercial spacecraft for 1999 were predicted at $395 million, the lowest commercial space exports in half a decade.

Exports of military space products suffered a similar decline. Douglass said that military space exports had dropped from $587 million last year to a projected $354 million this year -- lower than the 1995 figure of $399 million.

But AIA said that overall aerospace industry sales were likely to grow this year to $155 billion, a 4.6 percent increase over last year, driven largely by the civil aircraft market. Industry profits were also on the rise, to a record $10.8 billion. This was the fourth year in a row that the aerospace industry earned profits in excess of $7 billion, according to AIA figures.

But industry employment most likely dropped during 1999 -- down 6.6 percent to 834,000 jobs from last year. Space and missile sector employment shrunk this year to 87,300 -- a decline of 4,400 from 1998. It was the first time in three years that space and missile-related jobs fell below 90,000.

Douglass said that his group was calling for the creation of a national commission on the future of the aerospace industry to lay out policy and spending priorities in aviation and space for the next U.S. president and Congress.

"We need to ensure U.S. leadership in space in the next century," Douglass said. He called for a $22 billion increase in NASA research spending in the decade ahead, noting that much of the infrastructure that supports space activities, such as launching pads and test facilities, are aging.

"We have to make sure that the launch ranges are brought up to date in the next century," Douglass urged. He said the U.S. presidential candidates were beginning to respond to his call for increased aerospace research. "So far, the only candidate to endorse our recommendations is [Texas Governor] George W. Bush," he said. "But the others are beginning to take notice."