We have mademajor changes at TFS to reduce costs and will continue to do so. We expect that sales to this market willnot improve for the rest of this year and may not improve in 2010. Sales to the automotive marketcomprise the largest market for TFS. Theresult is that sales of our Total Filtration Services (TFS) operation dropped byover 20% this quarter compared to last year`s second quarter, while operatingprofits dropped by a little more than $1 million. has clearly impacted salesof replacement filters for automotive production and assembly facilities. We expect that ouraviation fuel filtration sales for the rest of 2009 will exceed the second halfof last year`s sales by approximately 5% "The continued drop in automobile sales in the U.S.
"Sales to the aviation fuel market in this year`s second quarter were slightlyless than in last year`s second quarter, but operating margins improved to over16% from 14% last year driven primarily by cost reductions. We also incurred various costs, which should not recur, to adjust ourproduction facilities to meet the sales volumes anticipated under this program. After thisevaluation, we are hopeful that we will then begin to sell into additionalregions. We expect that our customer will evaluatethe success of this program later this summer or in the early fall. So far, the program has been successful with product reorders comingsooner than we had initially expected. "We were recently selected by a large retail store chain for a program to sellour high-end Purolator brand HVAC residential filters in one of their salesregions.
Sales growth and major improvementsin production efficiencies in our plants are driving the improved operatingresults for the second half of 2009. This is a significant improvement from the first half of 2009 when salesdropped by 4%, and CLC Air incurred a loss. For the rest of 2009, we expect CLC Air sales toincrease by approximately 5% compared to 2008, and operating margins to exceed6%. Sales for thequarter were higher than in last year`s second quarter, and operating margins inthe quarter have improved by nearly five percentage points compared to thesecond quarter of 2008. "Our CLC Air restructuring program has turned the corner with significantlyimproved results The company is now profitable and growing. The largest improvement in thissegment came in our CLC Air operation while filter sales for offshore oildrilling and air filter sales to the automobile companies were the biggestdisappointment for this quarter. For the quarter, sales in the segment declined by 14% from2008 and operating profit declined by 49%.
Unfortunately this is not the case for everycompany or market. Our Industrial/Environmental Segment"Within our Industrial/Environmental segment, certain of our operating companiesand markets are clearly showing improvement from declines in the latter part of2008 and the first half of 2009. We are also significantly expanding ourtechnical facilities in China for product development and testing. We also acquired amanufacturer of metal mesh filters for the plastic resins and fibers marketsthat we believe lays the groundwork for a significant presence in this marketthroughout Asia in future years.
These acquisitions will have avery small sales impact on our results for 2009, but provide greater capacityfor heavy-duty engine filter manufacturing in Asia. "We completed several acquisitions in China in the second quarter, includingacquiring the remaining 20% of our Baldwin-Weifang engine filter company andpurchasing another engine filter manufacturer. Even if companies decide not to buy new transportation orproduction equipment or build new production facilities, maintenance ofequipment and facilities they already own continues, and that is the primarymarket we serve. As I noted above,we focus on the replacement filter aftermarket where over 80% of our filtersales are generated. "Our order rates, overall, have stabilized, and we are beginning to seeindications of increased product demand in selected markets. Sales of replacementmaintenance filters to the automobile industry and sales of dust collectorsystems were weak as we had expected.









