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High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft (1994)

Chapter: Appendix A: The Importance of the U.S. Aircraft Industry

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Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×

Appendix A
The Importance of the U.S. Aircraft Industry

The track record of the U.S. aircraft industry over the past fifty years constitutes one of the outstanding success stories of global competition. This success and the importance of the aircraft industry to America's economic wellbeing, national security, and technological leadership are testified to by numerous reports and experts.1 The economic importance of the industry can be seen clearly in the relevant statistics. The U.S. aerospace industry holds more than half of the world market and ranks sixth among U.S. industries in total sales. 2 In 1992, U.S. aircraft sales were $72.8 billion, and the combined trade surplus for civil transports, engines, and parts was $23.7 billion.3Table A-1 contains a

1  

See National Research Council Aeronautics and Space Engineering Board, Aeronautical Technologies for the 21st Century, (Washington, D.C.: National Academy Press, 1992), p. 1; Council on Competitiveness, Gaining New Ground: Technology Priorities for America's Future, (Washington, D.C.: Council on Competitiveness, March 1991), pp. 55–56; Michael L. Dertouzos, Richard K. Lester and Robert M. Solow, Made in America: Regaining the Productive Edge (Cambridge, Mass.: MIT Press, 1989) pp. 201–216; and U.S. Congress, Office of Technology Assessment (OTA), Competing Economies—America, Europe and the Pacific Rim (Washington, D.C.: U.S. Government Printing Office, 1991), pp. 341–358.

2  

The aerospace market is divided into several segments, including aircraft, missiles, space, and related products and services. U.S. Department of Commerce, U.S. Industrial Outlook 1993 (Washington, D.C.: U.S. Government Printing Office, 1992), pp. 20/1–20/3.

3  

Aerospace Industries Association (AIA), "1992 Year-End Review and Forecast—An Analysis," December 1992. Note that AIA figures are somewhat different from the Department of Commerce statistics appearing in Table A-2.

Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×

statistical comparison of the aircraft and aerospace industries with the chemical industry—another technology-intensive sector in which the United States is highly competitive globally. Table A-2 contains a breakdown of U.S. aircraft sales, Table A-3 lists aerospace export figures for 1992, Table A-4 indicates aerospace trade with Japan.

The aircraft and aerospace industries are also key components of America's larger technological enterprise. The aerospace industry accounts for about one-quarter of U.S. industrial R&D expenditures. Many of the technological competencies fundamental to competitiveness in transport aircraft diffuse to

TABLE A-1 1992 Industry Comparison—Aerospace and Chemicals

 

Aerospace (aircraft)

Chemicals

Value of shipments

125.7 (54.0)

301.9

Share of gross domestic product (%)a

2.1 (1.0)

5.0

Employmenta

695,000 (253,000)

853,000

Imports

12.7 (5.9)

25.1

Exports

42.2 (24.0)

44.2

Trade surplus

29.5 (18.1)

19.1

1989 R&D spending

20.3

11.5

1990 non-federally financed R&D spending

6.1

12.5

1990 non-federally financed R&D spending (% of sales)a

3.5

5.7

a Except for these items, all figures are current billion dollars.

SOURCE: U.S. Department of Commerce, U.S. Industrial Outlook 1993 (Washington, D.C.: U.S. Government Printing Office, 1992); National Science Board, Science and Engineering Indicators: 1991 Edition (Washington, D.C.: U.S. Government Printing Office, 1991), and National Science Board, The Competitive Strength of U.S. Industrial Science and Technology: Strategic Issues (Washington, D.C.: U.S. Government Printing Office, August 1992).

Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×

TABLE A-2 U.S. Aerospace Exports (thousand 1992 dollars)

Product

Japan

Worldwide

New civil general aviation aircraft

13,381

580,799

New military aircraft

100,976

1,909,398

New civil heliopters

11,783

117,694

New civil passenger and cargo aircraft over 15,000 kg

2,574,413

22,378,686

Aerospace parts and equipment not elsewhere specified or included

1,089,140

10,146,951

Other civil and military aircraft, balloons, gliders

1,081

17,445

New and Used Civil and Military Piston Engines and Parts

1,777,348

315,734

New and Used Civil and Military Turbine Engines and Parts

449,172

636,220

Missiles, space vehicles, and parts

245,182

1,764,678

New and used civil and military aircraft engines and parts

466,519

6,683,953

New and used civil and military aircraft

2,703,859

26,419,249

Total

9,432,854

70,970,807

 

SOURCE: U.S. Department of Commerce.

other industries and contribute to the overall economy.4 U.S. strength in the development and production of transport aircraft is also an important support for the defense industrial and technology base. Technology developed for commercial transports is often utilized in military programs; the production of commercial aircraft reduces military aircraft costs in companies that manufacture both; and commercial aircraft production helps to maintain the supplier and the work skill base in times of weak military demand.5 Finally, the excellence of American-made aircraft has long played a major role in improving the safety and efficiency of the nation's air transportation system.

The aircraft industry—like many others—is regionally concentrated, so that its economic importance is felt unevenly throughout the country. 6 In

4  

These technologies include "system integration in the design and manufacture of complex, high-performance equipment; project management to meet demanding targets for performance, cost, and delivery; sophisticated manufacturing techniques for fabrication, testing, and assembly; and computer-integrated manufacture, factory automation, and large-scale integrated information processing" as well as "the more obvious ones that affect aircraft performance—aerodynamics, propulsion, advanced structures, and avionics and control ..." National Research Council, The Competitive Status of the U.S. Civil Aviation Manufacturing Industry (Washington, D.C.: National Academy Press, 1985), p. 22.

5  

OTA, op. cit., p. 344.

6  

According to Boeing Commercial Airplane Group's brochure, "The Invisible Exporters," between 1987 and 1991 the Boeing Material Division procured an average of $10 billion per year in goods and services from suppliers in all 50 states. More than three-quarters of this amount was purchased from suppliers in four states: Ohio, California, Connecticut, and Washington. Of course, the larger first-tier suppliers in these states made purchases of their own, likely resulting in a greater geographic dispersion (including from overseas) at lower tiers.

Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×

TABLE A-3 U.S. Shipments of Aerospace Products (thousand dollars)

Product Description

1987

1988

1989

1990

1991

Aircraft

36,002,800

37,765,100

39,531,000

46,885,300

52,513,500

Military aircraft

16,862,300

15,044,400

14,832,900

14,108,700

15,622,000

Complete civil aircraft

12,491,743

16,019,855

17,421,046

24,864,289

29,780,098

Civil aircraft (fixed wing, powered)

12,145,669

15,453,662

17,108,080

24,608,896

29,550,713

Unladen weight not exceeding 2,000 kg

308,452

 

 

 

596,954

Unladen weight exceeding 2,000 kg but not exceeding 15,000 kg

 

 

 

 

802,657

Unladen weight exceeding 15,000 kg

11,837,217

 

 

 

29,151,102

Helicopters (rotary wing)

338,182

559,284

301,809

247,298

218,691

Other civil aircraft (nonpowered) and kits

7,892

6,909

11,157

8,095

10,694

Aircraft Engines and Engine Parts

18,821,900

18,866,700

19,903,900

21,580,200

21,314,900

Aircraft engines for military aircraft

4,205,600

3,214,200

3,342,000

3,265,800

2,967,600

Complete civil aircraft engines

2,841,150

3,753,689

4,358,246

5,335,475

5,778,444

Turbojet and turbofan

2,637,638

 

4,082,669

4,949,573

5,465,954

Turboshaft (turbo propeller):

203,512

 

275,577

385,902

312,490

Other, including auxiliary power units excluding missile and space engines

0

0

0

0

0

Aircraft Parts and Auxiliary Equipment Not Elsewhere Classified

19,528,900

20,545,400

21,294,500

23,081,800

25,288,200

Aircraft parts and auxiliary equipment, n.e.c.

15,817,800

16,331,000

18,155,900

19,618,100

22,155,100

Aircraft propellers and helicopter rotors

724,100

676,300

746,500

881,100

951,400

 

SOURCE: U.S. Department of Commerce.

Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×

TABLE A-4 1991 U.S.-Japan Trade in Aerospace Products (million dollars)

U.S. exports to Japan

3,907

Japanese exports to U.S.

661

 

SOURCE: Aerospace Industries Association, Aerospace Facts and Figures 1992–1993 (Washington, D.C.: AIA, 1992), p. 122.

contrast to other high-technology sectors in which the globalization of markets and technological capabilities has prompted companies to multinationalize, aircraft manufacturers—at least at the level of airframe integrators and manufacturers of major subsystems such as engines and avionics—have generally not established their own offshore production and R&D sites.7 The globalization of production and design has proceeded largely through international strategic alliances, consortia, and other types of supplier-partner relationships between nationally based companies.

Although U.S. companies continue to hold global leadership overall and in most important industry segments, the transport aircraft industry—including airframe integrators, engine makers, manufacturers of major avionic and structural components, and the broad supplier base—faces a number of significant challenges that threaten this leadership (see Table A-5). Global competition is intensifying—most notably in the large transport airframe market, where the Airbus Industrie consortium has leveraged significant support from four European governments to gain a large share of the market.8 Also, as a result of declining defense budgets in the United States and elsewhere, fewer resources are available from military programs for R&D, training, and other investments—investments that have traditionally provided an indirect support to commercial product development. Further, the synergy between commercial and defense R&D has declined in recent years as military aircraft design increasingly emphasizes features such as stealth, high maneuverability, and short field landing capability. Finally, the global market for large commercial

7  

"The difficulty governments face in determining what constitutes a domestic firm, and therefore which companies are eligible for public support, is not a problem in this industry. There is little foreign direct investment in the aircraft business." George Eberstadt, "Government Support of the Large Commercial Aircraft Industries of Japan, Europe, and the United States," contractor document for the Office of Technology Assessment, May 1991, p. 11.

8  

See Gellman Research Associates, Inc., An Economic and Financial Review of Airbus Industrie, September 4, 1990. The European Airbus consortium members and their respective governments have argued that the indirect benefits that accrue to the U.S. aircraft industry from the defense budget are equivalent to the direct government support that Airbus members have received. The U.S. position is that these indirect benefits are not really equivalent and that, in any case, European aircraft makers also enjoy defense spillovers. Although a detailed treatment of the protracted U.S.-EC conflict over this issue is beyond the scope of this report, a number of the policy issues raised by the conflict and the 1992 U.S.-EC agreement are central to the committee's charge.

Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×

transports has experienced a significant downturn over the past several years due to sluggish demand for air travel. The impact of this cyclical slump through the aircraft supply chain has been exacerbated by structural problems afflicting the U.S. airline industry—traditionally the largest component of the aircraft industry's customer base.9

It is safe to assume that the aircraft industry will retain its economic importance into the next century, despite the current downturn in sales. The global market for air transportation and large transports is expected to grow significantly over the next several decades. Table A-6 shows that much of this growth is likely to occur in Asia. Further, in contrast to declining spillover benefits from defense to commercial markets, the importance of commercial transport manufacturing for maintenance of the defense industrial and technology base is likely to grow, both because fewer companies will be able to maintain extensive R&D operations on the basis of military work alone, and because increasing pressure for cost performance on the military side will require the incorporation of greater commercial discipline. The benefits that accrue to countries with a strong aircraft industry have always been compelling and have justified public policies of direct or indirect support in the United States and elsewhere. Europe, Japan, Russia, China, and other countries are pursuing a variety of policies to promote domestic aircraft manufacturing. The emerging environment for U.S. private and public policymakers is characterized by significant challenges, high stakes, and a complex field of players and interests.

9  

See testimony of Lawrence W. Clarkson, Corporate Vice President for Planning and International Development, The Boeing Company, and testimony of Thomas M. Culligan, Corporate Vice President, McDonnell Douglas, before the Subcommittee on Aviation, Committee on Public Works and Transportation, U.S. House of Representatives, on the "Financial Condition of the Airline Industry," Washington, D.C., February 24, 1993.

Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×

Table A-5 Aircraft Manufacturing Process and Supplier Structure

Materials

Structures

Integration

Delivery

Aluminum

Fabrication

Engines

Marketing

Composites

Subassembly

Avionics

Financing

 

Tooling

Other components

Certification

 

Machine tools

 

 

Materials

Structures

Engines

Avionics & Instruments

Other Components & Systems

Alcoa

U.S.

Pratt & Whitney

Collins (Rockwell Intl)

Hamilton Standard

Kobe Steel

Vought

GE

Allied Signal

Allied Signal

Hercules

Grumman

Rolls Royce

Honeywell

Menasco

Toray

Northrop

 

Sundstrand

Sundstrand

Yokahama Rubber

Rockwell International

 

Tokyo Aircraft Instruments

Cleveland Pneumatic

Union Carbide

Japan

 

Japan Aviation Electronics

Shinko Electric

Rohr

MHI

 

TRW

Lear Siegler

 

KHI

 

Westinghouse

Kayaba

 

FHI

 

 

 

 

ShinMaywa

 

 

 

 

Japan Aircraft

 

 

 

 

Manufacturing

 

 

 

 

Airbus

 

 

 

 

Deutsche Aerospace

 

 

 

 

Aerisoatuake

 

 

 

 

British Aerospace

 

 

 

 

CASA

 

 

 

NOTE: The list of companies under each heading is included for illustrative purposes and is not an exhaustive list.

SOURCE: National Research Council Working Group on U.S.-Japan Technology Linkages in Transport Aircraft.

Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×

TABLE A-6 The Global Aircraft Market—Historical and Forecast Regional Shares of Average Annual Deliveries to Airlines (percent)

 

1972–1981

1982–1992

1993–2000

2001–2010

United States

35

38

39

31

Europe

26

28

25

25

Asia-Pacific

20

24

27

33

Africa-Middle East

10

6

5

5

Latin America

5

2

3

4

Canada

3

2

2

2

Total market (billion 1993 dollars)

14.8

26.1

40.9

48.7

NOTE: Percentages may not total 100 due to rounding.

SOURCE: Compiled from data appearing in Boeing Commercial Airplane Group, 1993 Current Market Outlook, March 1993, p. 3.5.

Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×
Page 95
Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×
Page 96
Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×
Page 97
Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×
Page 98
Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×
Page 99
Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×
Page 100
Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×
Page 101
Suggested Citation:"Appendix A: The Importance of the U.S. Aircraft Industry." National Research Council. 1994. High-Stakes Aviation: U.S.-Japan Technology Linkages in Transport Aircraft. Washington, DC: The National Academies Press. doi: 10.17226/2346.
×
Page 102
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The third in a series of sector-specific assessments of U.S.-Japan technology linkages, this book examines U.S.-Japan relationships that develop or transfer aircraft technology, the motivations of participating organizations, and the impacts on U.S. and Japanese capabilities. Incorporating detailed accounts of the business and technology aspects of U.S.-Japan aircraft alliances, the volume also describes the U.S. and Japanese policy contexts, presents alternative scenarios for the future and outlines how linkages with Japan can be leveraged as part of a strategy to reenergize U.S. leadership in this critical industry.

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