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THE PRESENT ENVIRONMENT 46 ments, has the objective of obtaining a substantially enhanced market position in the 1950s. It has introduced the A310, in direct competition with the Boeing 767, to broaden its family of large transport aircraft. In the coming decade the market changes noted above may lead the carriers to look for a new, more productive short-to-medium range aircraft with a seating capacity of 120 to 170 passengers, Such a vehicle would be a fuel-efficient replacement for older aircraft that serve short-to-medium range, moderate density routes. This market segment, however, has considerable uncertainties. The Boeing 737-300 and McDonnell Douglas MD-80 series (updated, enlarged versions of old designs) serve it in part, and now the Boeing 757 competes in the larger sizes. U.S. manufacturers are reluctant to launch an all-new airplane program until market requirements are clarified and potential customers identified with greater certainty. Nevertheless, the Airbus partners have agreed to proceed with the A320, aimed specifically at this market. Airbus hopes, by moving aggressively, to preempt U.S. manufacturers in this segment, and thus to capture a significant market share by being the first to offer a completely new aircraft of this size. The possible advent of the unducted fan jet engine in the late 1980s or early 1990s is adding further uncertainty and complexity to this competitive scramble. After repeated attempts since World War II, Europe has produced an aircraft in the A300 that has achieved market acceptance in regions outside Europe. The effort has provided thousands of jobs, saved foreign exchanges and contributed to national prestige by demonstrating ability to produce a technologically proficient aircraft. The eventual success of Airbus in achieving worldwide market penetration with a family of aircraft is unclear, but its efforts to do so inject additional uncertainty into an already uncertain business outlook for U.S. manufacturers. Furthermore, through aggressive pricing and financing it can further reduce the investment attractiveness of the U.S. commercial aircraft industry, whose financial performance has been modest at best. Rotorcraft The U.S. industry's civil helicopter product line is matched in all significant classes and sizes by competitive foreign helicopters. Current competition is from individual helicopter manufacturers in France, Italy, West Germany, and the United Kingdom. Multinational competition is emerging. Messerschmitt- Boelkow-Blohm (MISB) of West Germany and Kawasaki of Japan have recently formed a joint venture. They have established cooperative devel
THE PRESENT ENVIRONMENT 47 opment and production of the BK-117âa medium, twin-engined helicopter powered by Avco Lycoming LTS-101 engines. In another multinational program, the governments of Italy and the United Kingdom have agreed to start a new 30-passenger, three-engine civil transport helicopter program. This aircraft, the EH-101, will be developed and produced by European Helicopter Industries, a consortium formed by Augusta of Italy and Westland of the United Kingdom. A military version will be developed concurrently for the British and Italian navies and for export. The EH-101 will be powered initially by General Electric T700 engines. For a long time the U.S. civil helicopter product line consisted principally of derivatives of aircraft developed and produced for the U.S. military services. Most of the recently developed U.S. military helicopters are dedicated combat vehicles that do not provide a cost-effective opportunity for developing civil derivatives. As a result, the U.S. civil helicopter industry has had to develop and initiate production of its next generation of commercial products with private capital absorbing all business and technical risks. U.S. civil helicopter manufacturers, operating on private capital, have to compete with financing granted (or guaranteed) by foreign governments to their helicopter industries. Using such capital as part of a basic government strategy to create jobs and business, helicopter industries in Europe have developed and introduced products that are aimed at the world civil market without having to incur the traditional business risk. (The U.S. domestic civil market represents about 50 percent of that world market.) These aircraft sometimes feature advanced technology acquired or confirmed through U.S. license agreements and reciprocal defense procurement agreements. They have had a large measure of success. The foreign share of the U.S. civil helicopter market, measured by shipments, has increased from 14 percent in 1979 to 35 percent in 1982 and is projected to continue to grow, unless the U.S. helicopter industry finds a better means of financing the development and initial production of competing products (Table 2â6). United States manufacturers of necessity TABLE 2-6 U.S. Civil Helicopter Market (millions of dollars) Shipments 1978 1979 1980 1981 1982 U.S.-produced domestic industries 172 196 357 251 159 Imports 28 22 54 105 85 Total Market 200 218 411 356 244 Imports share percent 14 10 13 29 35 SOURCE: Compiled from Aerospace Industries Association of America, Inc., data.
