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SUMMARY 5 specialized materials and components for most foreign-built aircraft are purchased from U.S. suppliers because economies of scale will not justify local manufacture or because local capacities are inadequate. All of these exports, of course, strengthen U.S. trade and provide domestic employment. This circumstance will not persist without aggressive efforts by U.S. manufacturers to maintain leadership because foreign manufacturers continue to seek ways to increase local content; thus the U.S. content is diminishing. Despite the widespread concern over the strength of the U.S. dollar as an impediment to exports, this concern does not appear to be applicable to the export of large transports. Airbus is regarded as certain to compensate for changes in the rate of exchange irrespective of which way it goes. The large U.S. content also exerts a buffering influence. A strong dollar increases the cost of the U.S. content but reduces pressure on European content and vice versa. Growing Importance of International Markets The size and dynamism of the domestic air transport industry that fostered U.S. leadership in aircraft began to changeâat least relativelyâin the 1970s. The U.S. market grew more slowly (5 percent vs. 9 percent worldwide), and U.S. passenger-miles dropped from 57.5 percent of the free world to 40 percent. Although U.S. manufacturers have always excelled at interpreting the needs of foreign customers, they will have to be even more sensitive in the future. Most foreign airlines are government-owned or-supported. Consequently, purchase of aircraft is often a politicized process that essentially requires approval of, if not negotiation with, governments. The developing countries represent the area of most rapid projected growth in air transport, but they also experience the most difficulty in arranging financing. Consequently, U.S. manufacturers face increasing pressure to help finance the purchase of aircraft. This trend will increase their requirements for raising capital, enlarge their financial exposure to risk, and bring them into confrontation with foreign governments that use financing terms and other government-to-government trade factors as a competitive weapon in the marketplace. Internationalization of Aircraft Manufacture The manufacture of aircraft and engines is becoming increasingly internationalized. The growing capital requirements, increased risk, and greater technical complexity associated with
