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SUMMARY 6 aircraft manufacture create pressures to form partnerships. Perhaps more important, the desire of many countries to participate in the industry leads them to use access to their domestic markets as a lever to increase their participation in the industry. These arrangements, of course, encourage a two-way flow in technology from which U.S. manufacturers can benefit to some extent. The formation of such international partnerships is the subject of controversy, and the relative merits are not easily judged. One must balance denial of access to a market against at least partial access, but with the risk that one may be accelerating the development of technical competence by a potential competitor. The eventual outcome depends largely on maintaining momentum in long- range domestic aeronautical R&D2 and the incorporation of advanced technology in new designs. The panel believes that a healthy, effective domestic technology development program is the best possible foundation for maintaining competitive leadership. Financial Performance of the Industry Manufacture of large commercial transports is a long-term endeavor that involves committing huge amounts of capital in the face of great market uncertainty. Developing a wholly new aircraft requires four to six years and a $4 to $5 billion investment. Even for a successful venture, return of investment will typically require at least 10 to 15 years. The great market success of U.S. manufacturers and the long record of technological leadership have not led to outstanding financial performance. The aerospace industry (separate data on civil aircraft are not available on a current basis) has a return on sales and on assets below the average for all manufacturing. Anecdotal data on individual aircraft are even more discouraging. At most, 3 out of 22 commercial jet transports introduced worldwide are thought to have been profitable. Thus, with the changes now confronting the industry, management faces a great challenge. COMPETITIVE ASSESSMENT OF TECHNOLOGY Translating advanced technology into products suited to the marketplace has been a major factor in the success of U.S. aircraft manufacturers. As competition intensifies, the timing of the introduction and the fit of the product to the customer's need become increasingly important.
