Policy Issues in Aerospace Offsets Report of a Workshop (1997) / Chapter Skim
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OVERVIEW OF THE OFFSETS ISSUE
OVERVIEW OF THE OFFSETS ISSUE
Pages 4-8
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From page 4... ...
The current situation facing the aerospace industry was determined by two factors about ten years ago: record government budget deficits and the collapse of the Berlin Wall. The result of these two factors has been a dramatic reduction in defense spending.2 Out of a $7.3 trillion economy, the United States now spends $46 billion on defense procurement about $10 billion less than is spent on tobacco.
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From page 5... ...
Referring to 5 the background paper made available at the meeting,3 Mowery noted that it defines offsets as mandates for technology transfer or incorporation of local production, or a variety of other performance requirements typically requested by the purchasing government. Like the issue itself, these definitions are very complex.
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From page 6... ...
In part this is because defense offsets have historically involved the sales of completed weapons systems and not, historically, development arrangements where there is a more substantial technology transfer impact. Even on the civilian side, where there is greater involvement of foreign partners in the development process, it is difficult to see much substantial effect on, for example, the probability of entry by the foreign partner into the market as a prime contractor.
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From page 7... ...
Greider cited cases of a number of Boeing suppliers, including Northrop Grumman and Mitsubishi, moving Boeing work to China. He does not fault Boeing for following this strategy, saying that its management is undoubtedly doing what it believes is best in the situation.
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From page 8... ...
Professor Ted Moran from Georgetown University noted that his recent study of outward direct investment shows that companies that stay at home are less competitive, have fewer good jobs, and a less favorable distribution of "good versus bad" jobs. He suggested that it is likely that a study of offsets would have the same findings.
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