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