Boeing Frontiers
December 2002/January 2003
Volume 01, Issue 08
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Industry Wrap

Report sees threat to U.S. aerospace industry

The U.S. aerospace industry is facing increasing European competition, an aging workforce and a lack of long-term investments that could threaten its global dominance, according to the Washington Post, citing a recently released government report.

Boeing backed the Commission on the Future of the U.S. Aerospace Industry's nine recommendations for improving the industry. The federally mandated commission, consisting of 12 members, released its recommendations Nov. 19 after spending the last year conducting research, holding hearings and receiving written testimony from experts throughout the world.

Boeing Chairman and CEO Phil Condit said in a prepared statement the commission's work spotlights the critical importance of the aerospace industry to U.S. efforts for combating terrorism and other security challenges. He also noted that the aerospace industry plays a crucial role in the global economy and in economic development in all 50 U.S. states. An economic impact analysis published separately by the commission showed that the industry employed more than two million workers in 2001, with an annual average wage of $47,700.

Industry experts and some of the commission's own members criticized the report for failing to offer specific solutions.

''This report is too general and diffuse to have the impact that I believe is needed,'' said John Hamre, president and chief executive of the Center for Strategic and International Studies.

Hamre, a former U.S. deputy secretary of defense who served on the commission, told the Washington Post the aerospace industry is in deep financial distress and ''too much of our report is devoted to secondary and tertiary concerns.''

The report concluded that Congress and the White House should increase research and development funding, eliminate regulations that make it difficult for U.S. defense contractors to sell overseas and develop a national aerospace policy, the newspaper said.

Robert F. Laird, a defense industry analyst, said the report lacked funding parameters and a sense of priorities. ''They have several good things buried in there,'' Laird told the Post. ''But it is very unrealistic, it doesn't tell us anything about trade-offs.''

The report noted that the Defense Department's aerospace procurement budget fell from $118 billion to $55 billion from 1987 to 2000, that 26 percent to 27 percent of the industry's workforce will be eligible to retire by 2008 and that the European Union wants to be the world's leader in aerospace by 2020, the Post said.


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