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 AIA UPDATE: May 2006, Volume 10, No. 8
Mark Esper Brings Policy Expertise to AIA as Executive Vice President Mark T. Esper, whose career experience includes defense and foreign policy positions in the legislative and executive branches of government, became AIA's executive vice president of defense and international affairs on May 1. AIA President and CEO John W. Douglass said Esper's background contains the uncommon mix of skills and experience needed for the position. "Mark has an intimate knowledge of security, defense, and international issues but can also provide leadership on all matters important to the aerospace industry," Douglass said. "He will be a valuable asset to AIA and our members." Before coming to AIA, Esper was director of national security affairs for Senate Majority Leader Bill Frist. Earlier in his career he was a deputy assistant defense secretary, a policy director for the House Armed Services Committee, and a staff member responsible for national security issues for the Senate Foreign Relations Committee. A 1986 graduate of West Point, Esper served with the 101st Airborne Division in Saudi Arabia and Iraq during Operations Desert Shield and Desert Storm. Other experience includes working for the Senate Governmental Affairs Committee and serving as chief of staff of the Heritage Foundation. Esper earned a master's degree in public administration from the Kennedy School of Government at Harvard in 1995. He succeeds Craig Steidle, AIA's former national security vice president. AEROSPACE FOCUS: Farnborough Event July 17-23  Space Roundtable Sets Sights on Security and NASA Budget Issues The second of two annual Executive Space Industry Roundtable discussions will take place at the AIA Board of Governors' meeting in Williamsburg in late May. James Albaugh, executive vice president of The Boeing Company, will chair the event. The roundtable format fosters open discussions between AIA member company CEOs and the association's Space Council. It supports industry's mission to sustain the space industry and help shape a strong and effective national space policy. Space policy issues facing the nation are major considerations in providing homeland security in the post 9-11 environment. With NASA facing drastic underfunding to conduct even the minimum requirements of the Vision for Space Exploration or vital NASA science projects, input from the top levels in the industry on their concerns and priorities is critical. The first Executive Space Industry Roundtable took place in November 2005 with more than 30 AIA member companies represented. AIA Source: jp.stevens@aia-aerospace.org WASHINGTON PIPELINE: President's Budget Would Strengthen Defense and Space By John W. Douglass, AIA President and CEO The last year or so saw a number of pending and potential deals for our allies around the world to purchase U.S. fighter jets. Greece is set to buy F-16 Fighting Falcons while Pakistan looks to be ready to resume an order of the same model after a devastating earthquake last year delayed the deal. Singapore ordered F-15 Eagles and South Korea took delivery of its first F-15Ks. Malaysia is said to be considering purchasing F/A-18 Super Hornets while India might consider both the F/A-18 and F-16 when it opens up competition for new fighters. All this activity presents a good opportunity to revisit the importance of international defense trade to our industry as well as to our nation's security. And, perhaps more importantly, it shows the significance of keeping this relationship free and open into the future. Global economic engagement is one of the best ways to increase national security. Our trade with European and Asian allies allows intelligence sharing and joint force operations as well as development of advanced military hardware like the Joint Strike Fighter. These relationships also assist in our strategy of tracking and defeating terrorist networks and containing rogue states. The economic benefits of international defense trade are also substantial. The aerospace industry had a $40 billion positive trade balance in 2005, the largest of any single manufacturing sector. A total of $4 billion of that surplus was in defense items. About 20 percent of U.S. weapons systems output is exported, representing billions of dollars toward that surplus and tens of thousands of U.S. jobs directly supported by foreign defense trade. Sales to foreign customers have frequently been critical to keeping open entire production lines, such as F-16 and F-15 fighter jets and Apache helicopter. In turn, keeping open those lines protects blue-collar workers and lower-tier suppliers that are critical to a healthy defense industrial base. It's important to keep this information in mind and share it with our elected officials. As in past years, proposals to restrict U.S. global aerospace trade are surfacing in Congress. They are fueled by the loss of manufacturing jobs and increasing security threats around the world, but they are misguided. Cutting off free trade with our allies would almost certainly mean reduced access to their defense markets. As a result, the U.S. military would suffer because of reduced international cooperation, and an important engine of our economy would weaken substantially. These plans to restrict international defense trade also miss in their aim to bolster the U.S. manufacturing base. American companies manage all of the country's major defense programs, accounting for 95 percent of the contract value of the 12 leading weapons systems used in the Afghanistan and Iraq campaigns. Clearly, this is a case where the system is not broken and does not need fixing. Throughout this legislative season AIA will continue to work with leaders in Congress and the administration to head off policies that will work against the aerospace and defense industrial base. Working together we can and will preserve this vital element of our national fabric. WASHINGTON WATCH: Net-Centric Data Project Makes Gains for Industry AIA is working with the Defense Department to create recommendations, business rules, and strategies that would allow government access to industry data under a common data transmission and translation capability. This capability would reduce a weapon system's total life cycle costs while improving the quality and availability of product data for both warfighters and support resources. The common data environment is also integral to DoD's vision for net-centric operations and the supportability of future weapon system programs. The team working on this project is a multifunctional group led by AIA's Product Support Executive Board with contributions from several committees within AIA and other industry associations. The office of the assistant deputy undersecretary of defense for logistics plans and programs and the office of the deputy undersecretary of defense for material readiness and maintenance policy are the initial sponsors for this project. The need for this capability was recognized during a series of Tiger Team meetings while developing strategies for public-private partnering. Thus far the team has developed a concept of operations and delivered a briefing paper assessing the current universe of activity and standards for net-centric operations and identifying where gaps exist. Creation of business strategy recommendations, the final phase of this project, is expected to be completed and reported on at the AIA Fall Product Support Conference in November. AIA Source: rusty.rentsch@aia-aerospace.org WASHINGTON WATCH: AIA Explains Defense Program Cost Growth AIA in early April issued a policy statement on the so-called "Nunn-McCurdy" Defense Department reporting requirements on cost growth in major defense systems. The fiscal 2006 National Defense Authorization Act requires the Pentagon to inform Congress of significant cost growth in programs beyond their original "baselines" (the estimated total price of a system at the beginning of its life cycle). As a result of this requirement, DoD reported several programs that had exceeded their original cost estimates. The AIA briefing, however, emphasized that normal mission, technology, or quantity changes - not lapses in industry management - are what typically cause significant cost growth in many defense programs as measured against their original baselines. AIA President and CEO John Douglass' statement to congressional and media representatives noted that the Nunn-McCurdy original baseline requirements can trigger "artificial cost increases" that "should not be interpreted as a failure in program management." The association supports a pending DoD proposal to reform the Nunn-McCurdy provision by allowing the military to use "current baselines" - or revised cost estimates based on legitimate program changes - in preparing future Nunn-McCurdy reports. AIA Source: patrick.mccartan@aia-aerospace.org WASHINGTON WATCH: Douglass Named One of Most Effective Lobbyists on K Street AIA President and CEO John Douglass has been named one of the "Top Association Lobbyists" by The Hill, a non-partisan newspaper that covers Congress. The publication's annual "Best on K Street" list compiles top lobbyists in the Washington based on conversations with members of Congress, key aides, and lobbyists themselves. Douglass was described by the paper as "a nationally recognized expert in acquisition." The entire list can be reviewed at: www.thehill.com/thehill/export/TheHill/News/Frontpage/042606/spread.html AIA Source: anne.wiskerchen@aia-aerospace.org WASHINGTON WATCH: AIA Establishes Dialogue With the Indian Embassy Economic Minister Anoop Mishra and Defense Attaché Brigadier General J. Sikand led a delegation representing the Indian Embassy that met with AIA members at the association's headquarters in April to discuss future opportunities for dialogue and collaboration. Embassy officials were eager to hear how U.S. civil aviation companies developed their presence in India and the role that aerospace companies could play in supporting the expanded U.S.-India defense relationship. AIA has agreed to facilitate meetings for the Indian Embassy with new-to-market companies and to exchange information on the industry's international policy initiatives that could have a positive impact on the U.S.-India relationship. The association plans to work with the embassy and FAA to help coordinate and support U.S. Trade and Development Agency-funded training programs aimed at strengthening civil aviation policymaking and infrastructure development in India. AIA is also promoting congressional support of the U.S.-India Civil Nuclear Agreement as a critical step in bolstering the bilateral relationship between both countries. AIA Source: remy.nathan@aia-aerospace.org. B/E Aerospace Added to Roster Another aerospace company has joined AIA, raising current membership to 106 regular members. In addition, there are 166 associate members. The newest member is B/E Aerospace, Inc., a leading manufacturer of aircraft cabin interior products and a top aftermarket distributor of aerospace fasteners. Headquartered in Wellington, Fla., the company manufactures cabin interior products for commercial passenger aircraft and business jets and provides cabin interior design, reconfiguration, and certification services, including the conversion of passenger aircraft to freighter use. B/E has leading worldwide market shares in its major product lines and its customers include virtually all the world's airlines and aircraft manufacturers. The company has manufacturing facilities in the United States and Europe and employs 3,980 people. For more information, visit B/E's Web site at www.beaerospace.com AIA Source: trish.ward@aia-aerospace.org. AIA Treats Chilean Children to Air Show Activities and Tours Eleven U.S. military planes participated in the International Air and Space Fair (FIDAE 2006) in late March and early April in Santiago, Chile, the largest U.S. participation in the show's 26-year history. AIA staff at the event helped coordinate show schedules of military flight crews and visits to U.S. aircraft by distinguished guests. Association personnel also coordinated with the U.S. embassy in Santiago for special visits to the air show of children with muscular dystrophy, the Make-A-Wish Foundation, and the burn center of a Santiago Children's Hospital. Participants toured the U.S. military aircraft corral, a Gulfstream 550 corporate jet, and AIA member exhibits in the U.S. pavilion. Local news media and U.S. Southern Command public affairs reported on the kids' tours. The Boeing Company, Lockheed Martin Aeronautics, and United Technologies' Sikorsky hosted lunches for the children. Also participating in activities for the youngsters were show personnel from Textron's Bell Helicopter, DRS Technologies, Goodrich, Honeywell, L-3 Communications' Integrated Systems and Westcam, and United Technologies' Hamilton Sundstrand and Pratt & Whitney. AIA Source: sherry.epperson@aia-aerospace.org. OSHA Adjusts Standard on Chromium Exposure for Aerospace Workers OSHA in February issued its long-awaited, highly controversial worker exposure standard on hexavalent chromium and hexavalent chromium compounds. The new standard lowers the agency's permissible exposure limit from 52.0 micrograms per cubic meter of air to 5.0 and includes specific requirements for exposure control, respiratory protection, protective clothing and equipment, hygiene areas and practices, medical surveillance, hazard communication, and recordkeeping. The only process given a special provision is the painting of whole aircraft or large aircraft parts. For those operations, the rule mandates that industry use engineering and work practice controls to reduce exposure to or below a permissible level of 25 micrograms per cubic meter of air for painting operations. In addition, it requires that industry supplement that safeguard with respirator protection to achieve the permissible exposure limit of 5 micrograms per cubic meter of air. While controls for small parts are feasible at the final permissible exposure level, OSHA's rationale for the aerospace painting operations provision is that as parts sizes increase, it becomes more difficult to control exposure using engineering and work practice controls. In the same regard, it becomes increasingly difficult to position painters to avoid being downstream of the paint overspray due to the geometry of the parts. AIA's Environment, Safety, and Health Committee members, particularly the chromium working group, provided extensive data, analyses, testimonies, and written comments emphasizing technological feasibility, risks, and economic impacts on the aerospace industry. AIA prepared preliminary annual industry-wide cost estimates for the original proposed standard (estimated cost about $1.1 billion) as well as for the final standard with the supplemental aerospace provision (estimated cost around $300 million). Since the final rule was issued, the Public Citizens Health Research Group filed suit against OSHA, alleging that the final rule isn't protective enough. For industry, a petition for review was filed jointly in March by the Surface Finishing Industry Council, the Specialty Steel Industry, the National Association of Manufacturers, and the Georgia Industry Association, claiming the rule isn't based on applicable law and facts on record. In April AIA filed a motion to intervene in the legal suit. The scope of the chromium rule cuts across a significant part of the manufacturing component of the aerospace industry. AIA member companies have a unique interest in the outcome of the legal challenges to the final rule. AIA Source: hoai.huynh@aia-aerospace.org. Be Counted Among Member Companies Exhibiting Under AIA Banner at Farnborough Fourteen AIA member companies have signed up to exhibit under the association banner at the upcoming Farnborough International Airshow July 17-23, filling up AIA's available exhibit space. The companies, with regular members identified in bold, are: Air Industries Machining Corporation Allen Aircraft American Pacific Corporation DynaBil Industries, Inc. Ferguson Metals HITCO Carbon Composites Industrial Metals International LMI Aerospace NYLOK Corporation Precision Tube Bending Remmele Engineering TMX Aerospace Waer Systems, Inc. Woodward Governor Company AIA's exhibit will be located in Hall 3, stand B25. For more information about co-sponsoring an association event at Farnborough, contact Trish Ward at 703-358-1051 or trish.ward@aia-aerospace.org. REMINDER: AIA Midwestern Regional Meeting, June 22-23, 2006, Burnsville, Minn. The agenda for the meeting, hosted by Goodrich Corporation, includes discussions of research and development funding for aeronautics and the Berry Amendment requirement that DoD buy certain products, including specialty metals, with 100 percent U.S. content. Contact Trish Ward at 703-358-1061 or trish.ward@aia-aerospace.org.. AIA 2006 Top Issue: Support Transformational Improvements to the U.S. Aviation System Capability ISSUE A safe, secure, and efficient air transportation system is essential to U.S. prosperity and competitiveness in the global economy. The U.S. government must recognize the critical importance of aviation to the nation and allocate resources to this effort. With the U.S. air traffic system at the point of gridlock, transformational improvements are needed to address capacity shortfalls and in other areas that facilitate long-term growth, such as safety, security, efficiency, and environmental performance. BACKGROUND FAA Funding - FAA's air traffic management infrastructure is currently funded by the ticket, tax-based Aviation Trust Fund, which expires at the end of fiscal 2007. FAA relies increasingly on the trust fund for its basic operations. A replacement mechanism, supplemented by adequate general fund contributions, must be developed that provides an adequate, stable funding stream for the Next-Generation Air Transportation System (NGATS) while not unfairly impacting any segment of industry or adversely impacting growth. Also, AIA will oppose any FAA proposal requiring manufacturers to pay "fee for service" for product certification activity and safety oversight. Capacity - In 2004 the U.S. government formed the inter-agency Joint Planning and Development Office (JPDO) to begin definition, development, and implementation of NGATS. In 2005 FAA contracted with the AIA-affiliated National Center for Advanced Technologies to form the NGATS Institute, a vehicle enabling industry and government partnership in the new system's definition. Strong industry stakeholder engagement with JPDO through the NGATS Institute is critical for success and must continue. Also, adequate administration and congressional priority, with the corresponding funding, is necessary to ensure success. Safety - Industry and FAA must continue to focus on cost-effective, data-driven improvements in aviation safety. An excellent example is the Commercial Aviation Safety Team (CAST), which is close to achieving its goal of an 80 percent accident rate reduction by 2007. Under CAST, safety enhancements to reach a 73 percent accident rate reduction already have been, or are in the process of being, implemented on a voluntary basis. Security - As the U.S. airline industry continues to struggle to restore itself to financial health, the government should not impose new security levies on airlines or the traveling public. AIA believes that because national security and homeland defense are inherently governmental responsibilities, aviation security costs should be borne entirely by the government out of general revenues. To facilitate sound decision making and appropriate use of limited resources, the government must evaluate security threats in a manner similar to that used by CAST - through data-driven, risk management-based, decision-making processes. Efficiency - Improving regulatory processes for the cost-effective delivery of products and services is critical for U.S. industry competitiveness. In the most recent FAA reauthorization, Congress authorized FAA to develop Certified Design Organizations as a new, highly efficient means to make full findings of compliance with the regulations for issuing type certificates. AIA is continuing to work with FAA to implement such efficiency-enhancing concepts. Environment - Appropriate performance-based, harmonized environmental standards and competitively neutral policies are necessary in the United States and internationally to foster aviation's continued growth and public acceptance. OBJECTIVE Continue to make positive strides on an integrated, multi-year advocacy and action plan aimed at enabling transformational improvements to the overall U.S. aviation system capability. AIA ACTION 1. Press the administration and Congress to empower JPDO with the funding and priority necessary to develop and implement NGATS. 2. Support the NGATS Institute as the primary means for industry-government collaboration. 3. Support development of a stable, fair alternative to the current Aviation Trust Fund to support NGATS development and implementation. Press Congress to fund basic FAA regulatory functions, such as product certification and safety oversight, through the general fund. 4. Strive to achieve CAST goals and encourage the continued commitment of other aviation stakeholders to CAST. Promote CAST-like proactive safety improvement in other geographic and product areas. 5. Press the government to fund all aviation security measures through general revenues. 6. Promote the government's use of a risk management approach to decision making on aviation security issues. 7. Work with FAA on development and implementation of efficient regulatory approaches, such as Certified Design Organizations. 8. Press for appropriate aviation environmental standards and policies in the United States and internationally. AIA Source: Michael Romanowski, 703-358-1080 or michael.romanowski@aia-aerospace.org. AIA 2006 Top Aerospace & Defense Issues
Eight Countries Impact Record $67 Billion in U.S. Aerospace Exports About two-thirds of the record $67 billion in U.S. aerospace exports in 2005 were destined to eight trading partners. The United States exported $6.6 billion to Japan - the largest importer of U.S. aerospace products. France was second with $6.1 billion, followed by the United Kingdom, China, Canada, Singapore, the United Arab Emirates, and Germany. Five of the eight largest consumers of U.S. aerospace exports were also leading aerospace exporters to the United States, including $7.8 billion from Canada - the largest exporter to the United States for a third straight year. France was second with $5.4 billion, followed by the United Kingdom, Germany, and Japan. These five countries combined were the source of 78 percent of U.S. aerospace imports. The U.S. aerospace industry generated a $40 billion trade surplus in 2005. Japan, at $4.8 billion, was the largest contributor to the U.S. industry trade surplus. China was second with $4.4 billion, followed by Singapore, the United Arab Emirates, and the United Kingdom. The combined aerospace surplus generated from trade with these five countries constituted 45 percent of the industry's trade surplus. The only nation with which the United States has an aerospace trade deficit is Canada. The deficit with Canada was $3.4 billion in 2005, up from $3.3 billion a year earlier. Aerospace Foreign Trade with Eight Largest Consumers of U.S. Aerospace Exports 2005  |
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