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 AIA UPDATE: February 2007, Volume 11, No. 5
R&D Policy Promises National Plan in 2007 The future of U.S. aeronautics research and development could be shaped by the creation of a national aeronautics R&D plan, which is called for in the Bush Administration's landmark National Aeronautics R&D Policy. The plan, to be completed in 2007, will set R&D priorities and objectives and produce roadmaps to achieve the identified objectives with timelines. While AIA is encouraged by the policy document, released in late December, the devil — in this case — is in how the administration defines certain terms. Terminology in several places raises potential for concern, particularly in view of the administration's consistent cuts in aeronautics R&D and dramatic reorientation terminating advanced research. Nonetheless, AIA is generally optimistic that this first-ever national policy will give industry the support it needs for protecting aeronautics R&D for the future. The policy was issued by the White House's National Science and Technology Council after consultations with industry, including AIA's R&D Committee. The association and the R&D Committee will work with the administration on implementing the policy. AIA's initial focus will include establishing a permanent role for continuous industry engagement, developing the implementation roadmaps and priorities, and monitoring progress. Noting the importance of aviation to U.S. economic and military security as well as global competitiveness, the policy recognizes the necessity for federal leadership in advanced R&D. Emphasis is on the federal role in advanced aircraft technologies and systems research, private sector help in identifying and applying technological innovations, and coordinated federal research and investment. The policy mandates federal agencies to develop R&D roadmaps with priorities and timelines, coordinate and protect R&D infrastructure, and promote technology transfer. Also noteworthy are recurrent, two-year implementation reviews and progress assessments by federal agencies. AIA Source: susan.mertes@aia-aerospace.org AIA Framing Industry Issues for New Session of Congress AIA has put into action an aggressive liaison program to educate aerospace-related committees and new members of the 110th Congress on the industry's key 2007 policy issues. The issues include export licensing modernization to ensure national security while enhancing industry's ability to meet the military and commercial requirements of U.S. allies and partners. Another key issue is the anticipated reauthorization of FAA, which is managing the multi-year program to develop a new, national air traffic control system. The association also plans to champion a variety of defense acquisition improvements in addition to a balanced and adequately funded NASA portfolio of space exploration, science, and aeronautics missions. As a result of the transfer of control to Democrats, Congress quickly focused on the reorganization of committees and subcommittees. Leadership changes to committees with jurisdiction over aerospace programs included passing of the Senate Armed Services Committee gavel to Carl Levin (D-Mich.). Senator John McCain will serve as the committee's ranking minority member. Rep. Ike Skelton (D-Mo.) leads the House Armed Services Committee with former Chairman Duncan Hunter (R-Calif.) assuming the ranking minority slot. Sen. Daniel Inouye (D-Hawaii) and Rep. James Oberstar (D-Minn.) head, respectively, the Senate Commerce Committee and the House Transportation Committees. Sen. Ted Stevens (R-Alaska) and Rep. John Mica (R-Fla.) serve as the senior Republicans on the two panels that oversee civil aviation and space programs. Finally, Rep. Bart Gordon (D-Tenn.) and Rep. Ralph Hall (R-Texas) accepted the chairman and ranking minority assignments on the House Science Committee. AIA Source: patrick.mccartan@aia-aerospace.org AEROSPACE FOCUS  Swanson Elected AIA Board Chairman  William H. Swanson, chairman and chief executive officer of Raytheon Company, has been elected chairman of AIA's Board of Governors for 2007.
He succeeds Dr. Ronald D. Sugar, chairman and chief executive officer of Northrop Grumman Corporation, in the top leadership post. Clayton Jones, chairman, president, and chief executive officer of Rockwell Collins, was elected vice chairman of the association's Board of Governors. The board also re-elected John Douglass as AIA's president and chief executive officer and Ginette Colot as secretary-treasurer. Swanson has held an array of leadership positions since joining Raytheon in 1972, including manufacturing manager of the company's equipment division, senior vice president and general manager of the missile systems division, general manager of Raytheon Electronic Systems, and chairman and chief executive officer of Raytheon Systems Company. In addition to leading AIA's board, Swanson is a trustee of the Association of the U.S. Army, a fellow of the American Institute of Aeronautics and Astronautics, and a member of the National Defense Industrial Association, the Navy League, and the Air Force Association. Swanson serves as well on the CIA Officers Memorial Foundation board of advisors, the Medal of Honor Foundation board, the President's National Security Telecommunications Advisory Committee, and the Sprint Nextel Corporation board. He is also a member of the executive committee of the Business-Higher Education Forum and is co-chair of its Science, Technology, Engineering and Mathematics Initiative. The Raytheon chairman graduated magna cum laude from California Polytechnic State University with a bachelor's degree in industrial engineering and performed graduate work in business administration at Golden Gate University. He has been awarded an honorary Doctor of Laws degree from Pepperdine University and an honorary Doctor of Science degree from California Polytechnic State University. He was selected as the Outstanding Industrial Engineering Graduate in 1972 and in 1991 was recognized as the Honored Alumnus from California Polytechnic State University School of Engineering. Swanson was named "California Manufacturer of the Year" by the California Manufacturing & Technology Association and a fellow of the Royal Aeronautical Society in the United Kingdom. He has received the Navy League's Rear Admiral John J. Bergen Leadership Medal for Industry, and the Institute of Industrial Engineers' Captains of Industry Award. AIA Source: lauren.airey@aia-aerospace.org WASHINGTON PIPELINE: Survey Shows the Public Gives Aerospace High Marks By John W. Douglass, AIA President and Chief Executive Officer A stroll through the National Air and Space Museum in Washington, D.C., on a summer afternoon is all it takes to realize the general public is interested in the aerospace industry. The throngs craning their necks to see flying machines ranging from the Wright Flyer to Apollo capsules to Space Ship One prove the public is impressed with the awe-inspiring products aerospace companies have built over the years. But sometimes a more analytic approach is needed to gauge exactly where an industry stands in the minds of the public. In December AIA decided to find out some basic information about how the general public sees the aerospace industry. With important ongoing debates in Washington regarding funding levels for various aspects of the industry, a snapshot of public opinion is a valuable tool. We commissioned an informal poll in December asking a series of questions about aerospace with a randomly selected and demographically balanced pool of respondents from around the country. While the poll was not broad enough to be scientific, it supplied plenty of insight, and the results were more than encouraging. The first thing we wanted to find out was the overall public perception of the industry in order to establish a baseline. A total of 70 percent of respondents said they had a positive opinion of the aerospace industry, including 25 percent who responded their impression was very positive. Even more — 78 percent — said aerospace makes a positive contribution to the U.S. economy. And a remarkable 89 percent of respondents said the industry was important to our national security. The results showed 70 percent of those answering support broad space exploration plans, and 79 percent said the government should invest in new technology to improve air transportation. Aerospace scored higher in a measure of positive feelings than the entertainment, energy, and pharmaceutical industries. These results are obviously good news for the industry. However, they show the difficulty in translating broad public support into beneficial policies in Washington. For example, the public overwhelmingly said they would support robust funding for technological advances that would reduce air travel congestion, delays, and cancellations while improving security, safety, and environmental friendliness. But the government has been going in the opposite direction, slashing funding for aeronautics research and development by two-and-a-half times since the early 1990s. Investment in the Next Generation Air Transportation System — an advanced-technology air traffic control structure vital to dealing with ever-rising passenger traffic — has been falling, meaning it will not progress at an appropriate pace. One of AIA's priorities for 2007 is increasing awareness of the industry as a strategic national security and economic asset. Our objective is to educate and inform the public, elected leaders, industry analysts, and others about the vital role aerospace plays in keeping our nation safe and prosperous. Part of that effort will be demonstrating to lawmakers the importance of adequate funding levels for national defense, the new space exploration program, and aeronautics research. The survey results are a signal to those holding the purse strings that the aerospace and defense industry is important to a very significant group — the voters back home. WASHINGTON WATCH: Civil Aircraft Sales Fuel Record Year for Aerospace and Defense Industry, AIA Reports A surging civil aircraft market boosted the aerospace industry in 2006, lifting total sales to another record level, AIA reported in its state-of-the-industry analysis. Total sales increased $14 billion to $184.4 billion, a record for the third year in a row. That represents a jump of 8.4 percent over 2005's final sales total. AIA President and CEO John Douglass presented the numbers during the association's 42nd Year-End Review and Forecast in December, addressing about 300 members of the media, industry, and government. The event showcases the many industry statistical categories that AIA's Aerospace Research Center tracks, including performance over the last 12 months and a look ahead to 2007. Last year, Douglass said, aerospace logged a remarkable $52 billion positive trade balance, a vivid reminder of the industry's strength in the international marketplace. "The increasing trade surplus in the industry shows its importance on the global stage and positive impact on the U.S. economy," Douglass said. "It would be hard to overstate aerospace's positive contributions to our national economy, as evidenced by these very strong indicators." The industry also added about 23,000 new jobs, reaching a total of 635,000. Foreign sales of aerospace products jumped sharply for a second consecutive year in 2006, increasing $15 billion over last year's $67 billion. The increase was dominated by civil aircraft exports, particularly commercial transports. General aviation aircraft exports set a new record by increasing to $3.2 billion. Military aircraft exports experienced a healthy increase to $3.4 billion. AIA forecasts U.S. aerospace and defense industry sales to grow 6 percent, or $11 billion, to a record $195.4 billion in 2007. The increase would likely be driven primarily by increased delivery of civil aircraft, engines, and related parts and components. Defense and space sector purchases are expected to increase slightly. Looking beyond 2007, the current backlog of commercial aircraft orders means the civil aircraft sector will continue on an upward trajectory. A modest rise for the space sector is also expected, particularly as demand for commercial satellites continues to increase. AIA Source: lauren.airey@aia-aerospace.org WASHINGTON WATCH: Pair of Policy Initiatives Highlighted Two important 2007 AIA initiatives were highlighted by President and CEO John Douglass during the association's Year-End Review and Forecast event in December.
Carr and Lai Join Association Staff Two new staff members have joined AIA, one in civil aviation programs and the other in defense and international affairs. Ranee Carr is manager of civil aviation programs. Her responsibilities include monitoring government notices and press reports to identify emerging issues or trends related to civil aviation, reviewing government regulatory and policy proposals, and coordinating with civil aviation committees to develop AIA positions. She has worked in communications within the aviation and defense industries over the past 10 years, including Delta Air Lines, Thales, and Bombardier Aerospace. A 2007 graduate candidate at the School of Public Policy at George Mason University, Carr is pursuing a master's degree in transportation policy. She can be contacted at 703-358-1086 and ranee.carr@aia-aerospace.org. Joseph Lai is defense policy manager in the Defense and International Affairs Department. He is supporting AIA initiatives on export controls, technical operations, air show preparation, and more. He comes to the association from Barbour Griffith & Rogers International where he was a policy analyst. Before that, he served on the staff of Sen. Chuck Hagel. Lai has also held internships at the Cato Institute, the American Enterprise Institute for Public Policy Research, and the U.S. Trade and Development Agency. He earned a bachelor's degree in history from the University of California at Berkeley and a master's degree in international relations and diplomatic history from Yale University. Lai can be contacted at 703-358-1070 and joseph.lai@aia-aerospace.org. Satyam Steps Up Satyam Computer Services Ltd. (www.satyam.com) recently upgraded its AIA status to regular member from associate member. That move brings the association's roster to 105 regular members and 175 associate members. Satyam is a leading global provider of information technology, engineering, and consulting services that offer an array of solutions for customers in aerospace and defense and other industries. The firm has alliances and joint research and development initiatives with academia and leverages its wholly owned subsidiary, Satyam Technology Incorporated, on projects governed by Export Administration Regulations and International Traffic in Arms Regulations. STI was incorporated in 2000 and is headquartered in Parsippany, N.J. AIA Source: trish.ward@aia-aerospace.org AIA Helps Win R&D Extension In a move that will help the U.S. aerospace and defense industry remain competitive in the global economy, Congress passed and President Bush signed in mid-December an extension of the federal research and development (R&D) tax credit, legislation AIA strongly supported. Next, the association will once again work with the R&D Credit Coalition in seeking to extend the latest credit past its Dec. 31, 2007, ending date. The extension passed in December made the tax credit retroactive to Jan. 1, 2006, and extended it until Dec. 31 of this year. The previous extension ended Dec. 31, 2005. The latest action is the 12th time the R&D tax credit has been extended. In addition to extending the credit, the legislation increased the rate of the alternative incremental research credit and added an option for some companies to elect a new alternative simplified credit (ASC) for qualified research expenses. The ASC can be used by companies that perform significant amounts of research in the United States but are no longer able to qualify for the regular credit. The United States lags behind many other countries, such as Canada, France, and the Netherlands, that offer substantial tax credits for R&D investments. More information on the latest extension and new efforts for the future can be found on the R&D Credit Coalition Web at www.investinamericasfuture.org. AIA Source: kirsten.koepsel@aia-aerospace.org AIA Looking at New Opportunities for Members in Emerging Markets Building on the success of its first-ever trade mission, AIA is exploring new initiatives to support its members' interests in increasingly important emerging markets. (See related story in The Suppliers' Voice.) The association's International and Supplier Management councils organized a successful trade mission to India in December. Twenty-eight representatives of 18 member companies took part, including several U.S. prime contractors. Whether a business focuses on civil aviation, defense, or space, having the ability to source from and sell into overseas markets has become a critical element to a sound growth strategy. The importance of global markets to AIA members is highlighted by the fact that three of the association's top 10 issues for 2007 are matters affecting international aerospace business — export controls, business ethics, and competitive fairness. AIA's International Council is reaching out to corporate representatives through the Civil Aviation, Space, and Defense councils in an effort to identify priority markets and opportunities in emerging markets. Actions suggested thus far include hosting foreign trade officials, promoting trade policy positions, more trade missions, and partnering with international trade associations. AIA Source: remy.nathan@aia-aerospace.org Space Council Advocacy on ORS Restores Funding An AIA campaign last fall to rally support for the Operationally Responsive Space (ORS) program resulted in the restoration of requested funding for the program and a substantial increase, according to industry reports. ORS is a program that recognizes that space systems and technologies are essential to the U.S. warfighter and are primarily responsible for conferring the "information dominance" on which the U.S. and allied troops currently rely. AIA's Space Council initiated a drive to rally support for ORS in reaction to reports that program funding was in jeopardy. A strong industry response made it clear to the Pentagon that ORS is seen as an innovative and cost-efficient complement to legacy space systems. Bolstered by support from key top-level defense officials, the program was put back on track. Building on this momentum, the Space Council is now taking steps to strengthen the advocacy base for ORS within the Air Force, other services, and the Pentagon's Joint Chiefs of Staff. AIA has started by expressing industry's recommendations on the best way to move ahead on the congressionally mandated ORS Program Office. Further discussions will include championing the rapid development of ORS systems and launchers, supporting a comprehensive program office charter, determining a strong acquisition strategy, and encouraging the ongoing maturation of ORS technologies. The Space Council will also promote the importance of sufficient funding to support procurement of an initial generation of ORS systems. AIA Source: anne.ellis@aia-aerospace.org Fifth AIA Rocketry Challenge Set to Launch The field for the world's largest rocket competition, the Team America Rocketry Challenge, is now set with 690 teams of middle- and high-school students from across the country preparing to compete for the 2007 title. A terrific way to get students excited about careers in aerospace, this year's Challenge is the fifth in succession under the guidance of AIA and supported by many of its member companies. A record pool of prizes and scholarships await the top 100 teams when they arrive for the grand final competition in The Plains, Va., on May 19. A number of industry and government officials are expected to attend the finals. CNN has already committed a crew to cover the event, and other national media coverage is also likely. Preparations for the 2008 competition are already underway. The finals in 2008 will likely be scheduled earlier in the year to enable more teams to participate because May is often when school exams and preparations for graduation take place. The Team America Rocketry Challenge is organized by AIA and the National Association of Rocketry. More than 40 AIA member companies are sponsoring the 2007 event. AIA Source: jj.gertler@aia-aerospace.org Applications Sought for Worker Safety Awards Applications are being solicited from AIA member companies through Feb. 28 for the AIA Worker Safety Excellence Awards. The award program, in its second year, recognizes member companies that have demonstrated corporate improvements in employee injuries and illnesses and those that have achieved the lowest total worker incidence rates as defined by the Occupational Safety and Health Administration. Applications will be evaluated by an award committee using a weighting combination of year-end injury rates data and corporate safety program elements, including management and leadership involvement, health and safety training, communications processes, and systems for hazard identification and control. AIA's inaugural awards winners in 2006 were Aerojet for overall safety improvements and Raytheon Company for sustained excellence through achievement of lowest incidence rates in 2005 for all three categories under this award — aircraft, aerospace components, and space vehicles manufacturing. Contact AIA Environmental Safety & Health Director Hoai Huynh for detailed awards program descriptions and the 2007 awards application forms. AIA Source: hoai.huynh@aia-aerospace.org Council Endorses Workforce Initiative Advancing the agenda to help create an aerospace workforce for the 21st century, AIA's National Security Council has formally endorsed the National Collaborative for Graduate Engineering Education Reform. A project of the American Society for Engineering Education and major universities, the collaborative brings industry representatives into the curriculum development process to ensure that students are taught modern skills and concepts relevant to today's workplace. Endorsement of the national collaborative is only one of the points in the AIA Industrial Base and Workforce Committee's effort to identify and encourage best practices in industry and education. AIA Source: jj.gertler@aia-aerospace.org 2007 AIA Top Ten Issues Each year AIA identifies the aerospace industry's top issues. For complete descriptions of the 2007 AIA Top Ten Issues, see AIA's Web site at www.aia-aerospace.org. Advance Ethical Business Practices Worldwide ISSUE Ethical business practices are integral to developing well-performing defense and aerospace companies. Recruiting and retaining an effective and ethical workforce and instituting and operating by fair and transparent global business rules are absolute requirements to build confidence and trust among partners and customers. AIA and its counterparts from Brazil, Canada, Japan, and Europe are committed to utilizing our collective experience and expertise this year to foster further commitment to ethical business practices in the aerospace and defense industry. Promote the Development of a Modern Export Control System ISSUE The current U.S. export control system prevents the nation from realizing the full security and economic benefits of aerospace trade and technology cooperation. It needs to be made more predictable, efficient, and transparent. A comprehensive strategy is needed that will overhaul and modernize the existing systems, structures, and processes and promote interoperability and trade with our foreign partners. Promote U.S. Trade and Export Competitiveness in a Free and Fair Global Marketplace ISSUE The U.S. aerospace industry requires a level playing field and easy movement of goods, services, and ideas in the global marketplace. To maintain the ability to source from and sell into the global marketplace competitively and efficiently, the U.S. aerospace industry must insist that the United States and its trading partners abide by transparent, consistent, and harmonized international trade rules and national policies in areas such as market access, government procurement, supply chain security, government subsidies, standards, certifications, export credits, and offsets. Promote Acquisition Excellence ISSUE Cost growth in the development and acquisition of military systems has been a problem for decades. Congress and the Defense Department have renewed their insistence on improvements to defense acquisition policies and procedures intended to ensure that programs meet their cost targets as well as their technical and schedule commitments. AIA will propose and support defense acquisition policy and procedural changes that industry believes will result in improved program performance and provide DoD greater flexibility to manage cost growth resulting from unanticipated technical challenges. Support Transformational Improvements to the U.S. Aviation System ISSUE A safe, secure, and efficient air transportation system continues to be vital to U.S. prosperity and competitiveness in the global economy. An integrated, multi-year advocacy and action plan is needed to bring about transformational improvements to the U.S. aviation system. Support is essential for FAA reauthorization and funding, development and implementation of the Next Generation Air Transportation System, cost-effective, data-driven aviation safety improvements under the Commercial Aviation Safety Team, and similar initiatives that promote risk-based aviation security management and enhanced regulatory efficiency initiatives. Promote the Long-Term Vitality of the Aerospace Industrial Base and Sustain U.S. Military Preeminence ISSUE Without steady, predictable, long-term investment in the defense and aerospace industrial base, the United States will lose its ability to sustain the necessary capabilities to design, develop, and produce advanced systems needed to sustain national defense and homeland security preeminence. Of particular concern is the vitality of the aerospace and defense industry workforce and the need to recruit, educate, train, and retain workers for the future. Increase U.S. Government Financial and Policy Support for Civil and Commercial Space Projects ISSUE Greater investment and policy support from Congress and the administration is critical for America's key civil and commercial space projects. NASA funding should be increased to the level provided in the fiscal 2005 authorization so that near-term and out-year support for the U.S. Vision for Space Exploration will be consistent with the agency's projected milestones. NASA also should pursue a balanced portfolio that adequately supports its space, science, and aeronautics missions. In addition, government needs to ensure the continuity and evolution of Earth monitoring systems to meet national security and economic needs. Encourage the Revitalization of U.S. Aeronautics Research ISSUE Over the past decade a lack of focus on ensuring technological leadership in civil aviation has placed the long-term viability of our aviation industry and its economic growth potential in jeopardy. A new national aeronautics policy to guide and revitalize America's aeronautics programs through 2020 is imperative, and it needs to be consistent with the government's historic role of promoting U.S. leadership and competitiveness in both military and civil aeronautics. Support a Robust U.S. National Security Space Program ISSUE Investment in U.S. national security space programs must not be compromised. Unstable funding profiles exacerbate program execution failures, and decreased confidence hinders development of the technologically superior systems on which the United States depends. Stable and comprehensive funding for national security space systems, including appropriate investment in research and development, is essential to ensure that the United States maintains its strength and competitive advantage in space. Increase Awareness of the U.S. Aerospace and Defense Industry as a Strategic National Security and Economic Asset ISSUE The U.S. aerospace and defense industry is a strategic contributor to America's strength, prosperity, and security. Increasing positive awareness among decisionmakers, influential observers, and the public at large of the vital roles of aerospace and defense is critical to sustaining long-term support for the industry, its mission, and its workforce. |
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