- Advocacy & Policy
- Research Center
By Marion C. Blakey
AIA President and Chief Executive Officer
“Winning the future” was the battle cry in President Obama’s 2011 State of Union address. For the aerospace industry, success in the international market will be one of the deciding factors in the size of our “win.”
As domestic defense budgets come under more pressure, industry is increasingly looking to foreign markets to fill the gap in demand and keep production lines open. This is a strategy that also fits well with the Defense Department’s renewed emphasis on security cooperation and building partner capacity. Defense trade allows our allies and military partners to address common security concerns in coordination with and in place of U.S. forces.
In the civil and space sectors, global trade opportunities are expanding, as is competition for market share. The administration’s National Export Initiative and commitment to reforming the export control system clearly show that the president recognizes the importance of the international marketplace. Many in Congress also understand the significant role international markets will play in ensuring our industry remains second to none.
I testified before the House Committee on Foreign Affairs on February 7 at a hearing on export control reform. One of the most impactful statements of the entire hearing came from Congressman Mike Kelly (R-Pa.) who read a letter from a constituent company and AIA member, Acutec Precision Machining Inc. Written by Acutec President Rob Smith, the letter stressed the negative effects export controls have had on his business. “In general, the rules and regulations of the U.S. government have made it far easier to import from China than to export to anywhere from the U.S.,” wrote Smith.
That’s a clear sign that there is more work to be done. The U.S. satellite industry has been disadvantaged on a global scale since all satellites and their parts and components were moved from the Commerce Control List to the more restrictive U.S. Munitions List in 1999. AIA’s recent report, Competing for Space, illustrates the impact of inappropriate export controls on the satellite industry. We estimate that from 1999 to 2009, the United States experienced a cumulative loss of $20.8 billion in U.S. satellite manufacturing revenue and an average annual loss of 27,893 jobs. Additionally, in a survey of members, the study found that second- and third-tier space firms were hit particularly hard – with some businesses citing millions of dollars in lost sales annually.
To support our space industry, it’s important that the Defense Department completes its satellite study – known as the 1248 report – and that Congress considers carefully its recommendations for reform. As we enter a new era of budget austerity and the threat of draconian sequestration looms, failure to reform export controls could result in even more technology sectors experiencing a growing loss of critical industrial base suppliers with a corresponding risk to U.S. national security.
On another important front, the Export-Import Bank, one of the cornerstones of American manufacturing competitiveness, is fighting for reauthorization and an increase in its lending capacity this spring. The Ex-Im Bank supported $41 billion in U.S. exports from more than 3,600 U.S. companies last year. These transactions directly supported approximately 290,000 American jobs and thousands more indirect jobs, many of them in the aerospace sector. However, there are members of Congress that are raising concerns about financial risk in an agency that has a great track record of managing risk and returning more than $4 billion in revenue over the last six years to our Treasury. It’s important to recognize that many aerospace companies rely on their commercial activity to help sustain their technical work force and supply chains that also support defense activities for the U.S. military. The real risk would be to our industrial base if support of the Ex-Im Bank in the international marketplace is lost.
The U.S. aerospace and defense industry has a long lineage of “winners” and “firsts” that have made us a global leader. Orville and Wilbur Wright made us first in flight. Charles Lindbergh showed the world-changing potential of aviation with the first non-stop flight over the Atlantic and in 1969 the world was awed by a gentleman with the “right stuff” who took man’s first steps on the moon. Today, advanced technology is still advancing the art of aerospace with revolutionary materials and unmanned aerial vehicles, opening a brand new vista of advances.
If President Obama and Congress are looking for leaders in “Winning the Future,” supporting our industry’s export competitiveness with export control reform and reauthorization of the U.S. Export Import Bank are great places to start.