Policy Insight

Commission Assesses the Future of
the U.S. Aerospace Industry

By Vin O'Neill

Senior Legislative Representative, Career Policy
IEEE-USA

The Commission on the Future of the US Aerospace Industry was established pursuant to the FY 01 Defense Authorization Act (PL 106-398) as enacted on October 30, 2000. Its purpose to study the U.S. aerospace industry in the global economy and to assess its future importance for U.S. economic and national security.

The Commission is composed of 12 members: six appointed by the President; two each by the House and Senate Majority Leaders and one each by the House and Senate Minority Leaders. Former Congressman Robert Walker (R-PA) chairs the Commission.

Members include representatives from trade associations and labor unions including the Aerospace Industries Association, the General Aviation Manufacturers Association and the International Association of Machinists and Aerospace Workers.

The Commission holds periodic meetings and makes interim recommendations on critical issues that warrant immediate attention by Congress and the Administration.

It will issue a final report in November 2002.

Highlights of November 2001 Public Meeting

The Commission held its first public meeting at the US Department of Commerce in November 27, 2001 and took testimony from White House OSTP Director John Marburger, Congressman Dave Weldon (R-FL) and senior executives from several Federal departments and agencies.

It concluded that Federal aerospace spending is currently spread across multiple agency budgets with oversight by numerous Congressional committees. None has an integrated view of the condition of the nation's aerospace industry.

Commissioners directed OMB, the Department of Commerce and the CBO to assemble comprehensive baseline statistics describing the aerospace industry using spending breakouts from the President's FY03 Budget Request and current industry economic performance and investment expenditure profiles.

Highlights of Feb. 2002 Public Meeting

At a meeting on February 12th, the Commission took testimony from industry and government witnesses on aerospace investment, air transportation infrastructure and export controls issues and made the following recommendations:

• Aerospace Investment:  Amend and permanently extend the research and experimentation tax credit. · Increase financial rewards for private sector cost savings initiatives. · Resolve the EU-US dispute over the tax treatment of foreign sales corporations.

• Air Transportation Infrastructure:  Establish a multi-agency coordinating council to implement an integrated plan for improving air transport capacity in advance of anticipated increases in demand.  Increase funding for FAA and NASA research and development needed to support atc automation, noise and emissions reduction improvements.

• Export Controls:  Negotiate ITAR exemptions from munitions licensing agreements. Update country risk surveys and automate the munitions licensing system. Reduce regulatory barriers to global, program and project licensing under Defense Trade Security Initiatives. Modernize the Defense Export Loan Guarantee Program.

Highlights of May 2002 Public Meeting

On May 14, 2002 the Commission took testimony from government, industry, educator and student witnesses on space exploration, industrial base and workforce issues and made the following recommendations:

• Space Exploration:  Explore the feasibility of establishing a spaceport at the Kennedy Space Center.  Enhance the ability of DoD and NASA to lease real property at fair market value and retain proceeds to help pay for infrastructure development and operations. Grant NASA utility privatization authority.

• Industrial Base:  Assess the impact of consolidations (mergers and acquisitions) policies on infrastructure and the workforce.  Review the current and projected viability of the nation's fighter aircraft and solid rocket booster design and development capability.  Encourage closer cooperation between DoD and NASA in R&D. Encourage Congress to hold hearings on air traffic control modernization issues. Expedite the appointment and confirmation of a new FAA Administrator to ensure a smooth transition when top-level agency personnel retire later this year.

Aerospace Industry Workforce Issues

Commissioners and witnesses contend that the industry faces serious workforce challenges. Consolidations and down-sizing resulted in the loss of nearly 500,000 jobs during the 1990's. The average age of production workers is 44 in the commercial sector and 53 in defense. Between 20 and 30 percent of engineering and skilled production workers are expected to retire within five years.

The industry is perceived as being overly bureaucratic and lacking in exciting technological challenges by engineering students, many of whom are taking jobs in other industries.

Substantive reforms will require increases in the profitability of aerospace firms and favorable tax policies. In addition, aerospace firms must dedicate more resources to the financing of technical education and develop more flexible workforce utilization policies. Loan forgiveness for students who agree to pursue careers in the industry and a national apprenticeship training program should also be considered.

In response to workforce challenges, the Commission has made the following recommendations:

• Reaffirm the goal of stabilizing and growing the nation's aerospace workforce. · Establish an interagency task force to respond to long-term workforce development and training needs.

• Develop a high visibility media information program to educate the public about employment opportunities in the aerospace industry.

• Utilize tax credits to encourage employers to invest in skills development through a national, industry-driven apprenticeship program.

• Make the kinds of long-term investments needed to keep the Aerospace workforce pipeline filled.

Labor backed recommendations to assess the impact of offsets and outsourcing on domestic aerospace employment and recognize the importance of international labor standards were tabled.

Looking Ahead

The next public meeting of the Commission will be held at the Commerce Department in Washington on August 22, 2002.

More detailed information on the Commission, including member biographies, meeting agendas, testimony and summaries and copies of interim reports are available online at Commission on the Future of the US Aerospace Industry, www.aerospacecommission.gov.

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Last updated: 02 May 2005
Staff Contact: Vin O'Neill, v.oneill@ieee.org