US aerospace industrial base is running out of time

With the recent news that a $1.1 billion order for Boeing jetliners by South African airline Comair is at risk of cancellation, on the heels of recent announcements of three lost U.S. commercial satellite sales, the failure of Congress to hold a vote on re-authorization for the Export-Import Bank of the United States (Ex-Im) can now be seen clearly as an example of how inaction is causing the American aerospace industry to lose ground against its foreign competitors, and potentially thousands of workers to lose their jobs.   

U.S. companies large and small have been telling members of Congress for months now that overseas customers are going to buy from their foreign competition in the absence of the ExIm Bank matching finance options provided by every other foreign government.  Sadly, these warnings have been ignored. 

{mosads}This dynamic is especially true in the aerospace industry, where U.S. companies have consistently generated an export surplus ($61 billion in 2014) when we have had a level playing field to compete.  Plain and simple, our companies cannot compete alone against foreign companies and foreign government financing at the same time. 

Critics of Ex-Im cannot be more mistaken in their claims that Ex-Im’s financing is “corporate welfare;” in the aerospace industry, the thousands of companies that are an integral and integrated part of the supply chain for aircraft as well as the space industrial base are at risk.  For these suppliers, there will be the initial loss as U.S. aircraft and satellite manufacturers begin to slow down their production.  There will be an even greater impact going forward for aircraft suppliers as they lose the aftermarket maintenance, repair, and overhaul revenue that lasts as long as exported aircraft are in service. 

The timing of losing Ex-Im support could not be worse for the aerospace industry given the downturn in U.S. defense spending.  The shared aerospace and defense industrial base that supplies our military is relying more on commercial sales to sustain itself and innovate, and more than 80 percent of that commercial production is exported.  Besides risking high skill and high wage jobs, our national security is also jeopardized as many small and medium sized suppliers will find themselves unable to survive, let alone compete, without support for exports from Ex-Im.  

The purchase and payment lead times in our industry are long, and the clock is ticking.  The price for delay in the vote to re-authorize Ex-Im is going up every second, and our nation’s security and economy will ultimately bear the cost.

Melcher (LTG U.S. Army-Ret.) is the president and CEO of the Aerospace Industries Association.


More Economy & Budget News

See All
See all Hill.TV See all Video

Most Popular

Load more


See all Video