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How much more can we let the aerospace industry shrink?

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Lost: America’s Industrial Base

How much more can we let the aerospace industry shrink?

Like the F-22?  Don’t like the F-22?  Think we need more F-22s?  Think 187 F-22s is about the right number?  Believe we need the capability the F-22 brings to the fight, or think we don’t. The U.S. Senate’s vote Tuesday of 58 — 40 to stop F-22 production at 187 aircraft is the next to the last nail in coffin of the Air Force’s premier fighter program.  A House-Senate conference still has to agree on the final result, but it seems like a long shot that the program will be continued.

Regardless, of where you come down in the debate, what matters is that by not buying more F-22s, the U.S. Air Force’s fifth generation fighter has won a very secure spot on the side of “milk cartons” as the poster child for a “lost” industrial base.  

Last week’s publication by the Aerospace Industry Association (AIA) of a report on the U.S. aerospace industrial base should have given the Department of Defense and Congress pause.  Not because the aerospace industrial base has been reduced to a state that is not recoverable, but because the decisions being made in the Department have not considered the impact on the aerospace and defense industry that the Department depends on.  Particularly, troubling is that the Quadrennial Defense Review (QDR) has not considered in the past and is currently continuing to ignore the consequences of what it is recommending on the U. S. aerospace and defense industrial base.

The fact that the QDR was not done before Secretary Gates announced the F-22 termination leaves a great analytical gap beneath that decision where a solid foundation should be.

The issue is not just about jobs.  Though much of the debate in favor of the F-22 centered on jobs, the real industrial base issue is about the kind of jobs that are on the chopping block as defense strategy development moves forward without regard to the availability of the skilled and experienced workforce necessary to build the weapons that make the defense strategy actionable.  

When the industrial base is defined — more accurately — it is 1) formed and experienced developmental engineering design teams, 2) highly skilled and experienced aerospace touch labor and 3) the financial capability to compete in future weapons programs, it is clearly worse than anemic.

Since about 1986, there has been a steady decline in the number of aerospace research and development scientists and engineers the U.S. has had available to ensure the nation’s ability to build the necessary weapons,.  From a high of about 145,000 in 1986, the number of aerospace research and development scientists and engineers in the U.S. had diminished to around 38,000 in 2007 according to the 56th Edition of Aerospace Facts and Figures.  

It’s not that the United States is losing research and development engineers in all industries.  In fact, during the same period the number of research and development scientists and engineers in all industries has increased from around 670,000 to over one million.  But, in the aerospace sector the number of aerospace research and development scientists and engineers as a percentage of the total in all industries has plummeted from a high of about 22 percent in 1986 to just over 3 percent in 2007.

The real challenge in retaining engineering talent is with the part of the definition offered here as “formed and experienced.”  In their report the Aerospace Industries Association noted that once lost, “Reconstituting lost production, design and engineering capabilities could take many years.”

The picture for highly skilled aerospace touch labor doesn’t look much better.  From 1993 to 2007 the number of aerospace production workers declined by nearly 8 percent from 390 thousand to 360 thousand.   Often there is a mistaken notion that because in the build up of wartime manufacturing during World War II “Rosy the Riveter,” with little training abandoned the ironing board to take up the soldering iron.  Consequently, the idea that rebuilding lost aerospace production skills today is very wrong-headed.   The training and experience necessary for an apprentice electrician or machinist to become fully qualified in the aerospace industry takes between three to five years.  Modern fighter aircraft use composites and exotic metals that take significant training and experience to manipulate.

Politicians are fond of saying that putting a new defense program in their district or state will create so many thousands of new highly paid, highly skilled jobs.  The facts are that new defense programs won because some other company lost.  Since the numbers of production workers and engineers are declining, winning a contract means that jobs are migrated and not created.  Because the jobs are high paying as well, a certain amount of wealth migrates with the jobs.  But, for the country and the industrial base as a whole, new defense programs are essentially a zero sum game.

It is a very expensive proposition to compete for major aerospace and defense weapons and equipment programs.  General Dynamics, Boeing, Lockheed Martin, Raytheon, Northrop Grumman and BAE SYSTEMS with its recent U.S. aerospace and defense company acquisitions, are the six remaining aerospace companies.  Down from over 50 aerospace companies capable of competing for large programs before the spate of mergers.  Ok, you say.  

It’s survival of the fittest and the “Darwin Factor” has prevailed.  The consolidation of companies helped to reduce overhead and the remaining companies are more efficient.  I’m not sure that’s right, but maybe so.  The point here is that because the “Big Six” wield such financial power to invest in large defense programs, smaller companies that might have a competitive product or service face a financial barrier to entry that is daunting.  Again, the AIA report put the issue differently, but the point is the same, “Once a company decides to exit the modern defense industrial base, the expense of re-entry is so high that the exit will likely be permanent.”

The F-22 fighter debate has highlighted a more immediate problem that could have severe long-term consequences for America’s ability to attend effectively and responsibly to future threats.  National security strategy crafting like the Quadrennial Defense Review is in no way precise.   Even the most prescient of policy experts can only see up to the current military operations horizon, not beyond it.  Choosing a narrowly focused national strategy with the necessary weapon systems to execute that strategy without regard for the impact on the industrial base leaves our nation at risk.

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Written By

Mr. Patterson is the Executive Director, National Defense Business Institute in the College of Business Administration at the University of Tennessee, and until June of last year served in the Bush Administration as the Principal Deputy Under Secretary of Defense, Comptroller.

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