In the twisted, political logic of a gathering recession, the weakness of US-based automakers can be strength and the aerospace sector's health makes it a target.
The US Aerospace Industries Association (AIA), recognising this ironic peril, has launched an advertising campaign aimed at lawmakers and president-elect Barack Obama's transition team to underscore the value of the aerospace and defence industry to the economy.
The key message: do not break a healthy defence industry just to fix other parts of the economy that are falling apart.
"There are things they can do that can make that engine stutter or even jump the track," says Fred Downey, the AIA's vice-president of national security. "That's a bad thing for national security, number one. And it's bad for the overall economy, number two."
THINK JOBS
A full-page advertisement in The Washington Post on 2 December and follow-up ads running in political journals remind lawmakers that the industry supports 2 million jobs and 30,000 suppliers in the USA alone.
The goal is not to salvage any particular programme, such as the threatened Lockheed Martin F-22 and Boeing C-17 production lines, but to avert a wider defence industry financial catastrophe.
"We don't take a position on a specific programme," Downey says. "What I'm thinking of is more along the lines of what happened at the demise of the Soviet Union. Some people declared a peace dividend [saying], 'we can take money from defence for these other worthy needs'. We believe here that it's absolutely important to have stability and predictability in the defence programme side."
AIA's bottom-line recommendation is to contribute 4% of the gross domestic product to spending on national security, or about $700 billion. Of that number, about $120-$150 billion should be assigned to the Department of Defense's procurement and research and development accounts to maintain a healthy defence industry, Downey says.
However, the track record of defence contractors and the military's acquisition system raises questions about whether taxpayers' money might be better spent elsewhere. Earlier this year, the Government Accountability Office (GAO) reported that the cost of the top 95 military acquisition programmes in the Pentagon's budget had grown by a combined $295 billion.
NO FREE MONEY
Downey, a former aide to senator Joe Lieberman, acknowledges that the defence industry has problems, but argues they will not be solved by spending cuts. "There clearly are inefficiencies in the acquisition system, and they need to be fixed. But that doesn't translate into free money for something else," he says.
So far, neither Obama nor the Democratic majority in Congress have taken specific aim at the defence industry. However, one Democratic congressman, Rep Barney Frank, recently called for a 25% cut in defence spending.
Obama's national security team appears in no rush to cut funding for the military. The AIA briefed Obama's campaign before the election about the recommendation to devote 4% of GDP to national security.
"The response was positive," Downey says. "They recognised there are real and legitimate defence requirements and they need to be funded."
After 10 consecutive years of rapid growth in military spending, the defence industry is in relatively good form compared with the rest of the economy and its exports are held up as a rare bright spot of growth in the manufacturing sector.
To be sure, the defence industry faces challenges. Three major contractors - BAE Systems, Bell Helicopter and Boeing - have announced layoffs. The cumulative layoffs, however, amount to about 1,500 workers, which pales in comparison to the thousands of net job cuts in the automotive and financial sectors.
As a result, the banking industry and the three US-based automakers are in Congress pleading for a bailout, while the defence industry hopes that it is not forced to pay the bill.
"When you're wrestling with a bunch of alligators," Downey says, "the long-term goal of draining the swamp seems to fade into the future and we just want to remind them while they're dealing with alligators not to forget the long-term problem."
Source: Flight International
