Open Letter to Congress on the Need for Ex-Im Bank

AIA's President and CEO, Marion C. Blakey, in a recent letter to both chambers of Congress, made a strong case for the reautorization of the Export-Import Bank of the U.S.

We know that not reautorizing hte bank would be equivilent economic unilateral disarmament agains nearly 60 other foreign credit agencies. We hope you will join with us to support the Ex-Im Bank to sustain the American economy and U.S. jobs. 

Sign the Petition

 

Acquisition Rebalancing: Recommendations for Smart, Efficient & Effective Defense Procurement

Acquisition Rebalancing: Recommendations for Smart, Efficient & Effective Defense Procurement

The Department of Defense (DOD) must change how it acquires weapon systems and services. There is growing recognition from DOD leadership, Congress and the defense industry that it is time to revise the overly complex and burdensome system that drives unnecessary cost into programs and will soon make them unaffordable as defense budgets decline.

Making the acquisition system more economic and more responsive has been an elusive target. The challenges of time-to-delivery and product cost persist despite all attempts to reform the acquisition system over the last 40 plus years.

It’s time to stop tweaking the edges and bring the acquisition system into balance, starting with these core principles:

  • Have trust and confidence in the U.S. military and the aerospace and defense industry’s ability to deliver together outstanding technologies that keep our nation safe.
  • Balance oversight so that all parties are treated fairly and allow oversight functions to consume only the resources needed to mitigate risks of poor performance and malfeasance.
  • Employ our nation’s scarce resources to get the most value for our military from every dollar our nation invests.
  • Protect the nation’s economic and national security by developing and implementing cohesive defense industrialbase strategies.

These principles inform the recommendations presented in this paper, written to address the critical questions asked by the House and Senate Armed Services Committees. How can acquisition be more cost effective? Can delivery be expedited? Can recruitment, retention, and training of acquisition professionals be improved? How can program managers be empowered to make sound decisions, and how can technical expertise be fostered? Oversight and management ideas were also sought, as were recommendations to improve cost and delivery over the life cycle of major weapons systems. This paper is organized to address these questions and requests.

VIEW INTERACTIVE REPORT:

Acquisition Rebalancing: Recommendations for Smart, Efficient & Effective Defense Procurement

Defense Acquisition Resources to Understand Acquisition Reform

AIA has complied a number of letters that address the federal defense acquisition process and ways in which reforms can be made to ensure the best value for defense customers.  They include the following letters and may be downloaded as a combined zip file below.
  • Join Working Group on Improving Cybersecurity and Resiliance Through Acquisition
  • AIA Comments on DFARS: Discllsure to Litigation Support Contractors (DFARS Case 2012-D029)
  • Federal Management Regulation; Disposal and Report of Federal Electronic Assets (Case 2012-102-4)
  • Burdens and Barriers to Contracting with the Federal Government
  • Response to October 30th Letter on BBP 2.0
  • Better Buying Power 2.0 - Commercial Items
  • Meetings with Alan Estevez, Katrina McFarland, and Dick Ginman regarding Costs of Regulation
  • FAR; Contractor Comment Period, Past Preformance Evaluations (FAR CASE 2012-028)
  • Pension Harmonization Rule Change
  • Cost Acounting Standards
  • MOCAS payment cycle times
  • DCMA Meetings regarding Corrective Action Requests
  • AIA Comments on implementation of Better Buying Power 2.0
  • AIA Comments on DFARS: Safeguarding Unclassified DoD Information (DFARS Case 2011-D039)
  • Section 818 NDAA 2012

HASC/SASC Letter

This letter from the House and Senate Armed Services oversight committees informed AIA that the Congress is looking into ways to improve the defense acquisition system. Specifically:

  • Steps that DOD or Congress could take to reduce the cost of major defense acquisition programs;
  • Steps that DOD or Congress could take to expedite the delivery of useful capabilities to the warfighter;
  • Steps that DOD or Congress could take to improve how it recruits, trains, and develops its acquisition workforce;
  • Steps that DOD or Congress could take to empower key acquisition personnel, such as program managers and cost estimators, to make sound choices through the acquisition process;
  • Steps that DOD or Congress could take to improve planning, contracting, oversight and management of services; and
  • Steps that DOD or Congress could take to incentivize timely delivery of capabilities and services to warfighters with considerations for life-cycle costs.
The New American Space Age

The New American Space Age

Across the government and private sectors, more vehicles are now being built for human spaceflight than at any other point in history. Today’s NASA human spaceflight program is an ecosystem of diverse activity – developing both exploration systems and commercial transportation services. These elements are strategically linked to one another and vital to the success of the overall human spaceflight program.

In the field of suborbital spaceflight, private companies are developing spacecraft to take hundreds of paying customers briefly into space. If current trends continue, the suborbital market is predicted to have baseline revenue of $600 million over the first 10 years of operations. Already, one suborbital space transportation company, Virgin Galactic, is nearing 800 deposits for paying customers.

In low Earth orbit, three companies have won the most recent round of NASA funding, known as Commercial Crew Integrated Capabilities to develop new space transportation systems to the International Space Station (ISS) and open potential new markets for space transportation: Boeing, Sierra Nevada and SpaceX. All three have made steady progress to build U.S. domestic access to
the ISS and end our dependency on the Russians. 

For deep space exploration, the space industry is building vehicles to extend our reach further into the solar system than we have ever gone before. To expand human access to the solar system, two foundational vehicles are being built – a new heavy lift rocket called the Space Launch System and the Multi-Purpose Crew Vehicle called Orion. Orion will serve as the primary spacecraft to send NASA astronauts to destinations beyond low Earth orbit. Just as the Space Shuttle was a vehicle with many uses – from scientific experimentation, satellite servicing and space station construction – NASA’s next generation exploration vehicles will be equipped to take on multiple mission types for deep space exploration.

The human spaceflight programs established in the NASA Authorization Act of 2010 and agreed upon by the White House and Congress have made incredible progress. By continuing steady and consistent support for these programs, exploration programs and commercial space transportation services will extend our reach farther than we’ve ever gone before – all for the benefit of life on Earth.

Leveling the Playing Field: The Ex-Im Bank & U.S. Manufacturing

Leveling the Playing Field: The Ex-Im Bank & U.S. Manufacturing

In the wake of an uneven global economic recovery, countries are competing in an unprecedented race to create jobs and stimulate economic growth through increased exports. In this competition, not all countries abide by the same set of rules that the United States follows to support their companies' exports. Indeed, American companies often come up against government-owned, government-protected or government-subsidized competitors from countries such as China, Brazil, India and various European nations, making for a brutally competitive and uneven playing field.

In this race, the U.S. Export-Import Bank (Ex-Im Bank) serves as a critical engine for U.S. jobs by leveling the playing field and helping American companies to compete toe-to-toe against their competitors in the global marketplace. Ex-Im Bank is acting as a vital catalyst of U.S. economic growth, enabling billions of dollars of exports and supporting hundreds of thousands of export-related U.S. jobs. In 2013 alone, Ex-Im Bank transactions promoted $34.7 billion of exports in fields such as power turbines, locomotives, agricultural equipment and satellites, and sustained or created more than 205,000 American jobs.

AIA believes that American companies can continue to compete and win in the global marketplace against their overseas counterparts, but they cannot do it with one hand tied behind their backs. Foreign competitors continue to enjoy significant financial assistance from their governments. To protect the competitiveness of our industry and American manufacturing, we need to ensure the Ex-Im Bank has the long-term support from Congress it needs to support and grow the American manufacturing workforce.

AIA Conflict Minerals Education Update

AIA Conflict Minerals Education Update

This document serves to inform AIA members and their supply chains about the first round of pending Conflict Minerals Specialized Disclosure filings to the SEC. With the complicated nature of the Conflict Minerals Report format and audit protocol, AIA has prepared this document as a training guide to help answer some of the most common questions about the process.

In addition, based on the AIA Conflict Minerals Working Group Charter, this training document completes one of key goals of this collective group. In order to provide our member companies and their supply chains with the necessary guidance, we have released this information broadly to allow for review and consider prior to the SEC filing deadline of June 2, 2014 for the first Conflict Minerals Specialized Disclosure.

Defense Research and Development

Defense Research & Development: From the Warfighter to American Consumers, Redefining Everyday Lives Through Innovation

Federal investments in science and technology research and development are threatened by the current budget environment. The Aerospace Industries Association is embarking on an education effort to inform policymakers, elected leaders and the American public on the impact of federal R&D dollars on the innovations that redefine our everyday lives.

This report – the first in a series that examines the impact of federal investment programs – highlights four case studies of private sector technologies and products that have been largely defined or influenced by defense R&D spending. These case studies include the cellular smart phone, the hospital operating room, the modern automobile and the flat screen television. Each case study provides a narrated illustration of
the product and its connections to defense R&D.

The President’s budget for fiscal year 2015 requests a reduction in science and technology funding across both defense and non-defense discretionary accounts. This would reinforce existing reductions from the past several budget cycles. If sequestration is not addressed in fiscal year 2016 and beyond, this downward angle could turn into a nosedive. AIA believes policymakers must ensure a robust and balanced defense
research program, not only for the substantial benefits it provides to America’s warfighters, but also for the resulting commercial innovations that help grow our productivity and our economy.

Over the past six decades, federal investment in R&D programs has acted as an incubator for innovation, producing an immeasurable array of technological advancements that have come to define modern life and society at large. These investments have provided the basis for a revolution in electronic systems, communications, materials and medical science, the results of which have served as the building blocks for today’s most common technologies, including transistors, the Internet, GPS navigation and liquid crystal technology, to name a few.

The connection between research programs and commercial deployment of technologies is often multi-faceted. Program requirements can provide both the research impetus and critical opportunity for technology to mature through production and continual improvement. However, not all technologies that follow this path spill into the private market. Those that do are defined both by market demand and by calculated private investments that enable them to emerge as profitable products. These disparate paths demonstrate how investments made in advanced research can result in enormous contributions to the nation’s economy and industrial competitiveness.

Restoring Balance in the Defense Acquisition System

Restoring Balance in the Defense Acquisition System

Over the past quarter century, more than 300 commissions and studies have produced a variety of recommendations – some of which have become law – to change the way the U.S. military develops and buys new weapons systems. Yet the Department of Defense acquisition system continues to take longer and deliver less in quantity and capability while costs of modernization programs escalate.

AIA has taken a hard look at what is causing this problem to develop this issue paper about what was discovered to be a multi-faceted issue that largely revolves around extraneous and over burdensome policies, laws and regulations.

Solutions to reducing the burden include:

  • A more efficient and effective cost-benefit analysis program;
  • Better audit practices;
  • Reducing unaffordable burdens;
  • Expanding the use of commercial items;  
  • New intellectual property rules; and
  • Having a reasonable expectation for contractor pay and compensation.
Easing the Burden: Reducing the cost of national security space capabilities

Easing the Burden: Reducing the cost of national security space capabilities

For more than five decades, our national security space assets have grown tremendously more capable and essential to our nation’s armed forces and national security decision makers. They are invaluable for keeping our military second to none. Unfortunately, the space sector – as the Pentagon noted in the 2011 National Security Space Strategy – is increasingly becoming congested, competitive and contested.

Current American space capabilities will be increasingly difficult to sustain in the face of declining defense budgets. As a result, reducing the cost of space systems is not just prudent – it is crucial. Any additional resources devoted to space systems would put pressure on other important programs in a very tight federal budget environment. At the same time, due to their force-multiplying benefits, space systems enable substantial savings elsewhere.

Industry and government organizations are responding to these challenges and successfully reducing the cost of national security space systems, devising innovative ways of doing business, from “right sizing” to match changing market demand to increasing exports of space systems and components.

In May 2013, AIA’s National Security Space Committee held a Cost Reduction Workshop that identified successful initiatives providing the best capabilities in this challenging environment. These include:

  • A focus on contractors’ internal management and product portfolios,
  • Support for acquisition and procurement innovation, and
  • Strategic investments to advance new paradigms of hardware development.

Throughout the workshop, a consistent theme emerged: Our nation’s aerospace industry is committed to its ongoing partnership with government in support of national security.

The Conflict Minerals Story

The Conflict Minerals Story

One of the primary methods of supporting Conflict Minerals control is through responsible sourcing of the products that may contain conflict minerals. Responsible sourcing is an important principle of the AIA Supplier Management Council (SMC). The AIA SMC is now actively educating AIA member companies about the release of the SEC Final Rule and the pending disclosure requirements, working with other shareholders and industries involved with this challenge to synergize activities, and providing member companies useful guidance, in the form of best practices.

This document provides a thorough analysis of the issue and along with helpful tips for companies dealing with conflict mineral disclosures. 

AIA Conflict Minerals Snapshot

AIA Conflict Minerals Snapshot

One of the primary methods of supporting Conflict Minerals control is through responsible sourcing of the products that may contain conflict minerals. Responsible sourcing is an important principle of the AIA Supplier Management Council (SMC). The AIA SMC is now actively educating AIA member companies about the release of the SEC Final Rule and the pending disclosure requirements, working with other shareholders and industries involved with this challenge to synergize activities, and providing member companies useful guidance, in the form of best practices.

AIA Conflict Minerals FAQ

AIA Conflict Minerals FAQ

The following frequently asked questions document about conflict minierals outlines the background issues surrounding the issue, what the applicability and scope of the reporting requirements are, what a reasonable country of oragin inquiry (RCOI) is, what is acceptable due dilligence in reporting, how to report conflict minerals in manufactured products, and what an indipendent private sector audit is. 

Aerospace Industry Sales

Aerospace Industry Sales

Even in a depressed economy aerospace sales hit a recorded high 215.2 billion dollars in 2009, a 4% increase over 2008 sales. The Missiles market segment lead the record year with a 10% increase in sales followed closely by military aircraft. All market segments exhibit growth of 2% or more with the exception of the related products segment, which saw an 8% decrease in sales in 2009.  For more information, see Series 02.

Aerospace Orders, Shipments & Backlog

Aerospace Orders, Shipments & Backlog

Shipment numbers have been steadily rising in the aerospace industry since 2003—2009 was no exception. The aerospace industry shipped 206 billion dollars worth of products in 2009. Shipments may have gone up, but new orders and backlog slipped from record highs recorded in 2008 and 2009. Backlog numbers dropped slightly to 362 billion dollars. New Order numbers fell harder to 166 billion dollars. For more information, see Series 26A, B and C.

Aerospace Employment

Aerospace Employment

In 2009 US employment dropped by 4% in comparison to 2008. In the same span of time employment in the Guided Missiles, Space Vehicles, and Parts sector of the aerospace industry increased its employment levels by 1% and the overall aerospace industry employment dropped by 2%. The most significant drop took place in the Aircraft and Parts segment which fell off over 3%.  For more information, see Group 2: Employment.

R&D Scientists and Engineers

R&D Scientists and Engineers

In the mid-1980s, one out of five research and development scientists and engineers was employed in the aerospace industry. That portion fell to 3.3% in 2007, the latest year's data available from the National Science Foundation. Likewise, the numbers of R&D scientists and engineers has fallen from nearly 145,000 in 1986 to a low of 19,100 in 2002 before recovering. Scientists and engineers hurdle the technological challenges and bring awe-inspiring new products and innovations to life.

Aerospace Foreign Trade

Aerospace Foreign Trade

The aerospace industry’s trade balance was over $56 billion in 2009. The industry recorded over 80 billion dollars in exports and imports shrunk to 33 billion dollars; these numbers are still dwarfed by the record setting years the industry experienced from 2006 to 2008. For more information, see Series 31 and 32.

Foreign Trade by Industry

Foreign Trade by Industry

The aerospace industry’s trade balance was over $56 billion in 2009. The industry recorded over 80 billion dollars in exports and imports shrunk to 33 billion dollars; these numbers are still dwarfed by the record setting years the industry experienced from 2006 to 2008. For more information, see Series 31 and 32.

Top Aerospace Trade Partners

Top Aerospace Trade Partners

France became the strongest importer of US aerospace products in 2009 importing 8.2 billion dollars of goods. Other big importers include the United Kingdom, Germany, and Japan. The US aerospace industry recorded a trade deficient with both France and Canada in 2009, importing over nearly half of all aerospace imports from these two countries alone.

Unsolved - The Continuing Saga of Lead-Free Electronics in Aerospace, Defense and High Performance P

Unsolved - The Continuing Saga of Lead-Free Electronics in Aerospace, Defense and High Performance Products

European Directive 2002/95/EC on the Restriction of the use of certain Hazardous Substances in Electrical and Electronic Equipment (RoHS) and the Waste electrical and electronic equipment (WEEE) Directive (2002/96/EC)ii have changed the global supply chain for materials used in aerospace products. The result of this market shift is of high concern for our industry, forcing the transition away from tin-lead alloys used in the assembly and coating for high performance electronics known as lead-free (Pb-free) electronics.

Aerospace Industry Guidelines for Implimenting Interoperability Standards for Engineering Data

Aerospace Industry Guidelines for Implimenting Interoperability Standards for Engineering Data

The variety of engineering tools used to support design, procurement, manufacturing, and support of aerospace products has never been greater. From company to company, tools and processes range from manual capture in 2D drawings to sophisticated 3D models that are tightly integrated with other enterprise systems - this guide helps provide a standard approach to work across the range of processes.

Continuing Quest for Quieter Aircraft

Continuing Quest for Quieter Aircraft

Modern day jet aircraft are more fuel efficient and quieter than ever before.  In the past 40 years jet aircraft have not only gained 70 percent greater fuel efficiency but are also about 90 percent quieter than their predecessors.  In the meantime, air traffic continues to increase – predicted to double by the year 2030 – while aircraft noise and emissions that affect local air quality and global climate will increase only modestly, through industry efforts such as the commitment to carbon neutral growth after the year 2020.

2013 Year-End Review and Forecast

2013 Year-End Review and Forecast

The U.S. aerospace and defense industry is facing some of its greatest challenges in decades. While weathering numerous trials during 2013, our industry produced relatively flat results compared with 2012. An overall slight decrease in sales is forecast, reaching $220.1 billion for 2013 – down from $222 billion last year – with only civil aircraft sales showing growth. Sequestration effects on the industry and Defense Department have forced industry layoffs and divestitures and will continue to put pressure on the fragile industrial base.

NAS Standards Brochure

For even more details about NAS and the AIA standards series, you may download the brochure.

Net Profit After Taxes

Aerospace Related Employment

Exports of U.S. Aerospace Products

Year End 2012 Table 7 Imports of Aerospace Products

U.S. Aerospace Balance of Trade

Civil Aircraft Shipments

U.S. Civil Transport Aircraft Backlog

Shipments, Orders, and Backlog

Aerospace Industry Sales by Customer

Industry Sales by Product Group

Sustaining the U.S. Defense Industrial Base

AIA Industrial Base Issue Paper

Commercial Items - Equipping Our Service Members with the Best

Commercial Items - Equipping Our Service Members with the Best

Using commercial items provides the Department of Defense (DOD) with distinct military advantages – access to a wide array of technologies and products developed through industry investment, generally at a lower cost and with a quicker turn-around time than through traditional acquisition programs.  Commercial purchases allow for faster insertion of technologies, lower life cycle costs and greater access to – and support from – the vast array of companies that make up the U.S. civil and military industrial base.

Sequester, Defense Budgets and the Industrial Base

Sequester, Defense Budgets and the Industrial Base

Mandatory budget cuts will dramatically and disproportionately reduce the Defense Department’s modernization accounts, which will damage the industrial base more severely than is commonly believed. The reasons for this that are enumerated in the paper include: The effects of sequester in 2013 were mitigated; Modernization funding, though roughly one-third of the defense budget, will likely absorb nearly half the cuts in sequester’s early years; and DOD is taking a "modernzation holiday"by committing between 15 and 20 percent less to needed programs.

NextGen: Proven Technology. Endangered Potential

NextGen: Proven Technology. Endangered Potential

Budget cuts are undermining the United States' ability to fully implement the Next Generation Air Transportation System known as NextGen. This delayed implementation is slowing air travel efficiencies, compounding safety concerns and contributing to unnecessary environmental noise and air pollution. With U.S. air travel expected to grow by 19 percent by 2018, it is necessary to maintain the implementation of NextGen.

State of the Defense Budget

State of the Defense Budget

Implementation of the Budget Control Act of 2011 is having severe adverse impacts on the defense budget. In real dollar terms, DOD investment spending (Procurement and R&D) in fiscal year 2013 is 24 percent less than it was in fiscal year 2011, the year before the Budget Control Act. Unless the act is changed, fiscal year 2014 could see another 14 percent reduction in investment spending.

Disruptive Information Technologies: Leveraging the benefits, avoiding the pitfalls

Disruptive Information Technologies: Leveraging the benefits, avoiding the pitfalls

This republished special report states the likely impact of specific high powered colaborative technologies on business, technical, cultural, operational and security for our industry. The key characteristics of each technology are described in the report along with the benefits, risks and mitigations. Each section provides recommendations to help companies exploit the technologies and proposes where appropriate including where AIA may act on behalf of the industry.

Radio Frequency Identification: Business scenarios that can benefit from the application of RFID

Radio Frequency Identification: Business scenarios that can benefit from the application of RFID

The AIA eBusiness Steering Group commissioned this report to identify the business scenarios where RFID could be effectively deployed in the aerospace and defense industry, based on growing industry experience of RFID in real applications. The report identifies some key successful applications in pilot and production environments, the lessons learned and challenges still remaining, and the most significant enhancements to the technology.

Unmanned Aircraft Systems: Perceptions and Potential

Unmanned Aircraft Systems: Perceptions and Potential

This report attempts both to define unmanned aircraft systems properly and to demystify their applications. It also explores
the societal benefits presented by their domestic use, and the policy priorities that must be addressed in order to keep the United States in its leading position in global UAS technology.

Policies and Codes of Conduct for the Use of Social Networks: Leveraging the Benefits…

Policies and Codes of Conduct for the Use of Social Networks: Leveraging the Benefits...

This report defines the key issues to be addressed when considering the use of social networking tools within an organization, in a controlled community and in a public environment. It also recommends that the content of policies and codes of conduct for the use of social media should be integrated with existing policies and codes of conduct related to computer usage and network access.

Cloud Computing: a Report on Cloud Computing used in the Aerospace and Defense Industry

Cloud Computing: a Report on Cloud Computing used in the Aerospace and Defense Industry

This paper explores the various applications of Cloud Computing used by industry and government. Based on the experience to date, it identifies the latest benefits, risks and business impacts of Cloud Computing, with particular reference to portability and interoperability.

Promoting U.S. Tax Policy for Aerospace and Defense

Promoting U.S. Tax Policy for Aerospace and Defense

As the United States economy moves through uncertain times, America’s aerospace and defense industry remains a powerful, reliable engine of employment, innovation and export income. The aerospace and defense industry directly employs more than one million Americans, located in every state of the Union — and supports more than two million jobs in related fields.

The Economic Impact of Sequestration on Civil Space Programs

The Economic Impact of Sequestration on Civil Space Programs

AIA and economist Dr. Stephen Fuller of George Mason University unveiled a new report detailing job loss and economic figures for NASA and NOAA resulting from the Budget Control Act of 2011.

2012 Year End Review and Forecast

2012 Year End Review and Forecast

The annual U.S. aerospace and defense industy's financial report and projections for 2012; and a policy outlook for 2013.

Remarks delivered at AIA's 48th Annual Year-End Review and Forecast luncheon (mp3 also available)

Space In Our World

Space In Our World

This report highlights the need for space systems to be recognized as a national infrastructure priority becasue space systems and thier benefits have become an irreplaceable force for good in our nation and our world.

Information Technology Guideline: Aerospace and Defense Industry Supply Chain Information Collection

Information Technology Guideline: Aerospace and Defense Industry Supply Chain Information Collection

This document identifies the business problems related to the European Union (E.U.) Registration, Evaluation, Authorization of Chemicals (REACH) regulation. It outlines a reference model for describing REACH IT related issues applicable to any industry. It defines an example business scenario applicable to the aerospace industry.

REACH-IT

REACH-IT

A Framework for Understanding REACH with Guidelines for Integrating Systems and Addressing Compliance Requirements

The Unseen Cost - An Update

The Unseen Cost - An Update

In July 2009, the Aerospace Industries Association published a special report, The Unseen Cost: Industrial Base Consequences of Defense Strategy Choices. In this report, the AIA raised concerns regarding the long-term consequences and unintended impacts of contemporary defense strategies and direction. Recently, AIA has revisited this report.

The Economic Impact of the Budget Control Act of 2011 on DOD & non-DOD Agencies

The Economic Impact of the Budget Control Act of 2011 on DOD & non-DOD Agencies

AIA and economist Dr. Stephen Fuller of George Mason University unveiled a new report detailing job loss figures resulting from the Budget Control Act of 2011.

Affordable Defense Logistics

Affordable Defense Logistics

“Life Cycle Product Support / Outcome Based Partnerships” and “Management of Commodities” have the potential to save an estimated $20 billion to $25 billion annually.

Deloitte: The Aerospace and Defense Industry in the U.S.

The Aerospace and Defense Industry in the U.S.: A financial and economic impact study

This report was commissioned by AIA to assess the contribution and financial impact the U.S. aerospace and defense industry has had on the American economy, in terms of employment, cash taxes paid, impact on gross domestic product and other financial, economic and qualitative factors. Although typically focused on military and commercial aircraft, space systems and related supply chain portions of “aerospace and defense,” we broadened the definition for this study to include land vehicles and systems, naval vehicles and systems, security and defense contracting software and services. The scope does not cover the users of these products and services, thereby excluding the air transportation industry (cargo and passenger airlines) as well as government employees.

We estimate that the U.S. aerospace and defense industry directly employed 1.05 million workers in 2010. These workers received $84.2 billion in wages and paid $15.4 billion in U.S. Federal individual income
taxes, and $1.9 billion in state individual income taxes. Although not directly in the scope of this study, in addition we found that the Federal government employs an estimated 845,198 aerospace and defense skilled workers at armed forces maintenance and repair depots, National Aeronautics and Space Administration (NASA), Federal Aviation Administration (FAA), other defense agencies including Defense Advanced Research Projects Agency (DARPA) and civilians working at the Department of Defense.

We found the industry has an estimated indirect and induced employment of 2.36 jobs for every 1 directly employed. This employment multiplier is a “direct effect” multiplier, which accounts for primary and secondary effect employment associated with the aerospace and defense industry. It does not contemplate “final demand,” or employment associated with tertiary effect employment well beyond the direct effect of this industry’s employment base. Thus, we believe that indirect and induced employment totals 2.48 million workers, in addition to those cited above who are directly employed. Together with these indirect employees, we estimate the grand total direct, indirect and induced employment associated with the U.S. aerospace and defense industry is 3.53 million jobs, not including industry skilled workers employed by the Federal government or airlines. 

We estimate that these U.S. aerospace and defense companies generated $324.0 billion in sales revenue in 2010, with $15.6 billion in net income after tax at an average pre-tax reported operating profit margin of 10.5%. This margin percent metric was below average, when compared to other industries in America. These companies paid $5.5 billion in corporate income taxes on their earnings, as well as $1.7 billion in state income and similar business taxes. Thus together with individual direct employee taxes, the total industry generated an estimated $37.8 billion in wage and income based taxes to state and Federal government treasuries, not including the taxes paid by indirect and induced industry employment. 

The industry is the largest net exporter, and one of the largest contributors to our nation’s gross exports at $89.6 billion, with a larger portion made up of commercial aircraft bound for foreign carriers. The industry’s
contribution to the nation’s GDP is 2.23%, and as described below, we conclude the industry “punches above its weight,” when considering other beneficial and qualitative impacts to our economy beyond these metrics.

Indeed the industry contributes in ways not directly included in GDP, employment, and taxes paid. Although it has only been 108 years since the Wright Brothers’ first flight, the industry has contributed fundamentally to the way we live, work, travel and communicate with the technology created and continued innovations in jet aircraft, communications satellites, the internet and Global Positioning Systems (GPS), for example. Also, the industry is primarily
responsible for the reduction of casualties in armed conflict due to the technology innovations that keep our warfighters out of harm’s way with unmanned aircraft, sophisticated surveillance sensors and over the horizon strike capability.

Current economic challenges resulting in defense budget declines may impact direct and indirect employment, ability to conduct research and development, and taxes paid. On the other hand, the current up-cycle in commercial aircraft production, thus employment, portends years of future growth potential. However, due to its weighting, the uptick in commercial aircraft production is not expected to make up for the shortfall in overall industry revenues and
employment due to the size of the pending defense downturn.

This study demonstrates the significant economic and financial contributions made by the aerospace and defense industry, and its broader impact on our society. These will be important considerations as constituents assess the impact of changes to investments in research and development and the industrial base, and the continued ability of the industry to create the next generation of game changing products and services.

Competing for Space: Satellite Export Policy and U.S. National Security

Competing for Space: Satellite Export Policy and U.S. National Security

As we enter a new era of budget austerity and the threat of draconian sequestration loom, failure to revise export controls could result in an ongoing loss of critical industrial base suppliers and pose an increasing risk to national security.

Human Capital Management

This report provides a framework of Key Performance Indicators (KPI) for an organization to assess its ability to retain the critical knowledge that it needs, both internally and within its supply chain. It is recommended that an enterprise should assess its maturity against the KPIs and establish the level of capability that is required to effectively manage its risk as identified by internal business process requirements or mandated by contractual obligations.

Best Practices for Exploiting the Consumerization of Information Technologies

The nature of the aerospace and defense business implies that the industry is one of the most severe test cases for the effective deployment of new consumer devices, virtualization of storage and processors and Internet connectivity. These guidelines describe best practices for companies to assess the risks involved in exploiting new technologies and capabilities within their business, and to operate such equipment to deliver benefits.

Policies and Codes of Conduct for the Use of Social Network

This document recommends templates for the policies and codes of conduct that companies should apply to their employees’ use of social networking tools, depending on whether those tools are hosted in a private, community or public environment. The recommendations are based on best practices from member companies.

Industry Task Force Paper: Defense Executives Assess Business Impacts of Major Budget Cuts

Industry Task Force Paper: Defense Executives Assess Business Impacts of Major Budget Cuts

The $480 billion in additional budget cuts projected over the next decade could cripple certain defense sectors, resulting in an industrial base that is smaller, less innovative, and less responsive to urgent wartime needs.

Defense Acquisition Reform: Moving Toward an Efficient Acquisition System

This report identifies the key elements of the DOD's Efficiencies Initiative that are both doable and necessary. This report also identifies reforms to the system not included in the Efficiencies Initiative that we believe are necessary to ensure the ultimate beneficiary — the warfighter — has the tools needed at a cost that is acceptable to the taxpayer.

The Case for a Defense Industrial Strategy

The defense industrial base is a national strategic asset that has provided the United States with a marked advantage in defense technology for more than six decades. But that asset — the intellectual capital and production capacity of aerospace and defense manufacturing — is at risk of atrophying to a point where it will not be able to provide the weapons systems this country needs in the future.

Defense Investment: Finding the Right Balance

Prepared by AIA’s National Security Council, this paper looks at historical spending in the investment accounts and the ebb and flow of spending since the 1970s. It concludes that our nation and its military members pay a large price when we decrease spending on procurement and R&D. We hope that these conclusions will help today’s officials make the right decisions that will keep our troops safe while maintaining a healthy defense industrial base for the future.

Counterfeit Parts: Increasing Awareness and Developing Countermeasures

Counterfeiting has a long and ignoble history, ranging from art and literature to manufactured goods. Unlike other industries, counterfeiting in the aerospace industry may have life or death consequences. We take the problem seriously. Thus, all stakeholders from industry and government must work together to effectively reduce the introduction of counterfeit parts into the aerospace supply chain and minimize their impact.

Building and Maintaining Value in the National Security Space Industrial Base

Building and Maintaining Value in the National Security Space Industrial Base

Space systems are increasingly providing an unprecedented level of critical national security capability to the U.S. and our warfighters. Yet these systems are often highly complex and not without substantial cost to the taxpayer. In light of growing pressure on federal government budgets it will be important to ensure that our nation maintains a strong space industrial base while also providing value to both the taxpayer and warfighter. Following AIA’s recent Tipping Point report, AIA looks at specific examples of space capabilities that are absolutely vital to our security and provides recommendations on the path forward:

  • A survey of our national security space industrial base and areas of concern.
  • Recommendations of steps to build and maintain value in the national security space sector.
  • An industry analysis of funding stability, block satellite buys, sourcing wisely, and other important measures.

2010: Third Quarter

2010: Second Quarter

2010: First Quarter

Acquisition Policy Changes: Impacts on Contract Profitability

Acquisition Policy Changes: Impacts on Contract Profitability

Federal acquisition policy expressly recognizes the importance of the contractor’s ability to earn reasonable returns on business with the Government. Recent acquisition trends and policies, however, have attacked the profit and fee portions of contractor’s prices, either through the elimination of fee on certain cost elements or by negotiation strategies impacting overall returns on government contracts.  Industry believes acquisition trends focused on elements of profitability, including changes to contract cash flow and policies for R&D funding, will have negative consequences for the Government and the nation as a whole as contractors and investors move resources away from unprofitable government business.

What is Best for the Warfighter and Taxpayer

What is Best for the Warfighter and Taxpayer

The Product Support Executive Board is producing a series of briefs assessing the impact of in-sourcing policies enacted by the Department of Defense (DOD). The first in this series examines best practices for producing the most benefit for the warfighter and taxpayer.

Tipping Point: Maintaining the Health of the National Security Space Industrial Base

Tipping Point: Maintaining the Health of the National Security Space Industrial Base

National security space systems provide missile warning and defense; global communications; environmental monitoring; global positioning, navigation and timing; launch capability, and intelligence, reconnaissance and surveillance. They are the bedrock of our 21st century military capabilities and part of our economy’s critical infrastructure. Yet in light of an increasingly contested, congested and competitive space domain – and a national security space industrial base that is increasingly fragile – it is more important than ever to match policy goals with strong leadership, integrated strategy and the long-term funding and stability needed to maintain cutting edge and cost-effective space programs.

Civil Aviation Growth in the 21st Century

Civil Aviation Growth in the 21st Century

Civil aviation has always played a vital role in the health of the world’s economy and the well-being of its inhabitants. It facilitates commerce and connects families, friends and cultures across borders and oceans the way no other mode of travel can. Civil aviation is also vital to global humanitarian missions, bringing lifesaving equipment and personnel to disaster zones around the world.

Disruptive Information Technologies

Disruptive Information Technologies

This report is an initial statement of the likely impact of these technologies and the business, technical, cultural, operational and security implications for our industry. The key characteristics of each technology are described in the following sections along with the claimed benefits, risks and mitigations. Each section provides recommendations to help companies exploit the technologies and proposes supporting actions where it is appropriate for the AIA to act on behalf of the industry.

Promoting U.S. Tax Policy for Aerospace and Defense

Promoting U.S. Tax Policy for Aerospace and Defense

The U.S. economy is globally competitive, which magnifies the importance of our tax policy. Higher tax rates and complex tax regulations in the United States have produced a competitive
disadvantage for the United States and U.S.-based business activities. This disadvantage leads to fewer companies doing business in the United States, which results in a falloff in jobs and lower economic growth.

To advance our nation’s manufacturing base into the 21st century and increase the number of high-wage jobs in the United States, the government must develop and implement tax policies that will eliminate global disadvantages and allow the aerospace industry to grow.

Why FAR Part 12 Authorities Must be Retained

Why FAR Part 12 Authorities Must be Retained

In the early 1990s Congress recognized the opportunities commercial products provided to the Government and that procurement statutes were not well-suited to acquiring those items from commercial companies. Statutes were enacted to incorporate free-market principles into the Federal Acquisition Regulation (FAR) by encouraging both the acquisition of commercial items and services and the use of commercial practices. The recommendations of the Section 800 Panel Report of 1993 were to simplify the regulations and to more closely parallel commercial contracting practices. Specifically, FAR Part 12, “Acquisition of Commercial Items,” and the corresponding definitions of “commercial item” at FAR Part 2 were rewritten to exempt commercial item vendors from many burdensome regulatory provisions.

Reliability Assessment of Lead-free Electronics in the Aerospace, Defense ...

Reliability Assessment of Lead-free Electronics in the Aerospace, Defense ...

The Lead (Pb)-free Electronics Risk Management (PERM) Consortium recently released the following white paper entitled “Reliability Assessment of Lead-free Electronics in the Aerospace, Defense and High Performance Electronics Industries.” The White Paper states that it is premature to rely solely on known reliability standards for qualification of systems containing lead-free assemblies in critical, high-reliability, harsh environment applications without rigorous assessment of application requirements.

Ten Key Facts About Export Control Modernization

Ten Key Facts About Export Control Modernization

Modernizing the U.S. export control regime is vital to the aerospace and defense industry. The following 10 key facts illustrate how prudent and appropriate changes to the system will support U.S. national security and foreign policy interests while also helping American companies become more competitive in the global marketplace.

NextGen: The Future of Flying

NextGen: The Future of Flying

The Next Generation Air Transportation System (NextGen) transforms the National Airspace System to meet future safety, security, capacity and environmental needs. The full implementation of NextGen will fundamentally change air traffic management by combining new technologies for surveillance, navigation and communications with procedural changes and airfield development.

Research and Development Tax Credit

Research and Development Tax Credit

The aerospace and civil aviation industries account for nearly 15 percent of the U.S. Gross Domestic Product and support approximately 11 million domestic jobs. Consequently, America’s economic growth and national security depend on this high technology workforce, which includes many segments of applied research including air transportation, military operations, and space-based communications. Yet these U.S. firms, which produce the world’s most reliable aerospace systems and sub-systems, must compete with a foreign marketplace in which government entities underwrite a significant portion of the industry’s civil aeronautics research and development.

Electronic Knowledge Management

Electronic Knowledge Management

This document contains guidelines to assist organizations in developing an overall Electronic Knowledge Management strategy. It addresses the challenges of capturing and retaining the tacit knowledge from members of a workforce so that it can be exploited across the organization, even after individuals are no longer present, and managing ESI and other forms of information.

Space Brochure: Maintain U.S. Global Leadership in Space

Space Brochure: Maintain U.S. Global Leadership in Space

U.S. space efforts — civil, commercial and national security — drive our nation’s competitiveness, economic growth and innovation. To maintain U.S. preeminence in this sector and to allow space to act as a technological driver for current and future industries, our leadership must recognize space as a national priority and robustly fund its programs.

2009: Fourth Quarter

2009: First Quarter

2009: Second Quarter

2009: Third Quarter

2008: Fourth Quarter

2008: Third Quarter

2008: Second Quarter

2008: First Quarter

2007: Fourth Quarter

2007: Third Quarter

2007: Second Quarter

2007: First Quarter

2006: Fourth Quarter

2006: Third Quarter

2006: Second Quarter

2006: First Quarter

2005: Fourth Quarter