Aerospace Industry News

The Association of Australian Aerospace Industries (AAAI) was invited- along with the British (SBAC); French (GIFAS); German (BOLi); Canadian (AIAC) and Japanese (SJAC) to send representatives to attend the Aerospace Industry Association (AIA) of America, International Council Conference. The AAAI Executive Director was invited to submit a paper and talk for 15 minutes at the Conference. Other members of the Executive Committee of AAAI were invited to attend the conference at their own cost. The Chairman (P Lister) and one member (R Koger) attended.

The US determination to get rid of offsets appear to be a reaction to a number of factors:

• of immediate concern are:

– the publicity given to the 130% offsets, Britain claimed for the Boeing E-3 AWACS deal,

– the Japanese FSX project, and

– the initial demands by Korea in the Korean Fighter program; and

• of longer term concern are suspicions and disquiet about the trading and industry development practices of Europe (post ’92), Japan and now Korea, Taiwan and Brazil et al and a projected severe downturn in the US Defense budget.

The concerns are more ’emotional’ than based on sound analysis of the relative advantages and disadvantages of international co-operation. There is still a willingness to listen to arguments for placing offshore work (or providing technology) when these arguments are based on an identifiable program to increase a country’s defence contribution to an alliance of interest to the USA or can be shown fo be in the longer term interest of US industry.

It is understood that the US Commerce Department is, at present, conducting a survey of international programs (particularly offsets programs) related to the F-18 project, to attempt to quantify the effects these programs had on US based subcontractors – so as to be able to use this information in arguments against future proposals. There was a GAO investigation some years ago which was defused by the major US prime contractors. This time the impetus is from the small sub-contractor and supplier who has (proportionally) much more to lose.

Most of the comment at the Conference related to Defence offsets. This was because only four countries demand identifiable offsets for civil aircraft purchases. Despite an emphasis on Defence contracts at the meeting, the US Commerce Department is very likely to present great problems to DITAC’s ambitions to achieve ‘partnership’ arrangements – if the Australian Department cannot get a number of long-term arrangements in place before the opposition in the US is fully mobilised.

There is going to be further tightening by the US Government on the transfer of technology (for both military and civilian projects). Australian companies should bear this in mind when developing their business plans. The downturn in the US Defense budget is creating a reaction in the Administration and Congress leading to many advocating greater protection for the US industry.

Currently the market for large passenger aircraft is very buoyant. There is a significant shortfall in capacity worldwide. An ideal opportunity exists to gain orders. A worrying thought is that a prediction of a mid 90s downturn (crisis) in civil large passenger aircraft demand, mentioned in the very first keynote address, was still being seriously discussed at the end of the conference. If a downturn does occur, Australian companies will have a very small window of opportunity to establish themselves as reliable longer term participants in the civil airliner manufacturing pyramid.

Comdef 89

COMDEF 1989 is the Defence Equipment exhibition, supported by the US Department of Defense held each year in Washington DC at which NATO countries and Sweden, Japan and Australia are encouraged to display products for sale to the US Defense Forces.

It is run on commercial lines with the promoter given the rights to stage the exhibition and charge whatever the market will bear for companies to participate. Originally it was held in response to complaints from European companies that the so called ‘two way street’ did not exist as they were actively discouraged from entering the US Defense market. COMDEF was seen by US authorities as positive proof that this was not so.

This year’s exhibition was held at the Omni Shoreham Hotel in Washington DC. AAAl’s Chairman and Executive Director, who were in the USA attending a meeting of the International Council of the Aerospace Industries Association of America, had the opportunity to spend one day at COMDEF 89.

The Australian participation at the exhibition was sponsored, managed and subsidised by Defence and Austrade. Detailed arrangements were organised by Mr John Garran and his staff from the Trade Commission Office in New York. Mr Garran himself acted as Exhibit Director. Defence representatives from Australia were Mr Mike Welch, Assistant Secretary Exports and International Programs DOD Canberra and two of his staff Mr Gary Luck and MrAlan Grigg. In addition other ‘notables’ were in Washington at the time. Mr Peter Terrill, the FAS concerned with Jindalee, was involved in negotiations for that project and managed to visit the exhibit and Mr Ken Harris, Chief Executive ofADI was also in Washington at the time. The Head of the Australian Defence Staff (Air Vice Marshall Barry Gration) and theAttaches all attended and lent support in various ways.

There was an extensive seminar program . in conjunction with the exhibition which was not attended by thisreporter. However, it is understood that the same messages he had picked up during theAIA Conference were being given out by the US- namely that Offsets were to be fiercely resisted by US authorities – that technology transfer proposals were to be more closely examined to asses their impact (at both commercial and strategic levels) and that the US was to be more aggressively competitive in regard to the export of Defence equipment.

European speakers were at pains to point out that there would be no ‘Fortress Europe’ past 1992.