Assistant Secretary of Commerce Nicole Y. Lamb-Hale
Manufacturing and Services
2nd Annual Aviation and Aerospace Manufacturing Summit
Thursday, February 24, 2011
As prepared for delivery
Good afternoon, everyone. It’s a pleasure to be here with you today. Thank you, Dr. Watret Dr. Materna for the introduction and to all of you for inviting me to be a part of this Summit.
In many ways, this Summit feels like a partners’ meeting. I would like to recognize the contributions and leadership of several of our partners who are helping the Obama Administration better understand the competitiveness and trade challenges that you face in the current economy.
Embry-Riddle is one of our “official partners.” In September 2010, Dr. Watret and I signed an agreement on behalf of the International Trade Administration and Embry-Riddle’s Worldwide Campus Center for Aviation and Aerospace Leadership to collaborate on industry outreach events and industry analysis. Dr. Watret, Dr. Materna and General Robert Mansfield (Ret.) work closely with us across a whole range of issues and research topics that relate to the competitiveness of U.S.-based aerospace manufacturing, innovations and export competitiveness.
I would also like to recognize Marion Blakey, President of the Aerospace Industries Association (AIA). AIA represents the nation's leading aerospace manufacturers and suppliers. The Commerce Department is collaborating with AIA on the President’s National Export Initiative and is looking forward to working with AIA at the Paris Air Show and National Aerospace Week in September 2011.
Fedex is also an official “partner” with the Department of Commerce. Working with the National Association of Manufacturers (NAM), we are identifying NAM members and FedEx customers who already export to help them expand to new international markets by connecting them with trade specialists at the Commerce Department.
Finally, in the most real sense, all of you here today, representing the broad sweep of the aerospace community are partners in the endeavor to ensure continuing U.S. leadership in global aerospace manufacturing, innovation, and technology.
I'm very pleased to have the opportunity to meet you and to discuss issues that are of importance to you, as well as to our country. In these changing times, I am excited to serve as the Assistant Secretary of Commerce for Manufacturing and Services.
I identify personally with the difficulties faced today by manufacturers. The downturn in both manufacturing and the overall economy, as well as the magnitude of our unemployment rate, has been extremely difficult. When I practiced law in Detroit, quite a few of my clients were manufacturers; so I am familiar with the challenges the sector has faced. And now, we have had to absorb the blows from the economic recession that began in 2007.
Manufacturing is the furnace that forged our middle class and remains a vital part of the U.S. economy. Based on figures announced earlier this month, the sector employs 11.4 million American workers as of January 2011. This accounts for about 9.0 percent of total nonfarm employment in the United States.
Manufacturing industries are also responsible for a significant share of U.S. economic production, generating nearly $1.58 trillion in GDP in 2009.
The U.S. aerospace and defense industry is a strategic contributor to the economy, national security, and technological innovation of the United States. The total value of aerospace shipments for 2009 was nearly $180 billion, a decline of 4.9 percent over 2008. The total value of aircraft and parts alone was $157 billion, a decline of 5.4 percent over 2008.
Aerospace manufacturing is an export intensive industry, with over 46 percent of total output consistently exported. It is internationally competitive, with the largest trade surplus of all manufacturing sectors. Over the past ten years, aerospace has been the second largest exporting sector on a dollar basis. Interestingly, exports of aerospace products and parts declined only 1.6 percent from 2008-2009, compared to the 18 percent decline in U.S. merchandise exports over that period.
According to a recent Department of Commerce study, aerospace supports more jobs through exports than any other industry. The aerospace sector also supports over 770,000 U.S. jobs both export and non-export related more than any other manufacturing or service sector, and supports 1.2 million jobs in related fields. Roughly half of all U.S. jobs supported by aerospace manufacturing are attributable to exports of U.S. aerospace products. U.S. aerospace production workers are well paid, earning 80 percent more than manufacturing workers generally and more than double all U.S. private sector workers.
These numbers are impressive. But they do not mean that we can sit back and refuse to meet the challenges of the future.
While the U.S. industry is very competitive internationally, U.S. predominance globally has declined over the over the last 20 years. Europe now produces more large civil aircraft than the United States. Major aircraft-producing countries subscribe to WTO rules on free trade in aircraft, but emerging competitors have not acceded to those rules.
However, the competitiveness of the U.S. aerospace industry will allow it to take advantage of growth in the world economy, which will be driven increasingly by nations seeking to improve their standards of living – thereby generating demand for goods and services that will increase over time. A new global middle class is emerging and creating new global markets for our goods and services. By implication, U.S. aerospace companies will have greater prospects for success by seeking export opportunities.
And one of the reasons I am so pleased to be here is that all of you today already are or can take advantage of this potential for growth.
The Five Pillars of the National Export Initiative
Exporting is good for American business, good for American workers and communities, and good for American jobs. That is why President Obama launched the National Export Initiative, or NEI, which set the goal of doubling U.S. exports in five years thereby supporting several million jobs. The Obama Administration is committed to working with U.S. companies to help ensure that American-made goods and services succeed in the global market.
When America exports, America prospers. At a time when Americans are saving more and consuming less, exports can help to create the jobs needed to bring unemployment down and help to assure a strong and durable recovery.
To meet this objective, the President has focused on five pillars for the NEI which are:
- Improving advocacy and trade promotion;
- Increasing access to export financing;
- Removing barriers to trade;
- Enforcing our trade rules;
- Promoting strong, sustainable, and balanced growth.
ITA is taking a sectoral approach to developing a winning strategy to achieve the President’s NEI export goals, based on the recognition that—while government can do what it can to assist—it is companies that do the exporting and specific products that win markets.
In fact, my unit of ITA, Manufacturing and Services, has redefined its mission to advance the international competitiveness of U.S. industries by leveraging its in-depth sector and analytical expertise in the development and execution of trade policy and promotion strategies.
It will come as no surprise that aerospace — as our leading export sector — is also a top priority sector for the NEI. In addition to our continuing efforts to promote the sale of aircraft, the new wrinkle here is that our strategy will also be offensive. By that I mean we will also focus on the aerospace supply chain and expanding U.S. supplier participation in global supply chains that will serve traditional airframe producers in the U.S. and Europe as well as emerging producers.
We have identified a number of priority markets, including India, Brazil, China, Canada, Japan, South Korea and the Middle East/North Africa (including Turkey, Emirates, and Saudi Arabia).
We selected these markets because, in our view, they are areas where U.S. government engagement can make a significant difference in terms of creating and growing export opportunities for U.S. aerospace suppliers. For example:
In India, we are working to eliminate India’s combined tariff and other charges on general aviation aircraft. You may have noticed that this issue was prominently featured in Secretary Locke’s remarks during his recent visit to India. In addition to this bilateral approach, we are also pressing hard for India to accede to the WTO Agreement on Trade in Civil Aircraft, which would require India to eliminate all tariffs on aerospace products and also eliminate its offset requirements. We see this as a cornerstone of a developing relationship with India as a maturing player in the global aerospace market. We will be focusing on convincing a number of other emerging producers—including Brazil, Russia, and China—to join the Agreement as well.
At the same time, through our Aviation Infrastructure Working Group, we are addressing the barriers to expanding India’s airport infrastructure and also facilitating U.S. supplier participation in this $20 billion dollar market.
In Brazil, we are working with an interagency team and aerospace industry groups in Brazil to put together an Aviation Cooperation Program (ACP) like the one we have with India and China. We have also identified some very high bound tariff rates for aerospace in Brazil and will be working to have them brought down to zero. And we will work with the U.S. suppliers to Embraer to identify additional export opportunities for them in third countries.
In Canada, we are continuing to address the issue of subsidies to Bombardier and also looking at ways to expand U.S. supplier participation in the Bombardier supply chain.
With respect to Korea, we are working to encourage Congressional approval of the U.S.-Korea Free Trade Agreement by educating the public on the Agreement’s economic benefits. The Agreement will create thousands of new manufacturing jobs, further our national goal of doubling exports in five years, and demonstrate that the United States is once again ready to lead on global trade efforts.
At the same time, of course, we will continue our Advocacy efforts and our traditional trade promotion—such as the upcoming Paris Air Show.
But we also need to look farther ahead. As President Obama said in his most recent State of the Union speech, “we know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the world. We have to make America the best place on Earth to do business. That's how we'll win the future.”
In developing our export strategy, we recognize that in order to maintain our strong export position in the future, we will have to address what I call “over the horizon” segments of the industry including commercial space, NextGen, alternative aviation fuels, and Unmanned Aircraft Systems.
The ITA export strategies, led by my unit Manufacturing and Services, are the basis for an interagency effort to focus the full resources of the U.S. government focused on what really will make a difference for our priority industries. Because of our sectoral focus, and the fact that the competitive position of our priority industries is a starting point, we are relying on your advice and engagement more than ever.
Enhancing Public-Private Partnerships
Which leads me to discuss the importance of public-private partnerships to the work that we do.
In addition to ITA’s collaboration with Embry-Riddle’s Worldwide Campus Center for Aviation and Aerospace Leadership, ITA has a variety of partnerships to advance the international competitiveness of the U.S. aerospace industry.
A unique public-private partnership is the Industry Trade Advisory Committees (ITAC) program. The ITACs are jointly managed by the U.S. Department of Commerce and the Office of United States Trade Representative. The ITAC for Aerospace Equipment engages business leaders in formulating U.S. trade policy. Indeed, the Aerospace Equipment ITAC, together with our 15 other ITACs, contributed significantly to the development of the US-Korea Free Trade Agreement.
Another noteworthy partnership is ITA’s Market Development Cooperator Program, or MDCP. The MDCP, which my unit manages, provides competitive awards to non-profit groups or universities’ projects to create export opportunity for U.S. businesses.
The MDCP boasts a great return on investment. In fact, ITA's $23.5 million investment since the commencement of the program has yielded over $2.9 billion in increased exports.
The 2011 MDCP competition is scheduled to begin soon and we encourage trade associations, economic development organizations and other non-profit groups to apply. Information on the program can be found at trade.gov/mdcp.
Further, through our Strategic Partnership Program, we are working to broaden and deepen the U.S. exporter base by leveraging partnerships with trade associations and private corporations. Through these innovative public-private partnerships, we are making companies that might not know about our programs aware of our trade promotion and related resources, and we are letting them know of global business opportunities.
Another significant public-private partnership is the Secretary’s Manufacturing Council. The Manufacturing Council advises Commerce Secretary Gary Locke on issues, policies, and programs that affect the manufacturing industry. The Council is comprised of 24 private sector members from a broad cross section of industry, including Kelli Johnson, from ACE Clearwater Enterprises and others that support the aerospace sector. The current Council is analyzing the importance of energy, competitiveness, workforce development and trade to manufacturing.
Finally, another U.S. government partnership that is helping to boost exports is the President’s Export Council, or PEC, that advises President Obama on export matters. As you may know, Jim McNerney of Boeing is serving as the Chair of the PEC. We really appreciate his leadership and all the energy he has been, and will be, dedicating to the PEC.
Let me conclude by saying that I am committed to working with you to foster the aerospace manufacturing sector’s growth, support its competitiveness, and expand its exports.
We will continue to work hard within the Obama Administration to enforce existing U.S. trade laws, as well as other trade obligations under our trade agreements.
We will also work to identify market opportunities for U.S. products and services.
The revitalization of manufacturing and export expansion are matters of national urgency. We have the potential to remake the economy and create a better future for our children.
You, as aerospace suppliers, are innovative and globally competitive. You employ the highly skilled workers that our country needs for leadership in the 21st century world economy. The markets with the highest potential, such as China, Brazil, and India, are also countries with rapidly developing aerospace capabilities. This means that it is not only an export opportunity, but also a competitive imperative that your companies factor export market development into your business planning.
We stand ready to work with you to rebuild American manufacturing for the 21st century, increase exports, and create jobs. Innovation, technology, and productivity will continue to drive American aerospace manufacturing and that is precisely why the United States will in the words of President Obama, win the future.
Thank you again for inviting me today.
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