U.S. aircraft manufacturers are expected to lose more than $100 billion and 250,000 jobs to foreign producers over the next five to 10 years, an economic think tank with labor ties said in a report Wednesday.
The losses are expected partly because more and more contractors in the growing Asian market are requiring the work be done there, said the Economic Policy Institute, a non-profit organization backed by labor unions among others.
The trend finds U.S. companies “trading jobs for market access” overseas, producing “a grim picture for the future of hundreds of thousands of aerospace-related jobs,” said the study titled, “Jobs On the Wing: Trading Away the Future of the U.S. Aerospace Industry.”
About 250,000 U.S. jobs are at risk by the year 2000, according to the report co-written by Randy Barber, a former author of an AFL-CIO newsletter and recent adviser to President Clinton’s National Airline Commission.
By 2013, losses could total as many as 469,000 jobs and $129 billion in sales, it said.
The institute, whose founding members included Labor Secretary Robert Reich, calls on the Clinton administration to negotiate a new civil aircraft trade agreement with the European Union that “prohibits Boeing, McDonnell Douglas and Airbus Industrie from using the export of jobs and technologies as a marketing tool.”
“Both U.S. commercial aircraft manufacturers are actively seeking out risk-sharing partners and in the process they are undermining long-term domestic aerospace employment prospects,” the report said.
“The major integrators have become so dependent on Japanese firms for certain work that Boeing says it can no longer build an aircraft without the Japanese,” it said.
Boeing Co. spokesman Christopher Villiers said 70 percent of Boeing’s sales are outside the United States but 85 percent of the jobs created by those sales are domestic.
“Yes, there are occasions where we find it advantageous to gain market access to put some work in other countries. That has traditionally been the way the industry has operated. It generates jobs at home,” Villiers said Wednesday in a telephone interview from Seattle.
Boeing estimates every $1 billion worth of airplane sales generates approximately 3,700 U.S. jobs at Boeing, 4,500 jobs at various other U.S. firms including engine companies, and about 1,200 jobs at firms outside of the United States, he said.
The institute, a critic of the North American Free Trade Agreement and General Agreement on Tariffs and Trade, singles out Boeing and the estimated $6 billion it spent recently developing the new 777 jetliner.
A substantial portion of the development and production of the planes was undertaken with foreign partners, partly because of antitrust restrictions and the reluctance of the U.S. government to back the deals domestically, the report said.
Excluding the engines, Boeing’s 777 will have 30 percent foreign content, 21 percent of which will be accounted for by Boeing’s Japanese risk-sharing partners who invested $2 billion to develop the aircraft, the report said.
“Not only will this be the highest foreign content of any U.S. commercial aircraft ever produced, but a significant number of American Boeing jobs have been transferred to the Japanese, who will fabricate virtually the entire fuselage along with other important components.”
Ultimately, the 777 probably will require only about 40 percent of the U.S. production jobs of Boeing’s other current aircraft, said Barber and Robert Scott, associate director of the University of Maryland’s Center for International Business Education and Research.
The market share of U.S. manufacturers has been declining since the 1970s. A share of about 60 percent is projected by 2013, down about 10 percent from the early 1990s.
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