Aircraft

Purpose: The United States (U.S.) aircraft industry, also known as the Aerospace and Defense (A&D) industry, is a Department of Defense (DoD) and National Security (NS) asset. This research explores the importance of the A&D industry. The influence of U.S. government policy and regulation intended to protect and sustain the domestic A&D industry are counterbalanced with federal budget constraints and technology transfer concerns. Specific areas influencing the A&D industry include the balance between export control regulation and industry fiscal health, the implications to domestic defense competition when considering affordability, and the bolstering of the global supply chain in order to preserve U.S. NS interests. To improve the U.S. position in these areas, this paper examines the need for the U.S. to inculcate innovation in the A&D industry. Additionally, the U.S. must continue to reform export control regulations while balancing national security and economic growth opportunities through trade and exports. Finally, the U.S. must confront the challenges of an aging workforce, cyber security, and an increasingly fragile supply chain. A concerted effort on all fronts will ensure a viable A&D industry capable of generating economic growth and meeting security challenges of the 21st century.

Methodology. The Eisenhower School Aircraft Industry Study team applied the Commandant’s industry studies analytic framework to a business model assessment informed by guest speaker presentations, site visits, and individual research assessments on the A&D industry. Research on special topical areas offer assessments of the A&D industry outlook while challenges present leaders and law makers with opportunities for policy recommendations to strengthen and sustain the A&D industry through increasingly tight fiscal constraints.

Economic Overview: In 1944, at the height of conflict in World War II, the U.S. spent $125.6M on national defense, representing a staggering 35.3% of the Gross Domestic Product (GDP). Through the Cold War, U.S. spending on defense rarely strayed outside of 5-10% of GDP. In 1971, federal budgets shifted to include additional social and economic programming. Twenty years later at the end of the Cold War, defense budgets fell to the range of 3-5% of GDP, as Americans expected to reap a peace dividend with the fall of the Soviet Union. In 1993 Secretary of Defense Les Aspin delivered a clear message to defense industry executives at the famed “Last Supper” – there was not enough business to go around and barring significant consolidation many firms would face bankruptcy. Leaping ahead another twenty years, the Budget Control Act (BCA) enacted fiscal constraints impacting all sectors of the Defense Industrial Complex, including the A&D industry.

Read the report →