PRESIDENT'S PERSPECTIVE GOVERNMENT POLICY
Trump Aerospace Industry Tweets Misfire
Examples of this involved the program to develop and field a new Air Force One to transport the president — a program where The Boeing Co. will likely be the prime contractor; and another questioned the costs of the F-35, a new fighter aircraft for the Air Force, Navy, Marine Corps and several international partners. There are numerous exceptions one can take with his December tweets on these subjects.
The Trump Organization has experience in acquiring and outfitting a commercial aircraft, operating a Boeing 757-200 that was purchased from Microsoft co-founder Paul Allen and then customized for Trump. The plane is reported to be worth $100 million, and that price may be the benchmark used by Trump in evaluating the cost of an Air Force One replacement.
If so, such a comparison is truly “apples to oranges.” Air Force One is a much different and larger aircraft using a Boeing 747 airframe. The current Air Force One fleet, which consists of two aircraft, uses the 747-200 airframe that was in production from 1971 to 1991. In other words, today’s presidential aircraft are based on a design that is nearly 50 years old, and was delivered 28 years ago near the end of the production run.
The base price of a new 747-8, the airframe to be used for the new Air Force One, is nearly four times that of Trump’s 757-200, which is itself out of production. However, the new Air Force One is not “personalized,” but “missionized.” It adds features such as in-flight refueling, secure global communications, electronic and missile counter-measures, and other capabilities unique to the president. These essential mission enhancements are where the additional costs exist. Moreover, the government establishes these requirements, not Boeing.
As for tweets about the F-35, and Trump’s reported request that Boeing price out a comparable F/A-18 alternative, the discussion is somewhat different. The F-35 has been under development since 1994 when the Joint Advanced Strike Technology program was established with the goal of producing a next-generation fighter aircraft meeting the needs of the Air Force, Navy and Marine Corps. As past efforts to produce a common aircraft, such as the TFX effort in the 1960’s, have shown, this was — and in some respects remains — a daunting engineering problem.
But after an intense competition, the Lockheed Martin F-35 with its three variants has largely succeeded. For two clear reasons, there is no possible version of the F/A-18 that could replace the F-35 versions that are just coming into service. The F/A-18 cannot meet the Marine requirement for vertical takeoff, and it is insufficiently stealthy and technologically inferior.
The F-35 is a fifth-generation aircraft, a significant advance beyond fourth-generation aircraft well represented by the F/A-18. Seeking to replace the F-35 with another version of the F/A-18 would be like asking Boeing in the early 1950s to design an enhanced B-29 to replace the larger, more expensive B-52 that was just entering service — and amazingly is still in service for over 60 years.
But all of this dodges the main point. The major item that needs to be considered by our new president is the size and composition of the nation’s defense industrial base. Since the major consolidations of the 1990s, the current defense base is much smaller overall than the one in the past, and heavily shifted to being primarily smaller subcontractors. The Fortune 500 only lists 12 as aerospace and defense firms.
Boeing was awarded a sole-source contract for the Air Force One replacement program because it is the only American company making such an aircraft. Lockheed is one of three companies — Boeing and Northrop Grumman being the others — capable of designing and manufacturing high-performance military aircraft such as the F-35. This contraction of the defense industrial base should be a national concern. As military threats are expanding, our defense industrial base has been shrinking.
This change reflects fundamental laws of free-market economics. The defense market is low margin, has significant barriers to entry, has limits to international sales opportunities, is highly regulated and — uniquely — the buyer is the also the regulator. Essentially, these are market conditions, barriers and imposed costs that many in the new president’s party have opposed.
Trump, like all presidents, has a responsibility to ensure that the taxpayers’ money is well spent and produces the greatest value, and we applaud that. But economics suggests that the best value results from more participants in a market, as that produces competition in both price and innovation. Threatening to cancel programs, to further limit the prospects for earnings, and to take a step backwards on the path of innovation, will not attract more U.S. companies into the defense market. The president’s objectives are correct, but his path to achieving them may have an opposite effect.
Our aerospace and defense industry supports millions of high-paying manufacturing jobs across the country. It is one of the nation’s leading export sectors, earning considerable foreign exchange — about $100 billion annually, which reduces the troublesome trade deficit that the president has frequently mentioned as a concern. Respectfully, the new administration should focus on steps that will make this vital industry more healthy, robust and attractive, and one that keeps pace with our competitors in the process.
Those of us who recognize the steps needed to achieve that end are eager to support efforts that move in that direction. We wish this administration and the 115th Congress success as our national security depends on it.