Trends and Challenges in Aerospace Offsets (1999) / Chapter Skim
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Offsets in the International Marketplace: An Aerospace Industry View
Offsets in the International Marketplace: An Aerospace Industry View
Pages 158-166
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From page 158... ...
Critics of the practice express concern that offsets send work off shore and can create future competitors. Exporting companies generally respond that offsets are a necessary part of competing in the world market and have relatively little adverse impact on the economy, especially compared to the benefits that accrue from the sales themselves.
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From page 159... ...
Two major trends hit sales and employment beginning in the late 1980s. First, the markets for aerospace products declined, as financially troubled airlines reduced new aircraft purchases and, with the end of the Cold War, the U.S.
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From page 160... ...
For purposes of this review, it is assumed that offsets refer to the various conditions of sale that a foreign government imposes on the United States and other vendors that are in addition to supplying the desired military product. Such offsets may include direct offsets related to the product sold.
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From page 161... ...
Indirect offsets may involve investing in the purchasing country to stimulate nontraditional industry. It should be noted that industry does not regard a straightforward licensing or co-production agreement, which does not involve the sale of a product directly from the United States, to be considered an offset in terms of this policy discussion.
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From page 162... ...
makes a major purchase of a foreign-designed weapons system, it almost always demands that it be wholly or in large part produced in the United States. Recent examples include the AV-8A and B Harrier, the T-45 Goshawk, the Multiple Subscriber Equipment system, the 9-mm Beretta pistol, and the Joint Primary Aircraft Trainer System.
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From page 163... ...
defense industry suffers far more from other problems for example, the recent sharp decline in the DoD procurement budget, DoD acquisition regulations, high costs of venture capital, and a financial system geared to short-term returns rather than to long-term improvements in productivity and product than it does from foreign-imposed offset requirements. In 1990 the Aerospace Industries Association submitted a paper to the executive branch suggesting that it incorporate a set of principles into any federal policy with respect to offsets.
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From page 164... ...
suppliers. Examples of similar agreements include the Arrangement on Guidelines for Officially Supported Export Credits that was negotiated in the Organization for Economic Cooperation and Development, and the World Trade Organization Agreement on Government Procurement.
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From page 165... ...
This is unlikely to happen, however, until Europe succeeds in further downsizing and rationalizing its defense industry to more closely match current demand. We assume that U.S.
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From page 166... ...
That is, subsectors that have not kept up technologically, or employ technologies that are widely available around the world, or that are employing high-paid labor in low-skilled jobs are precisely the types of sectors for which foreign alternatives prove attractive, with or without offset obligations. However, if government can find specific subsectors that are particularly impacted by offsets, it would then be possible to work with the limited number of companies that account for most offset performance to see if greater restraint could be used in meeting offset obligations in such subsectors.
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