Trends and Challenges in Aerospace Offsets (1999) / Chapter Skim
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IV. Annexes: Defense Industry Offset Association (DIOA) Position on Offset Issues
IV. Annexes: Defense Industry Offset Association (DIOA) Position on Offset Issues
Pages 213-224
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From page 215... ...
The purposes of the DIOA are to: · educate its members about the practice of offsets and related business functions such as countertrade, joint venture formation, international fi nance, and transactional analysis; provide a forum and a means for its members to network with one an other; and address business and policy issues affecting the practice of international offsets. It is under this third objective that the DIOA sets forth the following position statement addressing issues raised about offsets.)
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From page 216... ...
ISSUE: THE IMPACT OF OFFSETS ON AEROSPACE EMPLOYMENT Industry Experience It will be rightly observed that in the course of fulfilling an offset obligation, a U.S. aerospace company may subcontract the manufacture of some of its components to foreign suppliers.
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From page 217... ...
Due to mechanisms such as incentive multipliers, thirdparty joint venture formations, and offset projects that do not involve U.S.-based work, aerospace companies are often able to satisfy significant portions of their offset obligations without large expenditures and without impacting their labor base and supplier pool. So what does $3 billion in offset credits mean in terms of actual defense/ aerospace jobs?
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From page 218... ...
The subcontractor may not be aware, for example, that his order for 50 shipsets of machined brackets for a pilot's seat will be delivered in the end to Italy and Taiwan, and that his prime contractor had to undertake offset obligations to win the contract. Most second- and third-tier suppliers are never asked to participate in offset programs in the customer countries and thus are unwitting beneficiaries of the efforts of the offset managers to find other ways to offset that particular piece of the aircraft' s value.
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From page 219... ...
· For aerospace producers at all levels who have employees displaced by the internationalization of aerospace work, government programs to provide retraining and job placement should be improved and reemphasized. ISSUE: LESSENING THE IMPACT OF OFFSETS Industry Experience Offset managers and aerospace contractors are not insensitive to the concerns of their work force and supplier base.
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From page 220... ...
The customer countries will award sizable amounts of offset credits for such assistance. Market Development Large aerospace companies frequently have a network of business contacts throughout the world that can be of assistance to firms in the customer countries for finding new export markets for their products.
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From page 221... ...
In this way, technology transfer projects tend to lessen the jobs impact of offset programs by substituting technology transferred for actual work transferred and provide a lowcost, mutually satisfactory means to fulfill an offset obligation. The key issues in technology transfer projects are:
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From page 222... ...
The DIOA is persuaded that this mechanism is working well and that those who have concerns with the sensitivity of data exported under offset programs (or any international joint venture) should address their concerns to the U.S.
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From page 223... ...
True, offsets are sometimes highly influential in securing international sales, but the ebb and flow of aerospace jobs and technologies due to specific offset transactions are dwarfed by other factors such as defense downsizing and industry restructuring.
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