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Trends and Challenges in Aerospace Offsets (1999) / Chapter Skim
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Panel III: The Effect of Offsets, Outsourcing, and Foreign Competition on Output and Employment in the U.S. Aerospace Industry
Pages 38-46

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From page 38...
... Scott stated that, although his paper looks at the employment effects of offsets and other types of trade, his comments will focus on issues raised earlier during the symposium and on policy options for dealing with offsets and other factors affecting employment in the commercial sector. He began by noting that the future of the industry may differ significantly from its past, particularly regarding employment.
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From page 39...
... Most economists believe that trade is responsible for at least 20-25 percent of this increasing gap between production and nonproduction workers' incomes. Thus, there is a significant question in the minds of production workers, who constitute the bulk of the work force and the electorate, as to the benefits of globalization.
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From page 40...
... Future job losses of this magnitude are likely to attract political attention, especially because the losses are in a hightechnology, high-wage industry in which the United States should retain competitive advantage.
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From page 41...
... He raised the question as to whether the United States is using its trade policy to create an employment policy. Looking back over the past few years, there seem to be two forces at work on the industry: the end of the Cold War and a dramatic increase in competition.
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From page 42...
... Dr. Rosen concluded by noting that the most important finding in the paper is that 62 percent of production is in the United States, yet 75 percent of the job loss is also in the United States.
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From page 43...
... In addition, offset credits can be gained by offering assistance with financing and in marketing customer-country products in the United States. Joint ventures and investments in customer countries is another way of gaining offset credits, and they often show up as indirect offsets.
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From page 44...
... He stressed the industry's belief that the United States must refrain from taking unilateral action on offsets. This would be tantamount to walking away from international sales.
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From page 45...
... That does not mean that the cost to the United States was $100; the cost was only $1. In 1997, $15 billion in overseas defense sales was accompanied by $1.5 billion in offset credits; that is the value calculated by the customers of the fulfillment of the offset requirements.
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From page 46...
... 46 TRENDS AND CHALLENGES IN AEROSPACE OFFSETS demand offsets. He also stated that the increasing need for access to capital will make it more difficult to distinguish what is an offset.
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Key Terms

  • aerospace industry
  • offset credits
  • commercial sector
  • commerce department
  • employment policy

  • market share
  • defense industry
  • offset requirements
  • policy institute
  • production workers

  • employment effects
  • international sales
  • customer country
  • european union
  • employment changes

  • joint venture
  • trade deficits
  • offset agreements
  • total aerospace
  • living standards

  • industry representatives
  • expressed concern
  • affecting employment
  • trade deficit
  • labor leaders

  • public opposition
  • continued dialog
  • increasing downward
  • simply offset
  • monetary fund


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