If Ross Perot is right, the survival of America`s aerospace industry is in jeopardy.
In Monday`s presidential debate, the independent candidate warned that the nation`s airplane-manufacturing business could disappear in 10 years unless the U.S. takes steps to ensure that its aircraft builders remain competitive.
On Tuesday, industry analysts disagreed with his implication that the industry is on its last legs. But they did agree that it is in a dogfight with foreign manufacturers for supremacy in meeting the world`s commercial aircraft needs.
”From the end of World War II to about seven or eight years ago, U.S. aircraft manufacturers accounted for about 95 percent of the commercial jet planes manufactured throughout the world,” said Harold L. Sirkin, a vice president and airline industry consultant for the Boston Consulting Group in Chicago.
”Today, U.S. manufacturers account for roughly 65 to 75 percent of the commercial jets being built,” Sirkin said. ”That`s a pretty significant erosion of market share in a relatively short period of time, and much of that erosion is due to the rapid emergence of Airbus, the European consortium.”
Ten years ago, the United States` two largest airplane builders-Boeing Co., based in Seattle, and St. Louis-based McDonnell Douglas Corp.-were the world`s two largest aircraft manufacturers. In the last few years, however, Airbus has surpassed McDonnell Douglas.
According to industry data, Airbus accounts for 19 percent of the commercial airliners being delivered to the world`s carriers. McDonnell Douglas` market share stands at around 17 percent.
Boeing still holds a commanding 58 percent share. Even so, the prospects that it will remain on top worldwide is by no means assured, industry analysts point out.
”Airbus has managed to build a good product and, as a result, has done well in not only penetrating the European aircraft market but also the market here in the U.S.,” said George Pearson, a vice president with Avitas, an airline and areospace industry consulting firm based in Reston, Va.
Earlier this year, for example, Elk Grove Township-based United Airlines, the nation`s second-largest carrier, said it would lease 50 jets from Airbus instead of from Boeing, its longtime supplier.
In addition to the continued growth of Airbus, Boeing is likely to confront additional competition in the years ahead from airplane manufacturers in the Far East, the analysts say.
The aerospace industries in highly developed Asian nations such as Taiwan and Japan are still in their infancy. In fact, both have yet to build a commercial jetliner. But with the help of their governments and with the technological and financial strengths they possess, they are likely to become full-fledged competitors within the next two decades.
Although Airbus officials deny it, industry insiders say the main reason Airbus has been successful in taking business away from U.S. manufacturers is the fact that the company is heavily subsidized by the governments that belong to the consortium. Consequently, the European builder is in a position of offering airlines much better financial terms than American manufacturers.
Still, despite the difficulties Boeing faces in holding on to its dominance, its long-term survival seems assured, analysts note.
”I don`t think our government would stand by and do nothing if Boeing`s existence, or even its dominant market share, were to be threatened by a foreign competitor like Airbus,” Pearson said. ”The thought of 30,000 employees of Boeing in Seattle being laid off, I would think, would be politically unacceptable.”
The survival of McDonnell Douglas, however, is less certain, Pearson and other analysts point out. Since 1990 the company has cut more than 10,000 jobs and is likely to cut even more as a result of continuing cutbacks on orders for its MD-11 jet.
