[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
MOVING UPWARDS AND ONWARDS: THE
WORKFORCE AND INNOVATION NEEDS OF THE
AVIATION AND AEROSPACE INDUSTRY
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HEARING
BEFORE THE
SUBCOMMITTEE ON INNOVATION,
ENTREPRENEURSHIP, AND WORKFORCE DEVELOPMENT
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
MAY 12, 2022
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 117-055
Available via the GPO Website: www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
47-536 PDF WASHINGTON : 2022
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
JARED GOLDEN, Maine
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
MARIE NEWMAN, Illinois
CAROLYN BOURDEAUX, Georgia
TROY CARTER, Louisiana
JUDY CHU, California
DWIGHT EVANS, Pennsylvania
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANDY KIM, New Jersey
ANGIE CRAIG, Minnesota
BLAINE LUETKEMEYER, Missouri, Ranking Member
ROGER WILLIAMS, Texas
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
CLAUDIA TENNEY, New York
ANDREW GARBARINO, New York
YOUNG KIM, California
BETH VAN DUYNE, Texas
BYRON DONALDS, Florida
MARIA SALAZAR, Florida
SCOTT FITZGERALD, Wisconsin
Melissa Jung, Majority Staff Director
Ellen Harrington, Majority Deputy Staff Director
David Planning, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Jason Crow.................................................. 1
Hon. Young Kim................................................... 2
WITNESSES
Hon. Eric Fanning, President & Chief Executive Officer, Aerospace
Industries Association, Arlington, VA.......................... 5
Ms. ML Mackey, Chief Executive Officer, Beacon Interactive
Systems, Waltham, MA, testifying on behalf of the National
Defense Industrial Association (NDIA).......................... 6
Mr. Blake Scholl, Founder & Chief Executive Officer, Boom
Technology, Inc., Centennial, CO............................... 8
Ms. Judy Burns, President, Patriot Machine, St. Charles, MO...... 10
APPENDIX
Prepared Statements:
Hon. Eric Fanning, President & Chief Executive Officer,
Aerospace Industries Association, Arlington, VA............ 23
Ms. ML Mackey, Chief Executive Officer, Beacon Interactive
Systems, Waltham, MA, testifying on behalf of the National
Defense Industrial Association (NDIA)...................... 28
Mr. Blake Scholl, Founder & Chief Executive Officer, Boom
Technology, Inc., Centennial, CO........................... 31
Ms. Judy Burns, President, Patriot Machine, St. Charles, MO.. 39
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
NBAA - National Business Aviation Association................ 43
Pilot Supply by the Numbers.................................. 47
Pilot Retirement Age Facts................................... 48
MOVING UPWARDS AND ONWARDS: THE WORKFORCE AND INNOVATION NEEDS OF THE
AVIATION AND AEROSPACE INDUSTRY
----------
THURSDAY, MAY 12, 2022
House of Representatives,
Committee on Small Business,
Subcommittee on Innovation, Entrepreneurship,
and Workforce Development,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2360, Rayburn House Office Building, Hon. Jason Crow
[chairman of the Subcommittee] presiding.
Present: Representatives Crow, Houlahan, Young Kim,
Luetkemeyer, Williams, Tenney, and Garbarino.
Chairman CROW. Good morning. I call this hearing to order.
Without objection, the Chair is authorized to declare a
recess at any time.
I would like to begin by noting some important
requirements. Standing House and Committee rules and practice
will continue to during hybrid proceedings. All Members are
reminded that they are expected to adhere to these rules,
including decorum.
House regulations require Members to be visible through a
video connection throughout the proceeding, so please keep your
cameras on. Also, please remember to remain muted until you are
recognized to minimize background noise.
In the event a Member encounters technical issues that
prevent them from being recognized for their questioning, I
will move to the next available Member of the same party and I
will recognize that Member at the next appropriate timeslot
provided they have returned to the proceeding.
The U.S. aviation and aerospace industry is crucial to our
national security and national defense capabilities. From
commercial airliners to telecommunication satellites, the
aerospace industry touches the lives of countless Americans
every day.
The industry also provides meaningful employment to over 2
million workers. These are great paying jobs that allow workers
to further their careers and support their families. In 2020,
aerospace workers averaged roughly $104,000 in wages and
benefits.
The impact of this industry extends beyond U.S. borders.
Domestic aerospace companies are global leaders that export
civil and military products to countries worldwide. In 2020
alone, the industry generated $874 billion in total industry
sales revenue.
The impact of this industry is big, but small businesses
make up a substantial portion of the sector. For example, small
entities comprise more than 90 percent of businesses in airline
transportation, air transport support, and aviation
manufacturing.
Despite the successes of the aerospace industry, COVID has
presented unprecedented challenges. Travel restrictions around
global air traffic to a near halt in the early days of the
pandemic. Since then, new variants and intermittent rising case
counts have continued to depress commercial aviation's
recovery. In January of this year, flights operated stood at
85.3 percent of pre-pandemic levels.
But even with this decreased demand, companies are
struggling to hire the right workers to keep up with the
supply. This problem is not confined to the aerospace industry.
Small businesses across the country are feeling the effect of
an overall labor shortage. This worker shortfall is complex and
connected to pandemic-related issues, like decreased legal
immigration, early retirements, and a lack of childcare options
for working parents.
But even before the pandemic, the aerospace industry faced
labor issues, including an aging workforce and the need to
constantly upskill workers due to innovation.
These problems have led to shortfalls in vital positions,
including pilots and mechanics, and staffing shortages have led
to record flight cancelations throughout early 2022, creating
significant disruptions for travelers.
The implications of this labor shortage also extend to our
military. Studies predict significant shortfalls for Air Force
and Navy pilots very soon. This is simply unacceptable.
If the aerospace industry cannot find an adequate number of
trained workers, our economy and national security will suffer.
That is why we must use the tools at our disposal to ensure
that workers have the necessary skills to fill these positions.
The FAA Reauthorization Act of 2018 and the National
Defense Authorization Act for Fiscal Year 2020 added training
grants for the pilot workforce alongside aviation maintenance
technical workers. The aerospace industry has also embraced
apprenticeships as a model for attracting young workers and
equipping them with the necessary skills to succeed.
So today, we will deepen our understanding of this
industry, examining these workforce initiatives and other
policy solutions that can support workers in the aerospace
sector as we work toward recovery.
I would now like to yield to the Ranking Member, Mrs. Kim,
for her opening statement.
Ms. YOUNG KIM. Thank you, Chairman Crow. I want to thank
you for holding this hearing, and I want to thank all of our
witnesses for testifying today.
Over the past few years, small businesses within the
aviation and aerospace industries have been met with
unparalleled economic headwinds, including labor shortages,
supply chain disruptions, and soaring costs. These industries
are vital to our economy as they produce both military and
civil aircrafts, facilitate trade and tourism, and connect
Americans worldwide.
Small businesses play a key role in aviation and aerospace.
According to the Census, statistics of the U.S. business, 94.3
percent of all firms that provide air transportation are
considered small businesses and almost 88 percent of aerospace
firms are small businesses.
One of the biggest challenges these firms are facing is the
unprecedented labor shortage. The most recent Job Openings and
Labor Turnover Summary reported 11.5 million job vacancies. To
make matters worse, employers continue to face record numbers
of workers leaving their jobs. And in March, 4.5 million
workers quit their jobs.
These trends persist, even as nearly half of small business
owners have reported job openings they could not fill. Worker
shortages are not a new issue to the aviation and aerospace
industries. In fact, this Committee held a hearing back in 2018
on this exact issue.
Unfortunately, COVID-19 exacerbated the shortages by
encouraging early retirements among airline and aerospace
workers uncertain about their career prospects in a sector that
was almost entirely shut down for months.
According to the Regional Airline Association, the United
States will lose about half of its pilots to retirement in the
next 15 years. Further, a recent study found a lack of
technical staff as the top disruptor for the aviation
maintenance and repair sector over the next 5 years. A pilot
and technician shortage affects not only the airlines but also
the millions of Americans who fly each year.
Another issue that is contributing to the worker shortage
is the growing skills gap. These sectors rely on highly skilled
workers to build aircrafts, satellites, missiles, and conduct
maintenance and safety tests.
According to a recent study by Deloitte, the manufacturing
skills gap in the United States could result in 2.1 million
unfilled jobs by 2030. The cost of these missing jobs could
total $1 trillion in 2030 alone. The lack of skill labor is a
major concern, and if not addressed, could have serious impacts
on our economy.
From finding and retraining skilled labor to supply chain
issues and skyrocketing costs and disruptive inflation and
energy prices, our small businesses are facing a multitude of
economic hurdles that threaten to close their doors.
I look forward to hearing from our witnesses today on how
we can better support you, and I hope to work with my
colleagues to find real solutions to elevate the increasing
economic challenges that our small businesses are facing every
day.
Thank you, and I yield back.
Chairman CROW. Thank you, Mrs. Kim. The gentlelady yields
back.
I would like to take a moment to explain how this hearing
will proceed. Each witness will have 5 minutes to provide a
statement and each Committee Member will have 5 minutes for
questions. Please ensure that your microphone is on when you
begin speaking and that you return it to mute when finished. We
run a tight ship here, Mrs. Kim and I, so please stick with
your 5 minutes so I do not have to gavel you out.
So with that I would like to introduce our witnesses.
Our first witness is Mr. Eric Fanning, President and CEO of
the Aerospace Industries Association, the leading advocacy
organization for the aerospace and defense industry. He has
more than 25 years of distinguished government service. He
previously served as Chief of Staff to the Secretary of
Defense, Acting Secretary of the Air Force, and Deputy
Undersecretary of the Navy. In 2016 and 2017, he served as the
22nd United States Secretary of the Army. He is the only person
to have held senior appointments in all three military
departments and the Office of the Secretary of Defense, which
actually raises the question for me is when you tell military
jokes, which service do you make fun of? So thank you, Mr.
Fanning for joining us. I look forward to your testimony.
Our next witness is ML Mackey, co-founder and CEO of Beacon
Interactive Systems and Division Chair of the National Defense
Industry Association Small Business Division. Ms. Mackey is an
innovator and entrepreneur. Her company, Beacon, is a valued
and rapidly-growing provider of mission-critical systems to the
Department of Defense that helps drive efficiency, improves
sustainability, and unleashes productivity. She is an advocate
for small businesses, women's leadership, and STEM innovation.
Ms. Mackey is an active Member of the NDIA's Workforce Project,
and in 2021, served as the Board Chair of the National Small
Business Association. Welcome, Ms. Mackey. It is a pleasure to
have you on the panel.
Our third witness is Mr. Blake Scholl, the CEO of Boom
Supersonic, an end product supersonic aircraft company based in
my district. Mr. Blake started Boom in his basement in
September 2014 with the goal of making high-speed travel
mainstream and enabling a new world of human connection. Prior
to founding Boom, he held a leadership role at Amazon and
cofounded the mobile tech startup, Kima Labs, which was later
acquired by Groupon. Thank you, Mr. Scholl. I look forward to
hearing about your experience.
I will now yield to the Ranking Member to introduce our
final witness.
Mr. LUETKEMEYER. Thank you, Mr. Chairman and Ranking
Member. I would like to welcome our final witness who is from
my district, Ms. Judy Burns. Ms. Burns is the president and
cofounder of Patriot Machine, Inc. Her company is headquartered
in St. Charles, Missouri, which is in the eastern part of
Missouri's 3rd Congressional District. Ms. Burns and her
husband started this small business more than 30 years ago and
the company has since expanded to 160 employees. Patriot
Machine is a globally competitive aerospace manufacturer
supplying highly complex structural parts and assemblies to
America's largest aircraft manufacturers. The company prides
itself on its cutting edge technology, skilled workforce, and
advanced planning techniques. Patriot Machine continues to
exhibit growth by recently adding a new advanced manufacturing
facility with ample space for further expansion. Under Ms.
Burns' expert leadership, Patriot Machine has received the
Supplier of the Year Award on three separate occasions from the
Boeing Company. Ms. Burns' other recognitions include
Missouri's First Lady Award for success in the field of
business innovation and the 2015 University if Missouri St.
Louis Distinguished Alumni Award. I know Ms. Burns' experience
as a small business owner and vast knowledge on innovation and
workforce issues will be extremely beneficial to our hearing.
Welcome, Ms. Burns, and thank you for taking time to testify
before us today.
And with that, Mr. Chairman, I yield back.
Chairman CROW. Thank you. The Ranking Member yields back.
Thank you all for joining us today. Mr. Fanning, you are
recognized for 5 minutes.
STATEMENTS OF ERIC FANNING, PRESIDENT AND CEO OF THE AEROSPACE
INDUSTRIES ASSOCIATION; M.L. MACKEY, CEO AND A CO-FOUNDER OF
BEACON INTERACTIVE SYSTEMS; BLAKE SCHOLL, FOUNDER & CEO, BOOM
SUPERSONIC; JUDY BURNS, PRESIDENT, PATRIOT MACHINE
STATEMENT OF HON. ERIC FANNING
Mr. FANNING. Thank you, Chairman Crow, Ranking Member Kim,
and Members of the Committee. Thank you for inviting me to be
part of today's hearing. My name is Eric Fanning and I serve as
the President and CEO of the Aerospace Industries Association
(AIA). For over 100 years, AIA has advocated for America's
aerospace and defense companies and the more than 2 million men
and women who are the backbone of our industry.
AIA thanks this committee for its ongoing leadership in
listening and learning from A&D industry leaders to support and
strengthen our industry. A crucial part of this effort is
rightfully focused on our world-class workforce, which remains
the bedrock of our industry's success. These men and women
bring unparalleled experience and expertise, as well as
tremendous heart to their work on behalf of America's military
and our aviation transportation system.
The A&D manufacturing base is a strategic asset for our
nation, and the workforce is its cornerstone. The pandemic
underscored how essential these employees are and reminded us
of the unique capabilities they bring to bear in support of our
security and safety each day. Without question, addressing our
21st century workforce needs is vital to our missions, our
customers, and to America's national and economic security.
Addressing the workforce needs of the A&D industrial base
requires a strong partnership between government and industry.
There are several ways AIA would like to work with government
leaders and Congress to address these needs. This includes
investing in STEM education, reskilling current employees for
new technologies, expanding our country's training efforts to
broaden talent pools, and increasing workforce diversity and
inclusion efforts within the A&D industry.
The workforce is strong but challenges persist. Economic
conditions like record inflation and the length and severity of
the pandemic are adding pressures to the budget, affecting the
cost of personnel, goods, and services. This has a direct
impact on employment, and ultimately, our customers. These
concerns were top of mind when our Supplier Management Council
assembled in New Hampshire a few weeks ago. Like so many in the
U.S., the pandemic created unprecedented challenges for our
workforce. In 2020 alone, decreasing demand for products due
largely to the reduction in air travel cost our industry 87,000
jobs. Approximately 64 percent of these losses came from the
shared A&D supply chain, comprising of thousands of small and
medium-sized businesses. Inflation is exacerbating the
continued pressure on employment.
Another challenge the A&D industry faces is the aging of
our workforce. An estimated 26 percent of our industry
employees are over the age of 55, slightly higher than the U.S.
total workforce. Given this disparity and a projected increase
in retirements, it will be imperative to retain and develop the
mid-career workforce, while also continuing to attract top
talent.
AIA and our Members are committed to strengthening the
diversity, equity, and inclusion throughout our industry. I say
more about this in my written testimony, but our companies are
investing significant resources into the attraction and
recruitment of diverse candidates to ensure we are accessing
the full breadth of what the country has to offer and to build
stronger teams.
How can industry partner with government to support and
strengthen the A&D workforce? Congress can expand federal
support for apprenticeships and career technical education,
while also removing barriers that are preventing companies from
effectively competing for highly-skilled talent. This includes
addressing the lengthy security clearance process which is
historically slow and bureaucratic, leading to staffing delays
and slowdowns for important national security projects.
Additionally, Congress must address the harmful research
and development tax change that went into effect in January
2022 that reduces cash flow and in turn will affect employment.
Nearly 70 percent of R&D spending is for wages and salaries.
This means that R&D spending is an investment in America's
workforce, as well as innovation.
At a time when we need to stay ahead of the growing
competitive threat from China, we must continue to build and
strengthen our world-class workforce. It is our employees that
are incubators of innovation. Their skill will usher in the
next generation of advancements that transform and empower our
country in the world. We urge Members to delay this tax change
during the bipartisan Innovation Act negotiations.
Thank you for having me today for this important and timely
hearing. I look forward to your questions.
Chairman CROW. Thank you, Mr. Fanning.
Ms. Mackey, you are recognized for 5 minutes.
STATEMENT OF M.L. MACKEY
Ms. MACKEY. Chairman Crow, Ranking Member Kim, and Members
of the Committee, thank you for inviting me to appear before
the Innovation, Entrepreneurship, and Workforce Subcommittee
today. And thank you for your consistent efforts in supporting
America's small business community.
My name is ML Mackey, and I am the CEO of Beacon
Interactive systems. Beacon delivers innovative, efficiency
improving, digital capabilities to the U.S. Air Force. I am
also here today in my role as the Chair of the Small Business
Division of the National Defense Industrial Association (NDIA),
the nation's oldest and largest defense industry association,
comprised of nearly 1,800 corporate and over 63,000 individual
members.
So the challenge facing the aviation and aerospace industry
today is a workforce challenge. How do we increasingly grow the
innovation workforce to address both current and future needs?
Whether it is a focus on the scientists and engineers
developing and delivering innovative technology or the
maintenance technicians, the airmen on the flight line,
maintaining and sustaining aircraft, there is a workforce
shortage across the board. To be successful we can either
increase the workforce so that we have more people available,
or we can increase the capacity of the resources in place. The
most successful outcome will be an artful combination of the
two.
Using Beacon as an example, participating in federal R&D
programs not only enabled us to further develop technology
innovation for the maintainers on the flight line, it also
enabled us to further develop our own innovative workforce.
This developmental impact in terms of becoming an ever more
innovative team is the multiplier effect of federal R&D
funding.
It is important to call out that the innovation workforce
is not only comprised of the technical resources typically
thought of in STEM discussions, but also the wider team of
innovation thinkers necessary to bring a successful product
forward. It includes the program managers, the analysts, and
the extended teammates of our Air Force colleagues on the
flight line. This is the diversity of thought and creativity
that fuels successful innovation. This is the team federal R&D
funds let us explore, find, and push the envelope to develop.
Without this well-developed intentional diversity of
thought, innovation happens in one-off moments not as the
continuous engine critical to U.S. national security needs and
the country's economic prosperity.
At this point I would like to broaden the discussion to
bring in input and recommendations from my fellow NDIA
colleagues.
At NDIA, we talk a lot about workforce training. The
success and growth of the aerospace and defense industry is
reliant on a robust and talented workforce. Technicians are a
critical component to the overall operational safety of the
industry and are playing a vital role in supporting the
pandemic recovery efforts.
Boeing's recently released Pilot and Technician Outlook
2021-2040 forecasted that 626,000 new maintenance technicians
will be needed to meet operator and MRO demand to maintain the
global commercial aviation fleet over the next 20 years.
Maintenance technicians will play a critical role in restoring,
inspecting, and preparing aircraft that have sat idle during
the pandemic to meet airworthiness standards. As importantly
the industry will need an influx of technicians familiar with
electrical and hybrid motors and components to keep pace with
the emerging advanced air mobility sector.
The recommendation here is to both continue and accelerate
investment in federal workforce training programs for
upskilling of the existing workforce, as well as outreach
efforts for future workforce development.
Another topic we frequently discuss at NDIA is procurement
visibility. The need for a clear demand signal from the federal
government, while important across all industry participants,
is especially true for small business. This is not limited to
just to procurement or research and development; it is also
needed for businesses providing aerospace services, spare
parts, and support.
A critical step the federal government, and particularly
DoD, could take to send a clearer demand signal to industry
regarding its priorities for aerospace systems' sustainment
would be to provide additional detail in the operations and
maintenance budget request regarding the materiel availability
objective for each major weapon system and the resources
required across the FYDP to achieve that objective.
That kind of accountability and transparency on the part of
the federal government would enable greater investment in
innovation and workforce development.
In closing, I will give voice to a third recommendation,
which is more about how to think about federal R&D than actual
steps to take. I am going to suggest we collectively adjust our
thinking on R&D funding from a singular engagement to more of a
continuum; that it should be viewed as more than just the
specific outcome of the specific R&D funding. It should be
understood as a continuous investment in developing the
innovation workforce critical to the aviation and aerospace
industry.
With that, I will close my remarks. Again, I would like to
thank you Chairman Crow, Ranking Member Kim, and Members of the
Committee. Thank you for the opportunity to appear before you
this morning and thank you for your continued efforts in
helping the small business community.
I would be pleased to respond to any of your questions.
Chairman CROW. Thank you, Ms. Mackey.
Mr. Scholl, you are recognized for 5 minutes.
STATEMENT OF BLAKE SCHOLL
Mr. SCHOLL. Well, good morning, Chair Crow, Ranking Member
Kim, Members of the Committee. Thank you for having me here
this morning.
I am Blake Scholl, founder and CEO of Boom Supersonic, and
I am pleased to talk about the importance of entrepreneurship,
innovation in U.S. aerospace, and our efforts to safely and
sustainably return supersonic passenger flight.
At Boom, we have already built and tested XB1, which is
history's first independently developed supersonic jet. In our
hangar just outside of Denver, we have the world's only
operational nonmilitary supersonic jet, and we are well on our
way to launching a Supersonic Renaissance with manufacturing
starting in 2 years where we will create thousands of jobs in
our super factory in North Carolina.
But big things start small. Not that long ago, Boom was a
tiny band of innovators in my basement in Denver building a
supersonic airliner markup out of cardboard, plywood, and
chairs from Office Depot.
At Boom, we believe in a world in which more people can go
more places more often, and we are redefining long distance
travel with Overture, our supersonic commercial airliner. And
we are proud especially to be part of an American manufacturing
renaissance that is so desperately needed in our country.
We are developing our Overture airline to satisfy three
objectives: speed, safety, and sustainability. Aboard Overture,
London is just 3.5 hours from New York, and Sydney, Australia,
will become as accessible as Honolulu is today. Ultimately, we
envision a future in which all can benefit from high-speed
flight and making the planet more accessible.
Increasing travel speeds fosters greater human connection,
but here in 2022, we actually fly no faster than we did 65
years at the dawn of the jet age, and I think that statis in
innovation in aerospace is a big reason why we have workforce
challenges. We have not inspired young people to enter careers
in aerospace.
But small startups are changing the face of innovation and
aviation. They are innovative, nimble, and able to take risks.
And this mindset is what propels startups to bring
revolutionary products, like a supersonic airliner to the
market. Businesses that do great things all start small. And
thanks to fundamental advancements in the aviation industry and
at Boom, safe supersonic flight will now be comfortable,
affordable, and sustainable.
And this acceleration in flight is possible thanks to a
revolution in clean energy. Historically, revolutions in energy
have powered improvements in the speed of travel. In the 19th
century, coal powered the transition from sail to steam and
from horses to railroads. In the first half of the 20th
century, oil powered the transition into airplanes. In this
decade, a revolution in alternative sustainable fuels will
power the transition to supersonic flight.
It takes new entrants like Boom to change the fundamental
paradigm of travel, both in terms of speed and sustainability.
And it is important to note that the United States is not the
only country developing supersonic aircraft. China and Russia
are very visible investing in speed.
The U.S. has long been a global leader in aerospace, and at
Boom, we are determined to see the country remain at the
forefront of innovation. And we are grateful for the early
support we have received from both commercial and military
sectors. United Airlines has purchased 15 of our aircraft with
an option for another 35, a deal that brings our order book to
70 aircraft. And by comparison, only 14 Concords ever entered
service.
The supersonic technology we are developing will also give
new strategic options to the U.S. military. The outbreak of war
in Ukraine has shown us how important it is to get critical
people and critical things where they need to be quickly, and
in the future, supersonic capability will enhance the
effectiveness of American leaders, diplomats, and
servicemembers.
Through the Small Business Innovation Research program, we
are also proud to have two contracts with the Air Force. Our
most recent is a 3-year strategic cost-share STRATFI, strategic
funding increase partnership which is a dollar for dollar match
between the Air Force and Boom to accelerate R&D on Overture.
But in reality, taxpayers are getting an even better deal. The
Air Force is leveraging our private capital and there are 10
investor dollars for every 1 dollar the Air Force has
committed.
By teaming with Boom, the Air Force gets in on the ground
floor of a transportation revolution that can continue to build
U.S. air superiority. The Air Force's interest in our work
sends a powerful signal to our investors, customers, and
partners, validating the viability of our aircraft, and the
SBIR program allows the Air Force to mature technologies down
the road. When we are ready for procurement, the technology is
ready and the option is there.
To ensure that U.S. leadership in aerospace endures,
government must continue to partner with innovative small
business to nurture innovation and to facilitate the next
generation of aerospace technology and inspire people to go
into the field.
So thank you very much for having me here today, and I look
forward to answering your questions.
Chairman CROW. Thank you, Mr. Scholl.
Ms. Burns, you are now recognized for 5 minutes.
STATEMENT OF JUDY BURNS
Ms. BURNS. Chairman Jason Crow, Ranking Member Young Kim,
Congressman Luetkemeyer, and other distinguished Members of the
Subcommittee, thank you for the opportunity to testify in this
hearing, and thanks much for the opportunities that allow small
businesses to participate in the aerospace and defense
industry.
I am the president and cofounder of Patriot Machine. Over
the past 31 years, my company has grown from my home's garage
into a globally competitive aerospace manufacturer with 160
employees. Headquartered in St. Charles, Missouri, we supply a
variety of highly complex structural parts and assemblies to
America's largest aircraft manufacturers. From the beginning,
innovation has been the key to thriving in a highly competitive
environment. The long-term health of our company depends on
regularly integrating new technologies and continually finding
new and better ways to improve operations. While we pride
ourselves on our culture of continuous improvement and problem
solving, there are some challenges we cannot take on alone.
The labor shortage in America affects all businesses. At
Patriot Machine, we have seen a marked decline in the number of
skilled applicants since early 2020. Increasingly, we are
training new hires on the job because they come to us without
the necessary manufacturing skills. We are developing internal
programs that emphasize structured, on-the-job training, and
mentorship, and also provide financial support for education
that applies to our industry. The costs of recruiting,
onboarding and training new hires are significant, particularly
if those employees leave the company after a short period of
employment, which sometimes happens with new hires who are not
yet sure what career path they want to follow. We know
employees are looking for opportunities to learn and grow and
we are committed to helping them. This is why we would like to
see an increase in federal funding for technical education and
community college programs with a technical focus to help
prepare the incoming workforce for careers in aerospace
manufacturing.
Meanwhile, the aerospace industry's supply chain
disruptions and rising prices in our sector have only worsened
in the perfect storm of recent events. The price and lead-time
of raw materials has doubled. Labor force issues, rising costs
and other factors have caused our suppliers to increase their
pricing significantly. Yet even under these volatile
conditions, Patriot is bound by long-term fixed price contracts
with our customers.
I encourage you to keep these challenges in mind when
making decisions on the 2023 defense budget. The increase
currently outlined, while helpful, does not provide significant
growth due to inflation. Aerospace companies like ours depend
on strong support for advanced development programs, which is
R&D basically, and for our existing production programs. A
combination of both helps us to stay ahead with technology, but
also adds support for long-term stability.
Lastly, we are a capital-intensive business with a need to
make serious financial investments in assets that often do not
pay off for years. This is especially true of the acquisition
of our high-tech machinery and equipment, which can take
several years between the initial purchase, manufacture and
installation. Hiring, training and retaining individuals
capable of programming and operating this equipment takes
significant investment as well. Rising interest rates will make
these acquisitions harder, too. One item which helped manage
these high-cost hurdles was the Tax Cuts and Jobs Act of 2017,
which temporarily increased the allowance of bonus depreciation
to qualified property to 100 percent of the value of assets
acquired that year. However, that percentage will be phased out
by 2027. An extension of these benefits, and perhaps even a way
of making these benefits known in advance and permanent, would
help Patriot Machine and other small businesses plan for the
future.
Thank you again for letting me share my perspective as a
small business owner in the aerospace manufacturing industry.
Your investments in aerospace projects allow us to continually
improve technologies and develop the next generation of the
workforce and industry leaders
Chairman CROW. Thank you, Ms. Burns.
I will begin by recognizing myself for 5 minutes.
Mr. Fanning, starting with you, there has been a lot of
discussion about reinvigorating the U.S. manufacturing base,
onshoring things that we lost in the 1980s and the 1990s to
create the ecosystem again, particularly in advanced
manufacturing, yet it remains a very sticky challenge of how we
find that workforce again that we lost over the last couple of
decades, those skills. I would love your thoughts on what is
the best way for us to redevelop that pipeline of skilled
workers, particularly with respect to advanced manufacturing?
Mr. FANNING. Thank you for that question. That is something
we spend a lot of time thinking about. Obviously, we are in
strong favor of American manufacturing, but we are a big
exporting industry as well, and so we recognize the importance
of the global markets in that way.
There are a number of things that we saw from COVID that
point to what we would like to bring back to the United States,
chips being one of them. I think we have cut in half the
production of chips in the United States as we look for cheaper
labor elsewhere. But as you pointed out, there is a labor
problem already, which is slowing the recovery. A number of our
businesses think they could recover faster and do more quicker
if they just had access to the workforce.
I think one of the big things is what programs are out
there to train for what. I remember Secretary Acosta saying
when he was labor secretary in the previous administration that
he was down in Florida talking about needing to train for
machinists, and a university said, we will create an associate
degree program for that because that is the only money they
could get access to from the federal government. So these are
good, high-paying jobs that require high skills, so leaning
into and investing more on the government side in
apprenticeships, work study programs, and really targeting
where we can go after underrepresented communities. That is a
whole category, a whole group of people that we are not
accessing and should be accessing and helping them get on paths
for these jobs.
Chairman CROW. And will that require us reaching into K
through 12 and really starting that pipeline earlier and, you
know, are there any programs that you think would help, you
know, really invigorate people's interest frankly in middle
school and high school in this area?
Mr. FANNING. Even elementary school. I think you are
absolutely right. We want to get the big end of the funnel as
big as possible. I mean, our experience with STEM education is
it is a series of offramps. You lose kids when they lose from
elementary school to junior high, junior high to high, high to
college. You are not finding people that are coming in later in
life because they do not have the skills that they need that
they learn in math and basic science. And so there are
programs, NASA, FAA, Department of Education that try to
inspire kids into STEM as early as elementary which is
important because then you need to get them all the way through
high school to get them into these other types of programs that
we are talking about, the apprenticeship programs.
Chairman CROW. Thank you.
Mr. Scholl, we had a chance to talk earlier about the SBIR
program and obviously, one of the things we talk about a lot
within this industry and context is the issue of the so-called
``Valley of Death,'' you know, where you have a lot of great
ideas and companies that fall off before they can really bring
things to scale and bring things to market. So I would love to
get your views on that and the importance of programs like the
SBIR program for companies like yours.
Mr. SCHOLL. Yeah, I think the SBIR program is super
important as a bridge from zero to one for new technologies.
Without that, for example, with the Air Force, we would have to
go from nothing to having a product that is ready for a program
of record procurement process. And the hurdle for that is very
high. And what SBIR does is allow the DoD, the Air Force, to
signal interest in a future product to encourage private sector
development of that product before it is ready to be purchased.
So it helps bridge that ``Valley of Death.'' It helps bring
things along and ensures that the U.S. has an option to procure
an innovative product when it is ready.
Chairman CROW. Thank you.
Ms. Mackey, comments on either of those questions, or both
of them?
Ms. MACKEY. Diversity in innovation is really about
diversity. So I am intrigued by the experience that you have
about bringing a product forward. I also find in the SBIR
pipeline that there is an idea and a thought more than a
product. So there are these different paths that I think are
all valuable and really important to the process.
I will share our experience with the SBIR program was about
bringing a capability forward that manifested into a product
idea during the SBIR initial investment, and then beyond that
transitioned to the Navy and now it is transitioning to the Air
Force. So I think the SBIR program is a really important piece
of our economy. I think it is also important to the workforce
in that it lets us try innovative new things that otherwise as
a small business we might be more conservative on. It lets us
attract the workers that you were talking about into doing
interesting work.
Chairman CROW. Great. Thank you. My time has expired.
The Ranking Member, Mrs. Kim, is now recognized for 5
minutes.
Ms. YOUNG KIM. Thank you.
I would like to ask my first question to Ms. Burns joining
us virtually. Thank you.
In your testimony, you reference the many challenges of
being a small business owner, including labor shortages,
inflation, and supply chain disruptions. So these are the
hurdles that we heard from other businesses as well. And they
do impact businesses in this similar industry. So how is your
business managing with all these economic headwinds?
Ms. BURNS. Thank you. Thank you, Congressman Kim.
We are taking it all in as much as possible. One of the
things during COVID that was very helpful was the PPP funding
and then also----
Ms. YOUNG KIM. We have technical difficulty.
Ms. BURNS. Sorry. Sorry.
We were critical infrastructure during COVID, which was
very good because it allowed our workforce to continue to work
through all of the COVID difficulties. We were in the middle of
building a new building, which we were able to continue doing
and we are ready for new work opportunities now. And we have
our new equipment installed. Fortunately, before, the interest
rates were low but now going forward interest rates are rising.
That will be more difficult. We are doing the best we can of
bringing in whoever we can to train and work on jobs but we are
very, very, let's see, highly technical. So it does take a lot
of training.
Ms. YOUNG KIM. So you mentioned that your company provides
internal workforce development programs to train and mentor
your employees. So can you tell us a bit more about the types
of programs you offer? And what is the biggest challenge your
small business faces in training your workforce?
Ms. BURNS. Well, we, let's see. We do a lot of different
things for training. When we onboard people, we have a lot of
different things we have to train on--safety, different
processes, equipment. We have a lot of very tight tolerances on
our parts, less than like a hair's thickness. Then we have to
measure them and make sure they are all made to order
correctly. And we just are, let's see, putting in processes to
make sure that everybody gets the training they need. So, we
just do the best we can.
Ms. YOUNG KIM. Thank you very much. Thank you.
I want to move on to Mr. Fanning. In your testimony, you
discussed the AIA Members launching a successful apprentice
program at Valley Community College in San Bernadino. My
district has parts of San Bernardino. How has this program
helped meet the company's labor demands and bring new employees
to the sector?
Mr. FANNING. The company is CAS, Certified Aviation
Services I think in your district. It is a great example of a
public-private partnership. So they join forces with the local
community college and provide on-the-job training actually on
the aircraft that they are servicing, and 70 hours of that
program, of that worktime, counts towards the degree. And it
provides a pipeline since those students, while they are
getting their certificates, are already working at CAS. They
are more inclined and CAS wants to capture them if they can.
Ms. YOUNG KIM. And those are the things we want to
highlight. So what can we do in Congress and as Members who
represent those, like your community college, to highlight and
raise awareness for apprenticeship programs like that?
Mr. FANNING. Well, I think the demand exceeds what is
available for some of those programs. So if we could increase
the funding for those apprenticeships to provide for the
schools, that type of training that the companies can tap into
and partner with, I think you will see the demand will grow
with whatever the funding is available for those partnerships.
Ms. YOUNG KIM. What I am hearing is a lot of funding.
Continue funding that is working.
Mr. Scholl, how has your business recruited the next
generation of skilled labor in the past? I know you talked
about bringing the new generation and want to make sure that
this industry has more next generation that is interested in
continuing the work?
Mr. SCHOLL. Thank you.
I think the most important thing is inspiration. People at
very early ages decide what is going to be exciting to go into
and what they can see themselves going into. And so reaching
our young people, yes, I think going all the way back to
kindergarten, if not sooner, and help ensure people from all
walks of life that exciting things are happening, innovation is
happening in aerospace, and supporting them all the way through
their career so they can go do something amazing, not just go
and work on a new app for a cellphone.
Ms. YOUNG KIM. Thank you. I think my time is up so I will
yield back. Thank you.
Chairman CROW. The gentlelady yields back.
I will now recognize the gentleman from Texas, Mr.
Williams, Vice Ranking Member of the Committee, for 5 minutes.
Mr. WILLIAMS. Thank you, Mr. Chairman, and Ranking Member
Kim. We talk about garages a lot today. It speaks pretty well
for garages. So I want to congratulate you all. And I want to
thank the witnesses for being here today. I appreciate that.
As a small business owner for over 50 years--I am a car
dealer so we can talk about supply chain and some stuff--but 51
years. I still own my business, employ hundreds of people back
in Texas. I know firsthand that we are always looking for more
mechanics, technicians, and other technical workers as we
talked.
Our country is facing a growing skills gap as younger
generations are not joining the vocational workforce--we have
talked about that--at a high enough rate that we need. And I
was pleased to see that my bill, the Supporting Small Business
in Career and Technical Education Act passed this Committee in
our markup yesterday which provides CTE graduates with
additional support as they enter the skilled workforce. While
this bill is a great first step in connecting CTE professionals
and as a lot of kids are dropping out of school they need this
so they can realize they can do other things and not go back to
school. Congress and the Biden administration need to do more
to address the technical worker shortage that is hurting
industries across the country. And of the business owners
trying to currently hire workers, we talked about this this
morning, an astounding 93 percent reported having only a few or
no qualified applicants for the position they were trying to
fill and that is because this administration is paying people
not to work rather than to work and we have got to fix that.
So, Ms. Burns. I have a question for you. As an aerospace
manufacturer, I know this technical worker shortage is not news
to you. Would you elaborate quickly on the biggest challenges
your small business is facing when recruiting and training
skilled workers, and how is your woman-owned business adapting
to this skilled labor shortage?
Ms. BURNS. Well, it is a challenge. And we are trying to
get people however we can, basically. We are bringing in people
that are in other career or maybe, you know, like other types
of work that have not had more advanced training that can come
in and grow their skills and their career in aerospace
manufacturing. And sometimes they do not have, you know,
schooling past high school and they are more mechanical and
they like these types of jobs. And----
Mr. WILLIAMS. If I might interrupt you, it just shows that
training is important and that sometimes you have to go get
people from another company rather than training them; correct?
Ms. BURNS. Yes. Actually, we try not to do that too much
but there are a lot of people who are switching between
aerospace jobs who are getting recruited to other aerospace
companies as well.
Mr. WILLIAMS. Well, thank you. I will have another question
for you here in a minute.
So, Biden is skyrocketing inflation. We talked about that.
Everybody is affected with this inflation and we have got no
fix to it right now according to this administration. Continues
to create uncertainty and has replaced the labor shortage as
the top concern for small business owners. And on top of that,
the Bureau of Labor Statistics released its April Consumer
Price Index reporting that consumer prices, and all of you saw
this, increased by 8.3 percent, which is worse than experts
expected. Plus, we have a negative GDP. Another month of raging
inflation from this administration means more bad news for
business owners like all of us. And so, as a business owner
when you get this, you have got to decide whether to reduce
capital investment, lay off, or cut pay for employees, or pass
the costs along to consumers in order to offset these increased
costs, and that is not that easy to pass it on.
So these are difficult decisions business owners should not
be forced to make, and so many people in Congress, my
colleagues, never have to make it because they have never owned
a business. That is a big problem.
So let me ask you this quickly, Ms. Burns. Can you expand
on how the rising costs of goods and gas and labor has impaired
your business and your customers? I am sure you cannot pass it
on to consumers. You just in many cases have to expense it;
right?
Ms. BURNS. Right. We are going to have to expense those
costs. I am not quite sure how we are going to cover it yet but
while we are increasing business, I would say there is one good
thing in the business environment now. Since we are coming out
of COVID there seem to be a lot of new opportunities, which I
think, will help grow our business if we can make sure that we
get enough qualified people to help expand.
Mr. WILLIAMS. And I think you touched on that, too. And
everybody did here. The tax cuts that we passed in 2016, we
need to make them permanent. Everybody is taking advantage of
those. That is the debate we had back and forth between the two
parties, but the tax cuts did as much to help this economy as
anything, and I am glad to hear our witnesses say that.
So with that in mind, Mr. Chairman, I will yield back.
Chairman CROW. Thank you. The gentleman yields back.
I will now recognize the gentlelady from New York, Ms.
Tenney, for 5 minutes.
Ms. TENNEY. Thank you, Mr. Crow, Chairman Crow, and Ranking
Member Young Kim for holding this meeting. And thank you to the
witnesses for your time, your insight, and being business
owners in a tough economy right now.
I am honored to represent New York's 22nd Congressional
District which stretches from the shores of Lake Ontario in the
north, all the way to the Pennsylvania border and everything in
between. This region has a strong innovation heritage and
centuries of pioneers in the Industrial Revolution, starting
back with the digging of the Erie Canal in my district. And it
is also the birthplace of IBM, the headquarters for the Air
Force Research Lab Directorate, otherwise known as Rome Lab,
which is a greater center for innovation in our communities.
The area around Rome Lab especially hosts a vibrant ecosystem
of aerospace companies developing the future of drones and
their potential to improve our lives and our national security.
This is aided by the New York Unmanned Aerial Systems Test
Site, which includes a state-of-the-art, 50-mile long testing
corridor that stretches from Rome, New York, to Syracuse, New
York. However, one of our biggest constraints holding back
progress has been the bureaucratic uncertainty from the FAA and
the federal government, as well as the inability to secure
needed components. We need a federal rulemaking process that
actively incorporates the needs of small businesses and not
just the entrenched interests that tend to be larger. We also
must ensure that regulators are fully transparent about their
plans and intentions so small companies can plan and adapt. The
shortage of components is tied to the country's decades-long
failure to curate a strong domestic supply chain and a line of
important products and parts. As our aerospace industry
increasingly pushes the boundaries of technology, it becomes
more and more evident and important to ensure that our
companies can access the semiconductors and the specialized
components they need. This is a crisis for national security
and our manufacturing capacity.
I want to first address my questions to Ms. Burns, and I
want to say thank you for bringing up the 2017 Tax Cuts and
Jobs Act and the need to make them permanent. That has been one
of the greatest things that has happened to our small business
community in upstate New York. We have finally gotten a
breather from the oppressive tax and spend type of policies
coming out of New York State from the federal side thanks to
that Tax Cuts and Jobs Act. Not only has it give us more growth
in terms of our small business community; it has given them a
little bit of an edge against some of their bigger competitors.
So thank you for that, and I appreciate my colleague mentioning
it.
I wanted to first ask you though, in your testimony you
wrote how the aerospace industry supply chain disruptions and
rising prices have only worsened and that these constraints
make it harder to carry out your long-term contracts with your
customers. Would you be able to give an example of some
important products that you are unable to purchase domestically
and have to import from foreign sources and where you have to
import them from?
Ms. BURNS. Okay. Thank you for the question.
We actually only use U.S. made products for our
manufacturing. We do not outsource or have any foreign sources
for our product. It is all U.S. made. But some of the prices in
materials, such as aluminum, titanium, stainless steel, those
types of things have, you know, some of them have gone up like
double. Aluminum, for instance, is much more expensive than it
was previously.
Ms. TENNEY. Is your aluminum and your titanium, are they
domestically sourced through the companies or are they--
obviosuly, they are coming from somewhere else.
Ms. BURNS. They are domestically sourced. Yes. So they are
made in the U.S. and I do not know why but there seems to be a
shortage of some things right now. A shortage of supply. I am
not really totally sure why.
Ms. TENNEY. Thank you. I think it has to do with our
policies.
I quickly want to ask Mr. Fanning a question, and thank you
for your question, Ms. Burns.
You wrote that a January 2022 tax change has significant
impacted America's innovators and their ability to recuperate
some of their research and development expenses. Can you talk
more about how this tax change is harmful and how it is hurting
small businesses?
Mr. FANNING. The change that occurred this year was to
amortize R&D investments over 5 years rather than getting the
credit in the year the expense was made. Seventy percent of R&D
comes out of the private sector, and 70 percent of R&D expenses
go to wages and salaries. So it is good for the economy. It is
good to attract new workforce, and it is good for small
business because a lot of small businesses are pulled into the
research and development programs.
Simultaneous to that, China is doubling down and giving a
200 percent deduction for R&D expenses. And so we look at it
both from an innovation standpoint but also from a national
security standpoint that we are making a change that could
disincentivize private investment in R&D.
Ms. TENNEY. Thank you for that. I appreciate it. And I
think my time has run out so I yield back. Thanks, Mr. Chairman
and Ranking Member.
Chairman CROW. Thank you. The gentlelady's time has
expired.
I will now recognize the gentlelady from Pennsylvania, Ms.
Houlahan, for 5 minutes.
Ms. HOULAHAN. Thank you. Thank you, Mr. Chair, and thank
you to all of you all for being here today.
As an engineer and a former Air Force officer, I understand
the very critical role that this industry and your industry
plays in supporting our nation's defenses and to promote
innovation across our economy. In my community in Pennsylvania,
Boeing employs approximately 462 of my constituents
contributing to an estimate $492 million of annual economic
impact throughout Pennsylvania. The industry's impact
reverberates across all of our local economies and supports
small businesses in manufacturing and innovation. A common
theme that I have heard in your testimonies is the need for
greater federal investments in STEM and STEAM workforce
development. To address this need, I have introduced a
bipartisan STEM Restart Act to provide funding to small and
middle-sized businesses, STEM businesses in particular, to
offer robust, paid, mid-career internships, known as
returnships, for mid-career workers. This would particularly
benefit women who are seeking to return or transition into the
STEM workforce.
For Mr. Fanning, could you please talk a little bit about
how providing funding for flexible workforce development
opportunities, such as the returnships that are created by the
STEM Restart Act, would help address the workforce development
and diversity challenges that are faced by the aerospace and
defense industry?
Mr. FANNING. I think one of the things we have learned from
COVID is the value of flexibility when you can afford it. And
oftentimes, people leave the workforce because they cannot
balance the competing needs they have outside of their job. And
so providing that flexibility, recognizing it, implementing
what we have learned during COVID we think will entice more
people back into the workforce, and in particular, as you
pointed out, women, which will help diversify our workforce.
Ms. HOULAHAN. I appreciate that. It has definitely been my
personal experience that it was very hard to kind of balance
everything when my family was young.
To Ms. Mackey, in your testimony you spoke about the
importance of federal investments in Research and Development.
On this Committee, I have introduced other bipartisan
legislation that would enhance SBA's SBIR and STTR programs
which have been shown to provide significant returns on R&D
investments at the Department of Defense. Could you speak to
the importance of reauthorizing these programs and share your
views on how the program can be enhanced?
Ms. MACKEY. Yeah. So it is incredulous to many of my
colleagues in industry, at trade associations, and the
government that the SBIR is at risk of being reauthorized. What
is it, $1.2 billion a year of innovation. And as you talked
about, that first step to engage with the Department of Defense
and bring mission critical technology forward.
So to your first point, it is almost ludicrous that we are
even considering whether we should reauthorize it. But of
course, we should reauthorize it and focus more on it. One of
the things, I was at a Harvard Business School event 2 weeks
ago with a lot of leadership from DoD and there were a lot of
students look about how can we get into national security and
how can we bring our emerging technologies and entrepreneurial
interests forward? And one of the conversations was, and it is
a lot like what you said, that SBIR is a gateway. I hesitate to
call it a gateway but a gateway into the community that is an
easy path into what is a different place than traditional
commercial contracting. So we are a nontraditional defense
contractor. The SBIR program let us first explore things that
our more risk averse customers would not have explored. And
then it exposed us to a whole new marketplace that is quite
compelling in terms of personal satisfaction in what you
deliver.
So I do not know if that answers your question or if there
is anything else.
Ms. HOULAHAN. No, I appreciate that. Thank you. And with
the limited the that I have left, I am really happy to hear
that there is increased attention back to our conversation
about diversity and inclusion in the aerospace industry,
particularly with regard to female representation. According to
AIA's 2021 Aerospace and Defense Work Study, only 25 percent of
the workers in the industry are women. Additional data has
shown that nearly 90 percent of professional airline pilots are
white men.
So to Mr. Fanning, how is the industry making strides in
training, recruiting, and retaining women as part of its
commitment to increase diversity and inclusion? And what can we
do to be helpful?
Mr. FANNING. Well, first of all, it is a priority because
as we need to grow our workforce and are in a hunt for talent,
we need to make sure that we are accessing everything that is
out there. And so if we are leaving some parts of the country
off the table, it is not going to be very effective for our
recruiting efforts. Aerospace and defense companies are
doubling down on efforts to provide mentoring, to provide paths
for development and career growth and promotion, to recruit
from different areas than they have in the past to try and find
that talent. And we are, back to the other conversation, doing
a number of things to attract people into STEM earlier. For
example, we run the world's largest student rocketry challenge,
and we just partnered with the Girl Scouts this year to get
more girls into the program, get them excited about STEM, and
then find paths for them through middle school and high school
and into the industry.
Ms. HOULAHAN. Thank you. I know my time has run out. I will
foot stomp again on the importance of returnships. I think we
are doing our very best to bring young girls along but we have
to keep them once we get them.
So I appreciate it, and I yield back.
Chairman CROW. The gentlelady yields back.
I will now recognize the gentleman from New York, Mr.
Garbarino, for 5 minutes.
Mr. GARBARINO. Thank you, Mr. Chairman. And thank you to
the Ranking Member for holding this hearing. And thank you to
the witnesses for being here.
A question for Mr. Fanning, and maybe Ms. Mackey can add on
to what she thinks after he answers, but Mr. Fanning, the week
before last, the Senate Armed Services Committee held a hearing
regarding the health of the defense industry industrial base
featuring the president/CEO of the Professional Services
Council, David Berteau, and former Undersecretary of Defense
for Acquisition and Sustainment, Ellen Lord. Our hearing focus
today is a little bit broader than that but both witnesses
spoke repeatedly about the need for industry to have a clear
demand and signal from DoD. For example, Secretary Lord stated,
``If you do not have a clear demand cycle and you do not know
what is being purchased over the next 5 years, you cannot
invest your resources, whether that be you plant, your
equipment, your tooling, your people, in something where you do
not know where the return is. And because there has been such
an erratic demand cycle and purchasing cycle, companies start
to go out of business or they put themselves up for sale. So
the most critical thing that the government could do is be very
clear about how much of what is going to be procured over
multiple years and then have long-term multiyear contracts.''
And then Mr. Berteau reinforced this key message by saying,
``In order to be successful, the company has to predict what
DoD is going to need. They have to invest in that years in
advance, and then they have to maintain that investment until
such time as the contract is awarded. This is very lengthy.''
I am from Long Island. Northrup Grumman used to have a big
footprint. They left Long Island but a lot of their
subcontractors are still on Long Island and I have met with a
bunch of them. They run through an organization called the
DAPS. It is an aerospace and defense trade association. And all
of them have said the same thing as what these two witnesses
said, they need more clarity in what kind of money is being
spent and what is going to happen.
And it is not just limited to procurement though, either.
It is also, as you heard from, you know, research and
development. What could the federal government, in particular
DoD, do to send a clear demand signal to industry regarding its
priorities for aviation systems sustainment to enable greater
involvement in innovation and workforce development?
Mr. FANNING. Thank you for that question. And I agree
completely with what David Berteau and Ellen Lord said. Having
spent most of my life on the government side in the Pentagon,
now working with industry, I see how industry has to guess
oftentimes. Not only is the clarity not there all the time but
the consistency is not there. And so the 5-year defense program
provides some clarity but is not always consistent over those 5
years. And one key element that is missing from that is
sustainment costs. Seventy percent of the lifecycle costs of
what the Pentagon guys are actually in the sustainment of it.
That is not included in the 5-year defense plan and that would
be another element that would be very helpful for industry in
its planning to take some of the guesswork out which would
actually serve the Department of Defense better in the long run
as well.
Mr. GARBARINO. I appreciate that.
Ms. Mackey, do you have anything to add about what the
federal government and DoD can do?
Ms. MACKEY. So I would just add that the reality, the
picture from a small business owner and from my colleagues at
NDIA, and that is in plain speak, our bottoms are closer to the
bottom line. We do not need it be easier but we need it to be
consistent. So all of the strategic advice that you just gave,
as well as once you release a procurement, make sure that you
stay consistent to how you said you wanted to acquire. We have
businesses inside NDIA right now that are working issues of
having invested in order to do some of these larger
procurements that really take them to the next level and then
the playing field changes at the last minute and the ability to
absorb those fits and starts and changes is really hard for
small business. So I think consistency is the piece that I
would like to recommend from the small business perspective.
Mr. GARBARINO. Yeah, the bigger businesses might be able to
manage it better than the small businesses. I have heard that
as well from the member companies in my district.
And just quickly, I know I am running out of time soon, a
couple of you all spoke about what your company or your member
companies are doing for recruitment because workforce has been
very tough to fill. And I know what community colleges are
doing. There has been a big push to get community colleges
involved. Are we seeing any resistance from high schools, or
really specifically high schools from pushing people into these
trade jobs instead of pushing them to colleges or have you seen
high schools being willing to send people to be part of these
programs, students? And that is for anybody who has experience.
Mr. FANNING. I do not know that we are seeing resistance
but I do know we need to do a better job of explaining to
schools, and to parents, why these are good paths. These are
high-paying jobs that can support families and are doing
interesting things. And so I think that is one thing we have
identified we need to do better at which is explain why these
paths are good paths.
Mr. GARBARINO. All right. Thank you so much. I have run out
of time so I yield back. Thank you, Mr. Chairman.
Chairman CROW. Thank you. The gentleman yields back.
One of the things that this Committee does a lot is talk
about the supply of pilots, which is essential to making a lot
of this work. And as additional background and context on that
issue I want to submit a paper into the record with
substantially more background by the Airline Pilots Association
to make sure that we are getting the pilots' perspective on
training and supply pilots as well.
So thank you again to our witnesses for testifying today.
This hearing has showcased the importance of the aerospace
industry to our nation. The pandemic created unprecedented
challenges but today the sector is on its way to recovery.
However, these labor shortages will continue to hold back this
industry and the entire economy if they persist. So I am
hopeful we can work together to advance workforce development
solutions that help upskill workers and ensure that small
businesses of all types can find the right employees.
Without objection, Members have 5 legislative days to
submit statements and supporting materials for the record.
And I want to just thank again all of the witnesses for
your perspective, and this is the type of stuff that is
actually called legislating and getting things done. And this
is one of the more bipartisan committees in Congress, and I
look forward to working with all Members to actually get these
things done.
So if there is no further business to come before the
Committee, without objection, we are adjourned. Thank you.
[Whereupon, at 11:09 a.m., the subcommittee was adjourned.]
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