[Congressional Record Volume 150, Number 61 (Wednesday, May 5, 2004)]
[Senate]
[Pages S4923-S4930]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE AEROSPACE INDUSTRY
Mrs. MURRAY. Mr. President, will the last aerospace worker leaving
America turn out the lights? I ask that question to sound an alarm for
every American who cares about our economy and our security.
We are about to surrender our global aerospace leadership because we
are sitting on our hands while Europe is doing everything it can to
dismantle our aerospace industry.
Today, I am sounding the alarm. Unless we wake up to this threat, we
are going to lose an industry that Americans created and that has
brought innovation to every corner of our economy.
We Americans led the first century of flight, but we might not even
have a role in the second century if we keep sleepwalking down this
dangerous road.
I am here on the Senate floor tonight to say: Wake up. Wake up to
this threat before we lose another American industry. Wake up to this
threat before we lose more high-wage, high-skill American jobs. Wake up
to this threat before it is too late.
Too many Americans, especially in our Government, are not aware of
what Europe is doing to kill off our aerospace industry. I want to
expose the unlimited assault that Europe and Airbus are leveling at
America's aerospace workers.
As my colleagues know, I have been troubled by Europe's market-
distorting actions in commercial aerospace for many years. I have
raised my concern with Senators, with foreign leaders, and with
administrations of both parties.
Tonight, I am detailing my concerns before the full Senate because
EADS and Airbus have launched a deceptive PR and lobbying campaign to
convince the U.S. Government that it is essentially an American
company. The Airbus campaign of half-truths is on full display as the
company works overtime in Washington, DC, to recreate a competition
they already lost to build the next generation refueling tanker for the
Air Force.
I have come to the Senate floor tonight to set the record straight
and to show how Europe's broader plan to dominate aerospace threatens
our future.
Tonight, I am going to focus on five issues.
First, I want to explain why this is so important for our country.
Secondly, I want to explain how the European view of aerospace as a
social program to create jobs is helping Europe beat out our more
traditional business perspective.
Third, I want to expose, in detail, the underhanded things that
Airbus is doing to dismantle our aerospace industry, from providing
subsidies for launch aid, research, facilities and suppliers, to
selling planes below cost, guaranteeing the future value of aircraft,
tying sales to landing rights, and linking plane sales to other trade
issues.
Fourth, I want to expose the deceptive lobbying and PR campaign
Airbus is using to reopen a competition it lost and the dangers that
poses for American security. Finally, I want to talk about the steps we
must take to retain our leadership of this critical industry.
Let me explain the title of my speech, ``Will the Last Aerospace
Worker Leaving America Turn Out the
[[Page S4924]]
Lights?'' I have the great honor of representing the State of
Washington which is one of America's great aerospace centers. We are
very proud of our long history and our leadership. On July 15, 1916,
Bill Boeing started his airplane company in Seattle, WA. Since that
day, Boeing and Washington State have shared the ups and downs of the
commercial aerospace industry. We have experienced extended periods of
nearly full employment, and we have endured marked downturns that left
tens of thousands unemployed.
In the early 1970s, there was a particularly bad downturn. It seemed
as if everyone was leaving Seattle. So two Seattle businessmen decided
to post a billboard to put a lighthearted spin on all the layoffs. Here
is the photo that ran in the Seattle Times in 1971. It shows a
billboard with a light bulb and a string coming out of it. It says,
``Will the last person leaving Seattle turn out the lights.''
Anyone who lived through this difficult period in Washington State
knows this sign. Eventually Seattle recovered, and since the 1970s we
have experienced ups and downs. Today we are facing another severe
downturn in the aerospace industry. But today it is not just Seattle or
Washington State that is hurting. We are hemorrhaging aerospace jobs in
Kansas, California, Texas, Florida, New York, Illinois, Georgia,
Arizona, Pennsylvania, Ohio, Connecticut, Maryland, New Hampshire,
Massachusetts, and Colorado. This is a national problem, and we are not
too many years away from asking, will the last aerospace worker leaving
America turn off the lights? We have to take action before it is too
late. Sadly, we are approaching a point of no return.
Last week the top two executives of EADS revealed their plans to take
over the global aerospace industry. According to a German newspaper on
April 27, 2004, CEO Rainer Hertrich said:
In ten years, we'll be number one, everywhere, worldwide.
His CEO Phillipe Camus said:
We're now ready for our final step: globalization.
Some of my colleagues may wonder why I am speaking at some length
tonight about the future of our aerospace industry. It is because this
industry is critical for jobs, for our economy, for our security, and
for our future.
The commercial aerospace industry employs more than 2 million
Americans with an average salary of $47,000. But unfortunately, we are
losing these good-paying jobs at a rapid rate. In the past 15 years, we
have lost 700,000 American aerospace jobs. These are scientific and
technical jobs; 700,000 high-skilled, high-wage jobs are gone. Unless
we wake up, we are about to lose more.
We spend a lot of time in the Senate talking about how American jobs
are being shipped overseas in search of cheaper labor. Aerospace is a
little different than some of the other industries we have discussed.
Aerospace jobs are not low-wage, low-skill jobs that move to where the
labor is cheapest. These are high-wage, high-skilled jobs we need to
keep in America. But we are being aggressively challenged by Europe for
those jobs.
Aerospace is also important for our overall economy. Our leadership
in commercial aerospace has helped American industries, from health
care to automobiles, become safer, more efficient, and more productive.
According to John Douglas, president of the Aerospace Industries
Association of America, the aerospace sector ``generates economic
activity equal to nearly 15 percent of the nation's gross domestic
product and supports approximately 11 million American jobs.'' Mr.
Douglas notes that aerospace also led the Nation in net exports with a
$30 billion surplus in 2000.
The Commission on the Future of the U.S. Aerospace Industry found
that in 2001:
. . . more than 600 million passengers relied on U.S.
commercial air transportation and over 150 million people
were transported on general aviation aircraft. Over 40
percent of the value of U.S. freight is transported by air.
Aerospace capabilities have enabled e-commerce to flourish
with overnight and parcel delivery and just in time
manufacturing.
Not only is this about jobs, it is also about security. It is
irresponsible to let our country surrender our aerospace leadership.
Once our plants shut down, once our skilled workers move to other
fields, once the infrastructure is gone, you can't recreate that
overnight. It took 100 years to build our aerospace leadership, and we
could lose it all in the next 10 years.
Finally, commercial aerospace is important for our future. Europe is
working hard to overtake our leadership of aerospace because they know
it is the future, the future of the worldwide economy and the future of
human exploration. Europe wants to lead the future. And if we stay on
this track, they will.
This industry is worth saving because it is important for our jobs,
our economy, our security, and our future. I should explain by way of
background there are only two companies in the world that make large
passenger airplanes. One is the Boeing Company. Its commercial air
operation is headquartered in Renton, WA. The other is Airbus which is
headquartered in Toulouse, France. Airbus is a division of the European
Aeronautics Defense and Space Company also known as EADS. Throughout my
remarks tonight, I will refer to Airbus and EADS interchangeably. So it
is one European company and one American company competing for control
of the commercial aerospace industry.
Next I want to talk about how the United States and Europe view
commercial aerospace, because we have two very different visions.
Unfortunately, their vision will allow them to overtake us unless we
realize what they are doing.
Let me start at home. For us in America, commercial aerospace is
seen as private business. Some companies will win; some companies will
lose. We will let the marketplace decide. But for Europe, aerospace is
a jobs program. The European governments will fund and support their
domestic industry because creating aerospace jobs in and of itself is
considered a priority. They don't care if Airbus loses money. They
don't even require Airbus to pay back loans on failed products. They
don't care as long as they are creating jobs for Europeans.
Europe views aerospace as a long-term investment. They are
aggressively subsidizing the industry and pressuring and rewarding
customers without regard to making a profit or following the business
rules American workers must follow. Simply put: They are willing to pay
any price to take over American leadership.
Don't take my word for it. Look at what EU leaders have said. Here is
what British Prime Minister Tony Blair had to say last year:
As a result of over 500,000 pounds in launch aid, Airbus is
today in a position where it can take over the leadership of
the large aircraft market from Boeing in the United States.
That would be tremendous for British manufacturing and for
European industry.
It is not just Tony Blair. Here is what a 2001 report to the European
Commission, titled ``European Aeronautics, a Vision for 2020'' states:
European aeronautics has grown and prospered with the
support of public funds, and this support must continue if we
are to achieve our objective of global leadership.
The same report goes on to say:
Total funding required from all public and private sources
over the next 20 years could go beyond 100 billion euros.
Simply put, Europe views aerospace jobs as a priority. According to
the European Aerospace Industry Association, there are at least 407,000
direct jobs in Europe's aerospace sector, more than 1.2 million total
jobs supported by aerospace in Europe, and there are more than 80,000
firms in the European aerospace supply chain.
Europe has maintained a $20 billion annual trade surplus in aerospace
goods since 1996. Europe has an aggressive investigation for the future
of aerospace. It wants to use significant public investment to create
and sustain jobs, largely at the expense of U.S. competitors and
workers.
Here is how the Commission on the Future of the U.S. Aerospace
industry put it in 2002:
Unfortunately, it appears that European officials intend to
continue directly subsidizing EU companies. The recently
unveiled EU aerospace policy strategy calls for an increase
in subsidies to continue building market share, largely at
the expense of U.S. companies.
So Europeans are willing to do anything to subsidize Airbus and
distort the market so it can beat Boeing. But here in the United
States, our Government is sitting on the sidelines. We are
[[Page S4925]]
following a normal business model, and we are getting creamed by the
Europeans, who are following a social welfare model, where it doesn't
matter if they lose money if their products fail. As long as they are
employing Europeans and taking over America's market share, they don't
care. That is not competition; that is subsidized slaughter.
We have to wake up before it is too late for America's aerospace
companies and workers. This is not a truly competitive market. Private
U.S. companies, responsible to their shareholders, are confronting
subsidized companies funded by governments who don't care if they make
a profit as long as they create jobs. Understanding how the Europeans
approach aerospace is the first step to helping American workers
survive this onslaught. The next step is to understand how the
Europeans are putting their vision into action, and that is what I want
to focus on next.
Tonight, I want to explore the unprecedented means that Airbus and
the Europeans are using to overtake American workers. Europe is taking
over America's aerospace industry through aggressive, unfair market-
distorting measures. Specifically, European governments are supporting
Airbus on the development side, as Airbus creates new aircraft, and on
the sales side, as Airbus pressures airlines and foreign governments to
buy their aircraft.
Let's start with the development side, where we find massive market-
distorting subsidies at every stage. Let's remember that Airbus was
created by European governments in 1967 specifically to challenge
Boeing and U.S. aerospace dominance in the manufacture of large civil
aircraft. EADS gets subsidies at nearly every stage of aircraft
development. They benefit from launch subsidies, research subsidies,
facility subsidies, and supplier subsidies. These aggressive subsidies
give Airbus virtually unlimited backing to overtake the American
aerospace industry. It is like an American worker stepping into a
boxing ring only to find out that, instead of one opponent, he is up
against the full force and power of the entire European Union. It is
not a fair fight.
Europe's abuses have been well documented by our own Government. Here
is what the U.S. Trade Representative said about Airbus subsidies in
its 2003 report on trade barriers:
Since the inception of Airbus in 1967, the governments of
France, Germany, Spain, and the UK have provided direct
subsidies to their respective Airbus member companies to aid
the development, production, and marketing of Airbus civil
aircraft. Airbus member governments have borne a large
portion of development costs for all Airbus aircraft modes
and provided other forms of support, debt rollovers, and
marketing assistance, including political and economic
pressure on purchasing governments.
These subsidies create an uneven playing field and allow Airbus to do
things that normal private companies cannot afford to do. Airbus has
grown without assuming any of the financial risk and accountability
that U.S. firms have to contend with every day. Here is how a top
aviation analyst put it:
Airbus cares a lot less about returning value to
shareholders. Boeing is the classic American shareholder-
driven corporation.
Europe's approach is working, too. Today, EADS is the second largest
aerospace company in the world. In the last decade, Boeing has seen its
market position globally erode significantly. At one time, Boeing sold
75 percent of the aircraft purchased worldwide. Airbus was in the
teens. Today, Airbus claims to supply more than 50 percent of the
industry.
Mr. President, I have made the case with statistics, data, trade
reports, and official Government findings. Let me put it a little more
simply: Airbus has a sugar daddy named Europe, who will keep forking
over money until Airbus has demolished America's aerospace industry and
put hundreds of thousands of skilled American workers on the
unemployment lines.
We cannot sit back and continue to let that happen. But it is not
just the support and development side in the form of subsidies for
launching facilities, research, and suppliers. Europe's market
distortions go much further on the sales side. Tonight I want to expose
some of the ways that European governments are supporting Airbus sales.
Airbus uses a series of incentives and threats to steal customers
away from Boeing--everything from bribes and landing rights, to
discounts, value guarantees, and trade threats and rewards. Airbus has
a history of graft and corruption. But don't take my word for it. Look
at what the Economist magazine, on June 14, 2003, said in a special
report, entitled ``Airbus's Secret Past; Aircraft and Bribery":
Up until 2000, Airbus and other French companies were
allowed to take a tax deduction for bribes.
Imagine that--bribing someone to buy your airplane and then you take
a tax deduction for the bribe you paid. The Economist article details
Airbus sales campaigns in India, Syria, and Canada that involved
corruption and bribes. The article notes that, in 2001, the Under
Secretary for Commerce for International Trade testified before
Congress on U.S. competitiveness in aircraft manufacturing. The Under
Secretary warned that bribery remains a threat to U.S. competitiveness.
He said:
This is an industry where foreign corruption has a real
impact. Bribery by foreign companies can have important
consequences for U.S. competitiveness because of the critical
role governments play in selecting aircraft suppliers; and
because of the huge sums of money involved in aircraft
purchases, this sector has been especially vulnerable to
trade distortions involving bribery of foreign public
officials.
His remarks were directed squarely at Airbus and the European nations
that aggressively back Airbus sales campaigns throughout the world.
This article also notes that, according to a 2001 European Parliament
report, the U.S. National Security Agency intercepted faxes and phone
calls between Airbus, Saudi Arabian Airlines, and Saudi Government
officials in early 1994. The NSA found that Airbus agents were offering
bribes to a Saudi official to ensure that Airbus received a $6 billion
order to modernize the Saudi Arabian airlines fleet. Bribes and
corruption have long been a part of their standard operating procedure
for getting other countries to buy their airplanes.
Those are just a few of the many techniques they have used to beat
out American workers. Let me turn to another one. Airbus purchases have
long been linked to landing rights at Europe's busiest airports; a very
attractive incentive to offer them to buy their airplanes, but it is a
very questionable practice.
I want to share four documented examples. In 2002, an airline named
easyJet placed a big Airbus order and then received favorable landing
spots at Orly Airport in France. In 2002, Malaysia Airlines received
landing rights at Charles de Gaulle Airport in Paris 3 days after
buying 6 Airbus A 380s. Emirates Airlines and Qatar Airways both
received extra landing rights after buying Airbus airplanes.
A source close to Emirates Airlines said:
It seems that Airbus leans on Air France, which has the
slots at Paris Charles de Gaulle and the slots are given to
the airline that has bought airbus. . . .This has been known
for years. Airbus sells one of its planes to a customer and
promises to do its best to get slots for that airline.
But landing rights are not the only trick Airbus uses to sell their
planes. Airbus also aggressively discounts the purchase price of its
planes, often at the last minute, and often below the cost of
production.
Airbus regularly makes a late final offer to an airline after Boeing
has made its best offer. Time and again, Boeing has lost a commercial
sale because Airbus doesn't have the same commercial accountability.
Airbus regularly sells aircraft below the price of production simply to
gain market share and to take customers away from Boeing.
The 2000 easyJet deal I just mentioned a moment ago is a prime
example of Airbus's willingness to discount airplanes to win sales
campaigns.
Airbus does not reveal its discounts or the particulars of a given
order. However, it was widely reported that Easy Jet got a 50-percent
discount on its Airbus purchase. Boeing said the deal was below the
cost of production. Airbus sold its planes below cost. Airbus got the
order at Boeing's expense, and the Europeans got at least 10,000 direct
jobs. It is a great deal for Europe; it is a horrible deal for American
workers. It happened because of all the financial backing, subsidies,
and special deals that Airbus gets from its European sponsors.
[[Page S4926]]
Let me share another way that Airbus distorts the marketplace. Buying
new aircraft is a big expense for any airline. Airlines want to make
sure the planes they buy will hold their value for years after their
purchase. Normally, the market price decides the value of a used
airplane, just like the marketplace decides the value of a used car.
But Airbus uses its deep pockets to override the marketplace. When
Airbus sells a plane to an airline, it often promises the airline that
the plane will hold its value in the future, and if it does not, Airbus
will pay the difference to the airline.
For example, Airbus will tell an airline that the plane it buys will
be worth $60 million in 10 years. The market only pays $40 million.
Airbus will pay the difference to the airline. It is a very attractive
incentive for an airline, but it is also unfair because it allows one
company to completely distort the marketplace. These Airbus guarantees
allow the company to use their government subsidies to buy market
share.
If this happened in another field such as cars, this Congress would
be up in arms. Imagine going to a Toyota dealer and a salesman makes
you a guarantee that in 10 years your car will be worth a certain
amount of money far above its actual value. As a car buyer, you love
that dealer. Airlines like Airbus's guarantee. But if a foreign
carmaker did that, every representative from U.S. carmakers, suppliers,
and dealers would be here in Congress demanding fairness.
The same abuse is taking place today in the aircraft market, but
Congress is not responding. That is why I am exposing all of these
techniques.
Let me share two specific cases where Airbus used these value
guarantees to distort the market and take sales away from American
workers.
In 2003, Boeing and Airbus competed to sell planes to Iberia Airlines
of Spain. At the last minute, Airbus stepped in and undercut Boeing's
price. It then offered Iberia a residual value guarantee on the future
value of the aircraft. Airbus got the deal. An official with Iberia
Airlines said Airbus got the deal because of the ``extraordinary
conditions'' it offered at the last minute. Once again, because of its
government support, Airbus was able to do things that a private for-
profit company could not.
Airbus used that same market-distorting approach with easyJet, a low-
cost carrier that had a fleet of all Boeing aircraft. In 2002, easyJet
agreed to buy 120 planes from Airbus and take options on an additional
120 planes. Airbus offered a significant price discount and a residual-
value guarantee to win that deal.
These are just a few examples of how Airbus, backed by European
governments, is taking jobs away from American workers through market-
distorting tactics. But it is not just the bribes, corruption, the
landing slots, the discounts, and the value guarantees Airbus is using
to undermine American aerospace. Airbus also steals sales by making
threats and rewards on unrelated trade issues.
Airbus and European government officials regularly link Airbus sales
to other trade issues. There is constant cooperation between Airbus and
European leaders to pressure foreign airlines and governments to buy
Airbus aircraft. Let me share a few documented examples that span the
globe.
First, Europe gives special rewards to countries for buying Airbus
planes. It happened with Russia 2 years ago. After the Russian airline
Aeroflot bought Airbus planes, Russian exporters were given greater
access in the European market, and Russia was given use of the EU space
launchsite.
It happened in Thailand as well. Following a 2002 Thai Airlines
Airbus purchase, Airbus lobbied the EU to lower trade barriers to Thai
chicken and shrimp exports.
Time and again, Airbus links their plane purchases to other trade
deals. But Airbus is not content to just use trade rewards. It also
threatens to punish other countries unless they buy Airbus planes. Let
me share a couple examples that first involves Pakistan.
In April 2003, Pakistan media reported that EU retaliated in textile
negotiations against Pakistan following the Boeing 777 purchase. Airbus
is not competing on the merits of its product. Instead, it uses threats
of retaliation to pressure countries into going along.
Another example of these threats and pressure tactics involves
Taiwan. During an aggressive 2002 competition between Boeing and Airbus
for an important Taiwan sale, the Government of France threatened to
terminate its satellite cooperation with Taiwan if Airbus was turned
away.
Let me share a final example of these trade tactics, and it is one of
which I have personal knowledge.
European governments have linked Airbus purchases to EU accession. I
saw this myself on a trip to Central Europe that I took in 1998 when I
visited Poland, Hungary, and the Czech Republic. One Central European
airline told me pointblank that they are under pressure from the
Europeans to buy Airbus because it would ultimately make EU accession
easier.
This is just a sampling of the very aggressive competitor that my
constituents and our aerospace workers confront every day in the global
market. I note that this is just the tip of the iceberg. I have been
briefed by some of our Government intelligence agencies, and the
examples I shared are just a very small part of what is happening. I
encourage all of my colleagues to be briefed by the appropriate
agencies because it will shock you, just as it shocked me. Arrange a
briefing and find out for yourself.
I now want to turn to my fourth point. Airbus and EADS are now
engaged in a slick campaign to market themselves as an American company
to policymakers and to the general public. They are running a campaign
of misinformation and half-truths to secure more U.S. business for
European workers. Their campaign is particularly evident in Washington,
DC, where Airbus is seeking to influence both the administration and
this Congress. They have their lobbyists working to unravel the Boeing
tanker contract, and their PR shop is making false claims about
Airbus's impact on our economy. Simply put, they are trying to get us
to see them as an American company.
Airbus and EADS have hired a small army of lobbyists. At least 18
lobbyists at multiple lobbying firms are registered to represent Airbus
and EADS in Washington, DC. Their lobbyists include the current
chairman of the Republican National Committee, former Members of
Congress, former staffers to a previous Senate majority leader, a
previous House minority leader, and others heavily involved in
congressional campaigns. Lobbyists with ties to the administration are
also at work for Airbus, including former officials at the White House,
Defense Department, Commerce Department, Transportation Department,
Export-Import Bank, OPIC, and NASA.
Airbus and EADS have also hired prominent Americans to help them gain
entry into the U.S. markets and to put an American face on this
European operation.
Ralph Crosby is the CEO of EADS North America. Mr. Crosby was a
longtime senior executive with the Northrup Grumman Corporation. EADS
said Crosby's hiring was ``to enhance the access of EADS to all
elements of the U.S. defense and aerospace marketplace.''
T. A. McArtor is the chairman of Airbus North America. He previously
served as the administrator of the Federal Aviation Administration.
David Oliver is the executive vice president and chief operating
officer of EADS North America. Oliver was previously the principal
Under Secretary of Defense for Acquisition, Technology, and Logistics.
With this team of lobbyists and former U.S. Government officials in
place, Airbus and EADS now want policymakers and the public to believe
that Airbus is actually an American company.
Here is what Airbus and EADS say in Washington, DC, and all over the
country in speeches, in paid advertisements, and in other official
materials: They say Airbus has created and supports 120,000 jobs in our
country. They say Airbus subcontracts with as many as 800 U.S. firms in
the United States, and they say Airbus now does $6 billion in business
annually in the United States.
For more than a year, I have called on Airbus to justify and document
these assertions, and they have refused. Last year, I wrote to the
Commerce Department and asked them to investigate these claims, and I
want to share the results.
[[Page S4927]]
On jobs, Airbus used to claim they created 100,000 U.S. jobs. The
U.S. Commerce Department could not find any justification for that
claim. Commerce asked Airbus to document these claims. Airbus refused.
Now Airbus is inflating its bogus figures, saying it is responsible for
120,000 American jobs.
Do my colleagues know what figure the Commerce Department came up
with? Five hundred. Not 120,000, not 100,000, but 500 jobs is what the
Commerce Department came up with.
The truth is, Airbus in large part is responsible for the economic
shock, consolidation, and dislocation that has hurt American aerospace
workers over the last decade. Thousands of small businesses have gone
out of business. Consolidation in the industry has brought enormous
change, and hundreds of thousands of jobs have been lost throughout the
industry. Let us set the record straight. Airbus does not create
American jobs; it kills them.
Airbus also makes false claims about the number of U.S. suppliers it
uses. Airbus says it contracts with 800 U.S. firms. The Commerce
Department, after looking into this request, can only come up with 250
firms, not 800. After that, Airbus did something kind of fishy. They
revised their supplier figure down from 800 firms to 300 firms, but
they increased the alleged value of its contracts from $5 billion up to
$6 billion annually. We just cannot trust Airbus' funny numbers.
When it comes to suppliers, Airbus deserves no credit for using U.S.
suppliers, and that is because commercial aerospace--the airlines, not
the manufacturers--select many of the suppliers. Clearly Airbus does
not deserve credit for the choices that its customers make. So again,
Airbus does not help American firms; it hurts them.
Finally, Airbus claims it does $6 billion in business in the United
States each year. They say that every chance they get, but here is
something they do not say. EADS alone has a $6 billion trade surplus
with the United States. I am not talking about another country; I am
talking about one company running a $6 billion trade surplus with the
United States.
Airbus and EADS are not helping America's aerospace industry. They
are destroying it. Already, 700,000 American workers have lost their
jobs while Europe keeps adding new workers to the Airbus payroll. It is
time for the Senate, for our Government, and for the American people to
take a real close look at Airbus' real impact on the United States.
The truth is that Airbus is a horrible investment for our country.
According to EADS' documents, North America provides EADS with 35
percent of its revenues, about 10 billion euros, but North American
workers only make up 2 percent of the company's jobs--just 2,400 jobs
out of 107,000 worldwide. We give them a third of their business. What
do we get in return? Two percent of their jobs. That is a bad deal.
The truth is, Airbus and EADS are exporting U.S. jobs, suppliers, and
dollars to Europe as fast as they can. It is clear to me that Airbus is
making phony claims about its impact on the U.S. economy, hiring
lobbyists and mounting a PR campaign so it can position itself to steal
the tanker contract from American workers.
I will turn to that tanker contract and some disturbing developments.
As all of my colleagues know, I have been involved in the tanker
contract from the very beginning. I have been proud to work with many
other Senators on it. There is no question our Air Force needs new air
refueling tankers. There is also no question that Airbus is trying to
reopen a competition it lost 2 years ago.
I want to make sure American policymakers understand how Europe is
hurting American aerospace workers and what Airbus has been doing
behind the scenes to undermine the Boeing tanker contract. If we allow
Airbus to steal the tanker contract through its phony claims, we will
be helping Europe dismantle our domestic aerospace industry and asking
U.S. taxpayers to foot that bill.
No one doubts the need for new tankers. Airborne refueling tankers
allow our country to project military force around the globe. Most of
our tankers are more than 40 years old. One-third of the fleet is unfit
to fly at any given time due to mechanical failure. Each plane requires
a full year of maintenance for every 4 years spent on duty.
There is no question they must be replaced with new tankers. The only
question is, who is going to build these tankers--American workers or
French workers? If we give this contract to the French, we will be
rewarding Europe's trade-distorting behavior, putting Americans out of
work, and helping Europe dismantle our aerospace industry.
Congress and the administration have wrestled with a variety of
issues having to do with the tanker replacement program adopted by
Congress and signed into law by the President 2 years ago. We are still
trying to sort through all of the issues. It has been a unique and,
frankly, at times a very frustrating process.
We are all aware of the impropriety of a few Boeing employees
surrounding this deal. There is no excuse for their behavior. I will
not defend it. I will not excuse it. They are being investigated and I
expect they will be held accountable to the fullest extent of the law.
But the actions of a few do not lessen the merits of a tanker deal. The
Air Force needs this equipment, and Boeing is the best company to
provide it.
Let us remember that the Air Force looked at a proposal from Airbus
in 2002 and rejected it on the merits. In fact, the Air Force gave very
detailed reasons why the Airbus proposal was inferior. Let me quote
from the Air Force statement on March 28, 2002:
The EADS offering presents a higher risk technical approach
and a less preferred financial arrangement. First, EADS lacks
relevant tanker experience and needs to develop an air
refueling boom and operator station, making their approach a
significantly higher risk.
Second, a comparison of the net present values of the
aircraft recommended by Boeing and EADS establishes Boeing as
the preferred financial option.
Third, the size difference of the EADS' proposed KC-330
results in an 81 percent larger ground footprint compared to
the KC-135E it would replace, whereas the Boeing 767 is only
29 percent larger.
The KC-330 increase in size does not bring with it a
commensurate increase in available air refueling offload.
Finally, the EADS aircraft would demand a greater
infrastructure investment and dramatically limits the
aircraft's ability to operate effectively in the worldwide
deployment.
Those are the detailed technical reasons why Airbus lost the tanker
contract. The Air Force essentially said that EADS and Airbus did not
have a real tanker or tanker technology; their proposed aircraft was so
large it required a larger footprint on the ground and a significant
infrastructure investment.
Their proposal was ``significantly higher risk,'' for the Air Force,
and, their proposed aircraft couldn't operate worldwide--limiting our
ability to project force.
Finally, the Air Force said that Boeing was the ``preferred financial
option,'' meaning the Boeing proposal was the cheaper alternative for
taxpayers.
So in March 2002, Airbus lost. For most people, it would be over, but
not for a company like Airbus. Airbus continued its campaign to delay
and if possible, kill the KC-767 tanker deal. Airbus lobbyists have
continued to work on and off of Capitol Hill with tanker opponents.
Airbus lobbyists worked to convince Members of Congress that Airbus
should be recognized as an American Company. Airbus even used the
United States Chamber of Commerce to sponsor trips to Paris and
Toulouse, France for Congressional staffers.
Airbus tried to derail the lease of four 737 aircraft to the Air
Force for executive transport at the General Accounting Office. Airbus
didn't care about the four 737's. They were testing the system to see
if they could use a bid protest at the GAO to block the tanker lease.
The GAO dismissed the Airbus bid protest.
As the tanker deal was scrutinized, criticized and delayed, Airbus
was regularly available to offer its tanker again to U.S. taxpayers and
the Air Force. During the delay, Airbus spent $90 million to develop a
real tanker. Now they are working as hard as they can to reopen the
competition they lost.
For Airbus, the tanker competition is not over. We see that in Airbus
materials--that are riddled with references to the tanker program.
Again and again, EADS and Airbus say they are prepared to bid for the
tankers.
[[Page S4928]]
EADS even went to Wall Street earlier this year to pitch the company to
U.S. financial interests.
As part of their pitch to U.S. investors, EADS says they still may
compete for tankers in the U.S.
Would they dare to say these things if they weren't hard at work to
give EADS another opportunity at tankers funded by U.S. taxpayers?
This week, EADS Joint Chief Executive Rainer Hertrich was quoted by
Reuters saying:
I see a realistic chance that the issue will be taken up
again by the administration after the election.
Mr. President, over the past few months, I have been very concerned
about what Airbus has been doing. In late March, I sent a letter to
Secretary of Defense Donald Rumsfeld detailing my concerns with
Airbus's campaign of distortion and misinformation to kill the tanker
program.
I ask unanimous consent that my letter to Secretary Rumsfeld printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Senate
Washington, DC, March 22, 2004.
Hon. Donald Rumsfeld,
Secretary, Department of Defense,
The Pentagon, Washington, DC
Dear Secretary Rumsfeld: I am deeply concerned about recent
comments by Secretary James Roche regarding re-opening
competition to supply aerial refueling tankers to the U.S.
Air Force.
The Air Force has already conducted a careful and open
competition to build the required tankers. As Secretary Roche
outlined in his testimony to the Senate Commerce Committee in
September, Boeing won that competition based on the
superiority of its design, technology, delivery schedule, and
overall risk reduction plan. Although Airbus demanded that
the General Accounting Office review that decision, the
review was dismissed almost immediately as lacking merit.
Rather than honorably accept the competition's outcome,
Airbus has resorted to a campaign of distortion and half-
truths in an effort to kill the proposed Air Force tanker
lease program.
I have fully supported thorough reviews of all aspects of
this program, and will continue to support constructive
modifications based on recommendations from those reviews.
However, I will not tolerate Airbus's attempts to undermine
the program itself by forcing the government to revisit
careful determinations about specific issues that have
already been made, reviewed, re-reviewed, and validated by
responsible government entities. The outcome of the initial
tanker competition is one such issue that has been clearly
and conclusively settled.
Airbus's corporate behavior on this matter cannot be
tolerated by the U.S. government. Its actions are further
delaying our ability to meet a key military requirement, and
if successful, will result in the outsourcing of thousands of
American manufacturing jobs to a foreign corporation that is
unfairly subsidized by European governments and that unfairly
competes with the only U.S. aircraft manufacturer. Such an
outcome represents ill-conceived public policy, and will also
unfairly punish the nearly 30,000 workers who will be
employed should the Air Force tanker lease program proceed
with a domestic manufacturer, as currently planned.
As you know, the average age of our existing tanker fleet
is 42 years and one-third of our tanker fleet is unfit to fly
at any given time due to mechanical and operational failure.
KC-135's spend 400 days in major depot maintenance for every
five years of service. Any unnecessary delay in replacing our
aging tanker fleet puts in jeopardy our ability to meet
critical air refueling and power projection requirements.
The Air Force's proposed tanker lease program is one of the
most closely scrutinized programs ever undertaken by the
Department of Defense. I support the DOD Inspector General's
current efforts to provide an independent assessment of
various aspects of this program. However, barring evidence of
wrongdoing, it is critical that we proceed without delay to
implement the Air Force tanker lease program and begin
production of those aircraft here in the United States.
I know how committed you are to replacing our aging tanker
fleet, and I know that meeting the demands of the critics of
this plan has taken a toll. But you and I both know that many
of these critics will not be satisfied until they stop this
contract with the only American airplane manufacturer capable
of producing a new generation tanker. We cannot allow that to
happen.
Sincerely,
Patty Murray,
U.S. Senator.
Mrs. MURRAY. Let me read one passage from my letter. I wrote:
Airbus' corporate behavior on this matter cannot be
tolerated by the U.S. government.
Its actions are further delaying our ability to meet a key
military requirement, and if successful, will result in the
outsourcing of thousands of American manufacturing jobs to a
foreign corporation that is unfairly subsidized by European
governments and that unfairly competes with the only U.S.
aircraft manufacturer.
Such an outcome represents ill-conceived public policy, and
will also unfairly punish the nearly 30,000 workers who will
be employed should the Air Force tanker lease program proceed
with a domestic manufacturer, as currently planned.
I have not received a reply from Secretary Rumsfeld, but I did
receive a shocking reply from someone else. Two days after writing to
Secretary Rumsfeld, I received a letter from Mr. Ralph Crosby, the
Chairman and CEO of EADS North America.
So I sent a letter to Secretary Rumsfeld, and I got a reply from the
head of Airbus. There's something very fishy about that. It got even
more outrageous as I read Mr. Crosby's letter. Mr. Crosby stated that
EADS is committed to being a ``strong U.S. citizen,'' and he repeated
the same statistics that EADS refuses to verify to either me or to the
Department of Commerce. I want to refute a few claims in Mr. Crosby's
unsolicited letter.
First, Mr. Crosby had the gall to suggest that EADS is a ``strong
U.S. citizen.'' Their history tells a much different story. Airbus and
EADS have been willing suppliers to nations that the United States
considers either rogue states or state sponsors of terrorism.
According to one news article dating back to 2001:
The Airbus Industrie Consortium views those countries
against which US or UN sanctions are in place--Libya, Iran,
Iraq and North Korea--as potentially representing major
opportunities, Noel Forgeard, CEO, indicated yesterday.
The same article quotes an Airbus Vice President as saying:
We might have been looking to place a total of 180
aircraft--100 with Iran, 50 with Iraq and 30 with Libya--with
at least 140-150 orders feeding through.
It was widely reported that Airbus was in close contact with Iraqi
airways during the period of UN sanctions following the 1991 Persian
Gulf War. Apparently, Airbus was in discussion with the state run--
Saddam Hussein run--Iraqi airways to sell 20 Airbus aircraft. It was
also widely reported that personnel from Iraqi Airways were taken to
Jordan and Malaysia for three month training courses on Airbus
equipment. Airbus still carries a five-plane deal with Saddam Hussein
on its order books and has said the deal is still valid. While American
troops are rebuilding Iraq's infrastructure and trying to build a
peaceful, democratic future for the Iraqi people, Airbus wants the new
Iraqi government to honor Saddam Hussein's plane deal.
To me, for so many reasons, EADS is not a ``strong U.S. citizen.''
Here is another claim from Mr. Crosby's letter that I must refute. He
wrote:
Should decisions by the U.S. government open a competitive
procurement of aerial refueling tankers, EADS North America
will respond.
We will offer a superior, cost-effective aerial refueling
solution that will be completed by American workers, on
American soil, in the United States providing the Department
of Defense and the Air Force the opportunity to select the
product that provides the best capabilities to the U.S. armed
forces.
Let's remember that the Air Force already rejected Airbus's tanker
proposal for the reasons I mentioned. The Air Force said Boeing was the
cheaper option, and it deemed the A330 a ``significantly higher risk.''
But in Mr. Crosby's world, these failures somehow translate into what
he calls a ``superior, cost-effective aerial refueling solution.''
There is another disturbing claim hidden in Mr. Crosby's statement
that should set off alarm bells. He said that Airbus tankers would be
``completed'' in the U.S.
Mr. Crosby says the A330 refueling tanker for the Air Force would be
completed by American workers on American soil. Translated that means
tankers will be built in Europe by European workers at U.S. taxpayer
expense and then American workers can install the final components.
Once again, EADS and Airbus are trying to use their market-distorting
tactics to shift aerospace jobs to Europe to the detriment of American
workers.
I have a simple reply to the Airbus's campaign to build tankers in
Europe paid for by U.S. taxpayers.
No thank you. No thanks. Never.
I wrote back to Mr. Crosby, and I ask unanimous consent that my
letter to him be printed in the Record.
[[Page S4929]]
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Senate,
Washington, DC, April 6, 2004.
Ralph D. Crosby, Jr.,
EADS North America,
Washington, DC.
Dear Mr. Crosby: Thank you for your letter of March 24,
2004. I appreciate your attempt to clarify your position.
Unfortunately, the vague and ambiguous language in your
letter has served to underscore my earlier concerns about
Airbus's efforts to undermine the Air Force Tanker
Modernization program. Additionally, I continue to seriously
question Airbus's unsubstantiated claims regarding its
employment and economic impact in the United States.
Your letter outlines, as you have stated publicly on
several occasions, Airbus's desire to compete for the Air
Force Tanker Modernization program. Your continued insistence
on Airbus's qualifications to compete in such a contest seems
to belie the fact that the tanker competition already took
place in 2002--a competition that Boeing won and Airbus lost
based on each company's proposed design, technology, delivery
schedule, and overall risk reduction plan.
As you know, the Air Force informed EADS on April 2, 2002
that its platform was deemed high-risk for the Air Force's
operational requirements for the refueling tankers. I remain
puzzled by Airbus's continued effort to re-open the tanker
competition two years after its final conclusion.
To my knowledge, the Airbus 2002 proposal has never been
made public. Providing the public with a clear picture of
Airbus's capabilities at the time of the competition would
help to address concerns refuting the competitions outcome.
I continue to believe that Airbus has engaged in a campaign
of distortion and half-truths to discredit the Air Force,
Boeing and the KC-767 lease program. Your letter did not
dispel my concern that Airbus is engaged in a campaign to
undermine the tanker lease program. I would welcome a full
accounting of Airbus's continued involvement with the tanker
lease program on par with the various information subpoenaed
from both the Defense Department and Boeing. A full
accounting of Airbus's lobbying activities including support
given to tanker opponents would provide the public with a
full sense of this debate.
As enlightening as the examination of the facts may be, I
do not think Airbus is willing to be as transparent in
detailing its communications with the Congress, the
Administration, and others outside of government as the
Boeing Company has been. From my vantage point, Airbus's
involvement in the campaign to discredit Boeing and the
tanker program could not be clearer.
I am also troubled by your continued assertions regarding
Airbus's economic and employment presence in the U.S. Your
letter states that Airbus ``supports'' a certain number of
U.S. jobs, and that an Airbus tanker would be ``completed''
by U.S. workers. In my view, an Airbus tanker ``completed''
by U.S. workers is a tanker manufactured in Europe with the
overwhelming number of jobs also created in Europe.
I would appreciate any solid, verifiable, and straight-
forward information detailing the number of U.S. workers and
vendors that Airbus directly employs, as well as specific
direct employment and U.S. content relating to manufacturing
a national Airbus tanker aircraft.
As you know, I earlier challenged Airbus' many rhetorical
claims about jobs, suppliers and economic contributions in
this country. The Department of Commerce confirmed my
suspicions and almost entirely discredited Airbus' claims. To
date, despite vows to do so, Airbus has not provided the
Department of Commerce any additional credible information on
its contributions to U.S. workers and the U.S. economy. The
truth is Airbus continues to market itself to the Congress
and the American people with assertions that appear to be
untrue and dishonest. You are aware of my concerns, as well
as those raised by the Department of Commerce, and I
encourage you to provide justification for Airbus' direct
claims on jobs, suppliers and economic contribution.
Finally, to set the record straight, Airbus did file a bid
protest challenge regarding the leasing provisions contained
in the FY'03 DoD Appropriations Act (PL 107-248). The Air
Force executed the lease of four commercial Boeing 737
special mission aircraft long before the Air Force attempted
to proceed with the KC-767 program. The Airbus bid protest
was specific to the four 737 aircraft but I must conclude
that the real Airbus target was the lease program itself and
ultimately the Air Force's ability to move forward with a 100
plane KC-767 lease with the Boeing company. The Airbus bid
protest was dismissed by the General Accounting Office.
Again, thank you for your response to my letter. I look
forward to hearing from you.
Sincerely,
Patty Murray,
United States Senator.
Mrs. MURRAY. I asked Mr. Crosby to again justify the claims regarding
the EADS and Airbus contributions to this country on jobs, suppliers
and economic contributions. For more than a year, his company has
refused to answer my questions and the requests from the Department of
Commerce. I asked Mr. Crosby to make public the EADS 2002 tanker
proposal submitted to the Air Force.
We know the Air Force said the proposal was high risk, more expensive
than Boeing, and could limit U.S. force projection worldwide. For 2
years, EADS and Airbus have been able to access Boeing proprietary
information about its technology and pricing, that came available
during the tanker program review.
Now, after spending $90 million to develop a tanker it previously did
not have, Airbus wants to reopen the tanker contract after it has
already seen all of Boeing's cards. Airbus has learned an awful lot
about Boeing and tankers and it has used that new technology to best
Boeing in a recent tanker competition for Australia. Mr. Crosby will
not talk about his 2002 proposal. He wants to compete with Boeing based
on everything Airbus has learned about Boeing over 2 years and an
additional $90 million investment in tankers.
Finally, I asked Mr. Crosby to provide a full accounting of Airbus'
involvement with the tanker lease program on par with the various
information subpoenaed from both the Department of Defense and Boeing.
I also asked Mr. Crosby to provide a full accounting of Airbus'
lobbying activities, including support given to tanker opponents. I
await a reply from Mr. Crosby.
Let me say that given the tremendous damage Airbus has done to the
commercial aerospace industry in this country, and particularly in
Washington State, I have real questions about the appropriateness of
U.S. taxpayer dollars going to strengthen Europe's competitive position
and hurting American aerospace workers.
I have talked in great detail tonight about why EADS and Airbus are
threats to the U.S. aerospace leadership and to American workers.
Europe has a plan to take over global leadership in aerospace. Europe
views aerospace as a social program, a jobs program for the benefit of
Europeans. Airbus and EADS are the prime example of Europe's vision for
its citizen and its aerospace industry.
There are real consequences for U.S. national security in what
happens here. We have to retain our supplier base, our skilled
workforce, and our technological advantages to project force and to
defend our Nation.
We have a decision to make in Washington, DC. U.S. policymakers on
behalf of the American people have to decide whether we want to sit
idly by as Europe hopes we continue to do or whether we want to commit
ourselves to a future in global aerospace.
I conclude by talking briefly about a few things we must do to keep
American workers at the forefront of commercial aerospace. Let me offer
three specific suggestions.
First of all, we should hold Europe accountable for its market-
distorting actions. We have to look seriously at a trade case to
challenge Europe's failure to adhere to its treaty obligations. We have
to recognize the future of aerospace is larger than a trade case or a
Boeing dispute with Airbus. Only a determined Federal commitment to
aerospace will assure our children and our grandchildren opportunity to
compete for the high-skill, high-wage aerospace jobs of the future.
Second, we should not reward EADS and Airbus for their market-
distorting, job-killing behavior. Airbus wants U.S. policymakers and
the public to buy its campaign that it is a good U.S. citizen. That is
baloney. They are trying to mask the real harm they are posing to
American workers.
Europe wants to further weaken U.S. aerospace competitors by
accessing U.S. taxpayer-funded defense programs. And, most offensively,
Airbus is working to undermine both the Air Force and the Boeing
Company to kill the tanker program so it may ultimately outsource
tanker manufacturing to Europe.
It is long past time to shine a very bright light on Airbus and its
lobbying efforts in Washington, DC. If we reward their underhanded
methods, if we let them steal the tanker contract away from our
American workers, the American taxpayers will be paying Europe to help
finish off our aerospace industry.
I don't see how we can let a subsidized foreign company use our tax
dollars to put Americans out of work.
[[Page S4930]]
But if they get away with their lobbying, their bogus claims, and their
PR campaign, we will have bought Airbus a sledgehammer to whack away at
our aerospace industry. That is outrageous. We cannot let it happen. We
need to hold Europe accountable for what it has done and we need to
make sure Airbus is not rewarded for its bad actions.
Finally, we should act boldly to embrace many of the recommendations
from the Commission on the Future of the United States Aerospace
Industry.
The administration is acting on a number of fronts. Congress must do
more, as well. As a first step, Congress should create a Joint
Committee on Aerospace. I intend to introduce legislation to create
that joint committee. It will help Congress recognize our future is
very much tied to aerospace and commercial aerospace, in particular. A
dedicated group of House and Senate Members with a targeted agenda can
help the administration and the country recommit itself to the next
century of global aerospace leadership.
I have sounded the alarm. No Member of Congress can claim they did
not know what European governments and Airbus are doing to American
workers. This is a critical industry. They are jobs worth fighting for.
I am not willing to surrender our leadership in the second century of
flight. There is a battle for the future of the aerospace industry.
Europe is putting its full support, subsidies, and power behind Airbus,
and it is working. We have to get off the sidelines.
I am committed to working in the Senate to make sure American workers
have a fighting chance to lead the world in aerospace. I know if we
focus on the challenge before us, our country will recover from this,
just as Seattle recovered from the downturn in the 1970s. We have a
bright future ahead if we take the steps I have outlined and hold on to
our leadership in commercial aerospace.
Aviation was born in America 100 years ago. Let's make sure Americans
are leading it 100 years from now.
I yield the floor.
____________________