[Congressional Record Volume 150, Number 127 (Friday, October 8, 2004)]
[Senate]
[Page S10826]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        AEROSPACE MANUFACTURING

  Mr. SMITH. Mr. President, I rise today to speak about a troubling 
dispute between two great partners in trade. Boeing Commercial 
Airplances, a pioneer and mainstay in American aerospace manufacturing 
since 1917, is being injured by subsidies that European governments are 
providing to its main competitor, Airbus.
  More than 30 years ago, Airbus was created by the governments of 
Germany, France, the United Kingdom, and Spain with the goal of 
building a competitive airplane manufacturer for the European 
Continent. To help encourage growth by their new company, these 
governments began giving Airbus large amounts of money with very 
liberal terms. These subsidies included infrastructure loans, loss 
coverage, debt forgiveness, money for research and development, equity 
infusion, and launch aid.
  These subsidies have allowed Airbus to develop and market a full 
range of aircraft without incurring full commercial risk. The launch 
aid assistance alone, which is essentially no-fault borrowing, has 
amounted to over $15 billion and allowed Airbus to undercut the 
marketplace with lower prices. In fact, if Airbus had borrowed this 
money at standard commercial rates, it is estimated that they would 
have to incur an additional $35 billion on their books today.
  While subsidies of this sort might be acceptable for a company in its 
infancy, Airbus has long since grown into a robust and mature 
competitor. Airbus today competes in every single airplane market over 
100 seats and is now jointly owned by the European Aeronautic Defense 
and Space--EADS--Company and BAE Systems, the world's second- and 
fourth-largest aerospace companies respectively. Combined, these two 
defense companies are actually larger than Boeing. In fact, last year, 
for the first time, Airbus surpassed Boeing in annual aircraft 
deliveries. Yet, they continue to receive large government subsidies.
  As much as these subsidies have helped Airbus, they have harmed 
Boeing. Boeing's global market share, based on deliveries, fell from 
nearly 67 percent in 1999 to 48 percent in 2003. In the past 5 years, 
Boeing Commercial Airplanes has reduced employment from 115,880 to 
54,880--that is 61,000 workers who have lost some of the highest 
quality and highest paying manufacturing jobs in the Nation. The 
aerospace industry is one of the most competitive sectors of our 
economy, and it is the single largest positive contributor to the U.S. 
manufacturing trade balance.
  The facts are simple. Airbus is a mature company with a full family 
of airplances that can no longer justify these subsidies, and the 
obvious damage to Boeing must be addressed and resolved.

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