[Congressional Record (Bound Edition), Volume 150 (2004), Part 7]
[Senate]
[Pages 8408-8415]
[From the U.S. 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 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.

[[Page 8409]]

  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 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

[[Page 8410]]

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.
  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

[[Page 8411]]

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.
  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

[[Page 8412]]

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. 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.

[[Page 8413]]

       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.
  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

[[Page 8414]]

     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. 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

[[Page 8415]]

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.

                          ____________________