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This really belongs to NOAA and the Department of Commerce to make this decision, and it is their responsibility to take the initiative and see that what needs to be done gets done.
So as far as NASA is concerned, I would hope that the budget for NASA would provide adequate well-rounded support for the research and technology that is needed, and that Congress would focus on the NOAA and commercial side of it to see that the right decisions are made in maintaining the satellite systems.
Senator TRIBLE. In your judgment, does the budget submission provide adequate funding in this area at this time?
Dr. SHAPLEY. No. I think it is tighter than it ought to be.
Senator TRIBLE. Would you care to advance an idea of how it should be expanded?
Dr. SHAPLEY. Let me look at that again and provide something for the record if I may.
[The material referred to follows:]
In my opinion, $10 million could usefully be added to NASA's fiscal year 1984 budget request for research and technology work in land remote sensing. The development of techniques for the analysis of thematic mapper (TM) data is an example of an important area where additional funding is badly needed. The funds added should be in the form of "new" money, not derived by transfer from other parts of the NASA budget, which is already overly "tight".
Senator TRIBLE. Good, if you would do that. And I have a number of other questions that I would like to submit to each of you, if you would be so kind to provide answers for the record.
I thank you for your presence here today and for the contribution you made to these proceedings.
With that, I think that is the last of our witnesses today, so this meeting is adjourned.
[Whereupon, at 11:20 a.m., the subcommittee was adjourned.]
ADDITIONAL ARTICLES, LETTERS, AND STATEMENTS
STATEMENT OF AEROSPACE INDUSTRIES ASSOCIATION OF AMERICA, INC.
The Aerospace Industries Association of America, Inc., (AIA), representing the nation's major manufacturers of military, commercial and business aircraft, aircraft engines and helicopters and their related components and equipment, appreciates the opportunity to provide our comments for the record of the Subcommittee's recent hearing on NASA's '84 aeronautics budget.
The panel of airframe and engine manufacturers-both civil and military—which appeared before the Subcommittee on March 15, reaffirmed industry's endorsement of the Office of Science and Technology Policy's (OSTP) 1982 report on aeronautical research and technology (R&T). Many of the conclusions reached by the OSTP supported a point that our industry has been emphasizing for a number of years: That the aerospace industry is a vital industry, continually refining and incorporating evolving aeronautical technology into superior products which will guarantee the industry's continued ability to contribute to the U.S. economy-in terms of job creation, balance of trade enhancement through export sales, generation of tax revenues, and the maintenance and strengthening of our national defense.
Of the cited benefits flowing from a strong aerospace industry, we would like to emphasize the importance of our sector as the nation's pre-eminent manufacturing exporter and contributor to the net U.S. balance of trade. This role is of particular relevance as the 98th Congress addresses the jobs issue, in view of the strong correlation between employment and export activity. Last year, AIA requested Chase Econometrics/Interactive Data Corporation to perform an independent study on the effect of aircraft exports on the U.S. economy. The study, attached for your review, was designed to conservatively evaluate the effect of an increase in exports through direct benefits, multiplier effects, government budget considerations and follow-on sales for spare parts and fleet expansion.
Using as a baseline case the Chase Long-Term, Moderate Growth Scenario of 1981, the study showed that $1 billion in initial aircraft sales and resulting follow-on sales would generate an additional $6.5 billion (1982) in GNP during the period from 1982-90. Of this, almost half ($3 billion) reflects increased consumption resulting from the incremental direct and indirect wage earnings. Investment would increase to $1 billion, with the remainder of the $6.5 billion increase generated by a $2.4 billion increase in net exports. The increase of $1 billion in initial aircraft exports would, importantly, add 44,000 full time equivalent (FTE) man-years employment in the aerospace industry. Through subcontracting and the multiplier effects mentioned above, this would lead to a total increase of 148,000 FTE man-years in the U.S. economy from 1982-90.
This increase in aircraft exports—and associated job creation-impacts government receipts and expenditure through personal and corporate income taxes, social security receipts, state and local receipts, unemployment compensation payments and government interest expenses. The total reduction in the federal deficit (including interest expense impacts) over the period is $3.7 billion in current dollars, or $2.4 billion in 1982 dollars.
Because of the high technology and large scale nature of aerospace production and its importance to national defense, the export of aerospace products provides several other key benefits to the national economy. While these benefits are admittedly difficult to quantify, they are nonetheless curcial to the United States. One such export-associated national asset is the maintenance of a large and well-trained, high technology labor force. These workers simultaneously produce the “big ticket” items which aid the U.S. balance of trade accounts and provide an in-place, nongovernment funded wartime mobilization capability. Reductions in this existing pool of skilled labor-due to either falling export or falling domestic sales-will reduce the U.S. capability in emergency situations. Similarly, existence of civilian facilities for aerospace research and production also add to the U.S. defense emergency surge capability. When such facilities can serve both civilian and military requirements,
the DOD burden of maintaining dedicated facilities is reduced, either directly or through contracts—in turn reducing the overall cost of defense systems.
Foreign market demand for U.S. aerospace products also offers our domestic manufacturers the opportunity to sell a greater number of units. Thus, fixed production costs-e.g., facilities, equipment and land-can be spread over a larger number of aircraft, engines or missiles, substantially reducing the cost of each unit, and the price paid by domestic customers. The existence of foreign markets is also crucial to the aerospace industry, because of the magnitude of investment required and the low profit margin. Export sales also contribute part of the funding for each new aircraft generation's R&D requirements, which advance the state-of-the-art in aerodynamics, communications and electronics. These new technical advances often find application in a variety of areas other than that for which they were originally designed—there is a sharing of knowledge between the civil and military sectors of the aerospace industry (crossover) and a transfer of the technology and know-how, originally developed for aerospace, to other domestic industries (spinoff).
The OSTP report recognized the extent of this civil-military crossover, and rejected any attempt to establish separate research efforts. Significantly, the technology spillover which once ran in a military-civil direction has now begun to flow largely in the opposite direction. The KC-10 tanker, the AWACS and the Advanced Airborne Command Post were based on the privately funded McDonnell Douglas DC-10 and Boeing 767 and 747 aircraft programs, respectively. In addition to this crossover of essentially complete aircraft, there is an increasing transfer from civil to military of information on materials and subsystems. This civil to military crossover saves the services, and ultimately the taxpayers, large annual sums of money, while assuring the military's access to ever-increasing technological advancement.
From the industry's perspective, the key recommendation in the OSTP report concerns continued government support for aeronautical R&T development and military aeronautical technology demonstration. As the industry witnesses stated during the March 15 hearing, we have long believed that such government investment is justified as the benefits resulting from aeronautical R&T advancement are paid out to the country as a whole. Without that level of support, which does not begin to approach the more extensive government participation which so many of our foreign competitors enjoy, the U.S. aerospace industry will find itself increasingly constrained in its efforts to strive for and maintain a technological edge-the ultimate selling point for our products.
The American aerospace industry has not lost the willingness nor the capability to shoulder the responsibilities associated with the development of high technology, advanced new concepts and products which will continue to assure our competitiveness in the world market. But we have had to come to terms with the economic reality of pursuing increasingly advanced technologies, and this reality has become more brutal in the wake of a global recession. Taking a proposed aircraft from concept to completion is a costly and time-consuming endeavor. Development of a new commercial aircraft or engine runs into billions of dollars, often exceeding the net worth of a company. With this large an investment at stake, a company will find it necessary to employ technologies involving modest risk-even to the point of foregoing riskier technologies with potentially greater benefits.
Government support in the pre-application phases-i.e., basic research and technology evolution-is necessary because industry alone cannot support all the promising areas of R&T. It must concentrate its resources on projects which are clearly feasible and which offer reasonable assurance of near-term payoff. It is essential, therefore, that government conduct research in those areas where the risk is too great, the potential payoff too distant, and the market uncertain. NASA's tradition of supplying proof-of-concept technology has stimulated and aided the industry in assessing subsequent development risks; once this proof-of-concept information is available, industry must then invest more than ten times as much of its own money to develop and then market worldwide the resulting new products incorporating the new technology. Ultimately, the sales of these new products-with the attendant benefits that flow to the national economy as a whole-could exceed NASA's original investment one hundred times over.
Surveys conducted last year indicated that 60 percent of total aerospace sales during the 1982-90 time frame will be made to customers outside the United States Capturing a significant portion of that projected market will depend upon our ability to enhance the competitiveness of our products by incorporating the latest technology. And we are guaranteed of a run for our money in our attempts to do soour foreign competitors have no less an appreciation of the benefits of export trade, and they have not been reluctant to target certain industries, notably aerospace, for increased R&D investment and capitalization. Conversely, U.S. investment in aero
nautical R&D as a percentage of sales has been dropping steadily during the last decade.
If we are to retain and expand the number of transport-manufacturing jobs and other national benefits associated with the role of world leaders in aeronautics, we must reaffirm the industry/NASA relationship, and the Congress must take a role in assuring that the OSTP recommendations are implemented. This will require that Congress move beyond endorsement of those recommendations to a steady, long-term commitment of support and funding for NASA's aeronautical R&T programs.
THE BENEFITS OF EXPORTS TO THE NATIONAL ECONOMY-A CASE STUDY FROM THE U.S. AIRCRAFT INDUSTRY
(Aerospace Research Center, Virginia C. Lopez, Director; Celia M. Sherbeck,
In order to get an independent evaluation of the impacts on the U.S. economy of a change in aircraft exports, the Aerospace Industries Association asked Chase Econometrics/Interactive Data Corporation (Chase) to examine these effects.
Chase used its Macroeconomic and Interindustry Models to examine the impact of a $1 billion increase in 1982 aircraft exports. Due to the long lead times in aircraft production it is assumed that enough sales have been made to cause a $1 billion increase of deliveries to export markets in 1982. Baseline for comparison was the Chase Long-Term Moderate Growth Scenario of November 1981. All monetary figures represent 1982 dollars unless otherwise stated. Direct and indirect effects were examined for the period 1982-1990.
Several key assumptions made in the study must be noted. First, since the $1 billion increase in aircraft exports is small relative to the three trillion dollar U.S. Economy, it was assumed that the increase would have no significant impact on the general price level in the United States. Further, it was assumed that the increase in aircraft exports would have no effect on the magnitude of federal, state and local government expenditures for goods and services.
TABLE 10.-Export assumption—Annual value of aircraft and parts sales, 1982-90
Source: "The Economic Impacts of Increased Aircraft Exports" prepared by Chase Econometrics/Interactive Data Corp., for the AIA, June 1982.
NOTE: Components may not add to totals due to rounding.
1 From a report on "The Economic Impacts of Increased Aircraft Exports," prepared by Chase Econometrics/Interactive Data Corporation for the Aerospace Industries Association, June 1982.