Remarks by Senator Patty Murray – Will the Last Aerospace Worker Leaving America Turn Out the Lights?

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Wake Up, America!

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 will 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’m here on the Senate floor 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’s 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.

Concerned for Years, Now Critical

As my colleagues know, I have been troubled by Europe’s market-distorting actions in commercial aerospace for many years.

I’ve raised my concerns with other Senators, foreign leaders, and Administrations of both parties.

Today 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, D.C. to recreate a competition they already lost to build the next generation refueling tanker for the Air Force.

I’ve come to the Senate floor today –

• to set the record straight
• and to show how Europe’s broader plan to dominate aerospace threatens our future.

I’m going to focus on five issues.

First, I want to explain why this is so important for our country.

Second, 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 that 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.

“Last Aerospace Worker”

First, let me explain the title of my speech, “Will the Last Aerospace Worker Leaving America Turn Out the Lights?”

I have the great honor to represent Washington state, 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, Washington. Since that day, Boeing and Washington state have shared the ups and downs of the commercial aerospace industry.

We’ve experienced extended periods of nearly full employment, and we’ve endured market downturns that left tens of thousands unemployed. In the early 1970’s, there was a particularly bad downturn. It seemed that 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 little light bulb and a string. It says, “Will the last person leaving Seattle turn out the light.” Anyone who lived through that difficult period in Washington state knows this sign. Eventually, Seattle recovered, and since the 1970’s, we’ve experienced ups and downs.

Today, we are facing another severe downturn in our aerospace industry. But today it’s not just Seattle or Washington State that are 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’ve got to take action before it’s too late, and sadly we are approaching a point of no return.

Just 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, Co-CEO Rainer Hertrich said, quote
“In ten years, we’ll be number one, everywhere, world-wide.”

His co-CEO, Phillipe Camus, said, “We’re now ready for our final step: globalization.”

1. Aerospace is Critical to America’s Future

Some of my colleagues may wonder why I’m speaking at such length today about the future of our aerospace industry. It’s because this industry is critical for jobs, our economy, our security and our future.

Jobs

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’ve lost 700,000 American aerospace jobs.

• 700,000 American jobs lost.

These are scientific and technical jobs.

• 700,000 high-skill, high-wage jobs – gone.

Unless we wake up, we’re going to lose many more.

We’ve spent a lot time in the Senate talking about how many American jobs are being shipped overseas in search of cheaper labor.

Aerospace is a little different than some of the other industries we’ve discussed. Aerospace jobs are not low-wage, low-skill jobs that move to wherever the labor is cheapest. These are high-wage, high-skill jobs that we need to keep in America, but we are being aggressively challenged by Europe for those jobs.

Economy

Aerospace is also important for our overall economy. Our leadership in commercial aerospace has helped American industries from healthcare to automobiles become safer, more efficient and more productive.

According to John Douglass, the president of the Aerospace Industries Association of America, the aerospace sector – quote: “generates economic activity equal to nearly 15% of the nation’s gross domestic product and supports approximately 11 million American jobs.” Mr. Douglass notes that aerospace also leads 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 – quote: “[M]ore 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.”

Security

Not only is this about jobs. It’s also about security. It’s 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 just the next 10 years.

Our Future

Finally, commercial aerospace is important for our future.

Europe is working hard to overtake our leadership of aerospace because they know it’s the future – the future of our worldwide economy, the future of human exploration. Europe wants to lead the future, and if we stay on this track, they will.

Mr. President, this industry is worth saving because it’s important for our jobs, our economy, our security and our future.

Only Two Companies Make Commercial Planes

I should explain by way of background that 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, Washington. 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 today, I’m going to refer to Airbus and EADS interchangeably.

So it’s one European company and one American company — competing for control of the commercial aerospace industry.

2. Europe Sees Aerospace Jobs as a Priority

Next I want to talk about how the U.S. and Europe view commercial aerospace because we have two different visions.

Unfortunately, their vision will allow them to overtake us unless we realize what they’re doing.

Let me start here at home. For us in America, commercial aerospace is seen as a private business.

• Some companies will win.
• Some companies will lose.
• We’ll 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 lots of 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’re willing to pay any price to take over American leadership.

Don’t take my word for it. Look at what E.U. leaders have said.

Here’s what British Prime Minister Tony Blair had to say last year – quote: “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.”

And it’s not just Tony Blair. Here’s what a 2001 report to the European Commission titled, “European Aeronautics: A Vision for 2020,” states – quote: “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 state – quote: “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 407,800 direct jobs in Europe’s aerospace sector.
• And more than 1.2 million total jobs supported by aerospace in Europe.
• There are more than 80,000 firms in the European aerospace supply chain.
• And Europe has maintained a $20 billion annual trade surplus in aerospace goods since 1996.

Europe has an aggressive vision for the future of aerospace. It wants to use significant public investments to create and sustain jobs – largely at the expense of U.S. competitors and workers.

Here’s how the Commission on the Future of the United States 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 U.S. 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,
• it doesn’t matter if their products fail.

As long as they are employing Europeans and taking over America’s market share, they don’t care.

That’s not competition. That’s subsidized slaughter, and we have to wake up before it’s too late for America’s aerospace companies and workers.

This isn’t a truly competitive market. Private U.S. companies – responsible to shareholders — are confronting subsidized companies funded by governments who don’t care if they make a profit as long as the create jobs. Understanding how the Europeans approach aerospace is the first step to helping American workers survive the onslaught.

The next step is to understand how the Europeans are putting their vision into action, and that’s what I want to focus on next. I want to explore the unprecedented means that Airbus and the Europeans are using to overtake American workers.

3. 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.

Development Side – Subsidies, Subsidies, Subsidies

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, facilities subsidies and supplier subsidies.

These aggressive subsidies give Airbus virtually unlimited backing to overtake the American aerospace industry. It’s like an American worker stepping into a boxing ring, only to find that — instead of one opponent — he’s 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’s what the United States Trade Representative said about Airbus subsidies in its 2003 report on trade barriers — quote: “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 can’t 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’s how a top aviation analyst put it – quote: “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 supplied close to 75 percent of the commercial aircraft purchased worldwide. Airbus was in the teens. Today, Airbus now 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 line. We can’t sit back and continue to let that happen.

Sales Side – Bribes, Landing Slots, Discounts, Value Guarantees, Trade Threats & Rewards

But it’s not just support on the development side in the form of subsidies for launch aid, facilities, research and suppliers. Europe’s market distortions go much further on the sales side, and 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.

Bribes

Airbus has a history of graft and corruption, but don’t take my word for it. Look at what the Economist magazine said in June 2003 in an article titled, “Airbus’ secret past – Aircraft and bribery.”

Up until 2000, Airbus and other French companies were allowed to take a tax deduction for bribes. Imagine that – bribe someone to buy your airplane and then 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 Undersecretary for Commerce for International Trade, Grant Aldonas, testified before Congress on U.S. competitiveness in aircraft manufacturing.

The Undersecretary warned that bribery remains a threat to U.S. competitiveness. He said, quote:
“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 which aggressively back Airbus sales campaigns throughout the world.

The 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 Saudi Arabian Airlines fleet.

Bribes and corruption have long been part of Airbus’ standard operating procedure for getting other countries to buy their airplanes.

But those are just a few of the many techniques that Airbus employs to beat out American workers. Let me turn to another.

Airbus Customers Get Prime Landing Slots at European Airports

Airbus purchases have long been linked to landing rights at Europe’s busiest airports. It’s a very attractive incentive to offer airlines in exchange for buying your planes, but it’s a very questionable practice.

I’d like 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 three days after buying six Airbus A380’s.

Emirates Airlines and Qatar Airways both received extra landing rights after buying Airbus planes.

A source close to Emirates Airlines said – quote: “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 that airbus uses to sell planes.

Discounts

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 2002 easyJet deal I mentioned a moment ago is a prime example of Airbus’ willingness to discount airplanes to win sales campaigns. Airbus doesn’t reveal its discounts or the particulars of a given order. However, it was widely reported that easyJet 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 was a great deal for Europe, but 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.

Guaranteeing the Value of Aircraft

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 that the planes they buy will hold their value years after the purchase. Normally, the marketplace 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 doesn’t, 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. If the market will only pay $40 million, then Airbus will pay the difference to the airline.

It’s a very attractive incentive for an airline, but it’s also unfair because it allows one company to completely distort the marketplace. These Airbus guarantees allow the company to use its government subsidies to buy market share.

If It Happened with Cars

If this happened in another field – like cars – the U.S. Congress would be up in arms.

Imagine going to a Toyota dealer and the 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’d like that deal. Airlines like Airbus’s price guarantees. But if a foreign car-maker 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’s why I’m 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.

Iberia

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 that 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 the 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 significant price discounts and a residual value guarantee to win the deal.

These are just a few examples of how Airbus – backed by the European governments – is taking jobs away from American workers through market-distorting tactics.

Airbus Purchases are Linked to Other Trade Issues by European Officials

But it’s not just bribes, corruption, landing slots, discounts and value guarantees that 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.

Russia

First, Europe gives special rewards to countries for buying Airbus planes. It happened with Russia two 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’s space-launch site.

Thailand

It happened in Thailand as well. Following a 2002 Thai Airways Airbus purchase, Airbus lobbied the EU to lower trade barriers to Thai chicken and shrimp exports.

Time and again, Airbus links 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 few examples, the first involves Pakistan.

Pakistan

In April 2003, Pakistan media reported the EU retaliated in textile negotiations against Pakistan following a 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.

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 program with Taiwan if Airbus was turned away.

Let me share a final example of these trade tactics, and it’s one that I have personal knowledge of.

Europe

European governments have linked Airbus purchases to EU accession. I saw this myself on a trip to Central Europe in 1998 when I visited Poland, Hungary and the Czech Republic. One Central European airline told me point blank that they are under pressure from the Europeans to buy Airbus because it would ultimately make EU accession easier.

Tip of the Iceberg

Mr. President, this is just a sampling of the very aggressive competitor that my constituents and our aerospace workers confront every day in the global market. And I want to 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 just shared are just a very small part of what is happening.

I want to 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. Find out for yourself.

4. Airbus is running a campaign of misinformation and half-truths to secure more U.S. business for European workers.

Mr. President, I’d now like to turn to my fourth point.

Airbus and EADS are now engaged in a slick campaign to market themselves as American companies to policy makers and 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, D.C. where Airbus is seeking to influence both the Administration and the Congress. They have their lobbyists working to unravel the Boeing tanker contract and their PR shop making false claims about Airbus’s impact on the U.S. economy.

Simply put, they are trying to get us to see them as an American company.

Small Army of Lobbyists

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, D.C.

Their lobbyists include:

• the current Chairman of the Republican National Committee,
• former Members of Congress,
• former staffers to a previous Senate Majority Leader and 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.

Hiring Prominent Americans

Airbus and EADS have also hired prominent Americans to help them gain entry into 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 long-time senior executive with the Northrup Grumman Corporation. EADS said Crosby’s hiring was – quote: “to enhance the access of EADS to all elements of the U.S. defense and aerospace marketplace.”

T. Allan 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 Deputy Undersecretary 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.

Airbus’s False Claims

Here’s what Airbus and EADS say in Washington, D.C., and all over the country in speeches, in paid advertisements, and in other official materials:

• Airbus has created and supports 120,000 jobs in this country,
• Airbus subcontracts with as many as 800 firms in the U.S. and,
• Airbus now does $6 billion in business annually in the United States.

For more than a year, I have called upon Airbus to justify and document these assertions, and they have refused.

Last year, I wrote to the U.S. Commerce Department and asked them to investigate these claims, and I’d like to share the results with you.

Jobs

On jobs, Airbus used to claim they created 100,000 U.S. jobs. The Commerce Department could not find any justification of that claim. Commerce asked Airbus to document these claims, but Airbus refused.

Now Airbus is inflating its bogus figures – saying it’s responsible for 120,000 American jobs.

You know what figure the Commerce Department came up with? 500 American jobs. Not 100,000.
Not 120,000. Just 500 jobs.

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’s set the record straight. Airbus does not create American jobs. It kills them.

Subcontracting

Airbus also makes false claims about the number of U.S. suppliers it uses.

Airbus said it subcontracts with 800 U.S. firms. The Commerce Department — after looking into this at my request — could only come up with 250 firms. After that, Airbus did something fishy. They revised their supplier figure down from 800 firms to 300 firms, but they increased the alleged value of those contracts from $5 billion up to $6 billion annually.

You just can’t trust Airbus’s funny numbers.

And let me tell you, when it comes to suppliers, Airbus deserves no credit for using U.S. suppliers. That’s because in commercial aerospace the airlines – not the manufacturers – select many of the suppliers.

Clearly, Airbus does not deserve credit for the choices its customers make.

Again, Airbus doesn’t help American firms. It hurts them.

Impact on U.S. Economy

Finally, Airbus claims that it does $6 billion in business in the United States each year.
They say that every chance they get.

But here’s something they don’t tell you. EADS alone has a $6 billion trade surplus with the United States. I’m not talking about another country. I’m 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’s time for the Senate, our government, and the American people to take a real close look at Airbus’ real impact on the United States.

A Bad Investment

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 all the company’s jobs. Just 2,400 jobs out of 107,000 worldwide. We give them one-third of their business, and we only get 2 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’s 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.

So let me turn to the tanker contract and some disturbing developments.

Tankers and Defense Contracting

As my colleagues know, I’ve been involved in the tanker contract from the very beginning, and I’ve 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 re-open a competition that it lost two years ago.

I want to make sure that 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 the bill.

We Need New Tankers

No one doubts the need for new tankers. Airborne refueling tankers allow our country to project military force around the globe.

But 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./li>
• Each plane requires a full year of maintenance for every four years spent on duty.

There is no question they must be replaced with new tankers. The only question is: Who will build those 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.

History

The Congress and the Administration have wrestled with a variety of issues having to do with the tanker replacement program adopted by the Congress and signed into law by the President two years ago. We are still trying to sort through these 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 the tanker deal. The Air Force needs this equipment, and Boeing is the best company to provide it.

Airbus Lost

Let’s 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’s statement on March 28, 2002.

“[T]he 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% larger ground footprint compared to the KC-135E it would replace, whereas the Boeing 767 is only 29% 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 aircrafts 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 EADS and Airbus:

• Didn’t 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.

GAO Protest

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.

Kept Pursuing Tankers

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’re working as hard as they can to reopen the competition they lost.

References

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’ve 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’ campaign of distortion and misinformation to kill the tanker program.

I ask that my letter to Secretary Rumsfeld be inserted into the record at this point.

Let me read one passage from my letter. I wrote –

“Airbus’ corporate behavior on this matter cannot be tolerated by the US 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.”

Mr. President, I have not yet 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.

EADS – Not a Strong, U.S. Citizen

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- quote:

“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.”

Dealings with Iraq

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.”

Completed in the U.S.

Here’s another claim from Mr. Crosby’s letter that I must refute. He wrote – quote:

“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’s another disturbing claim hidden in Mr. Crosby’s statement that should set off alarm bells.

He said that Airbus tankers would be – quote: “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 that my letter to him appear at this point in the Record.

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 that the Air Force said the proposal was high risk, more expensive than Boeing, and could limit U.S. force projection worldwide.

For two years, EADS and Airbus have been able to access Boeing propriety 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’s already seen all of the Boeing cards.

Airbus has learned an awful lot about Boeing and tankers, and it’s used this new information to best Boeing in a recent tanker competition for Australia.

Mr. Crosby won’t talk about the 2002 proposal. He wants to compete with Boeing based on everything Airbus has learned about Boeing over two 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 just 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 hurt American aerospace workers.

Recap

Mr. President, I’ve talked in great detail today about why EADS and Airbus are threats to 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 citizens 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 defend our nation.

We have a decision to make here in Washington, D.C.

U.S. policy makers — on behalf of the American people — have to decide whether we want to sit idly as Europe hopes we continue to do or whether we want to commit ourselves to a future in global aerospace.

I want to conclude by talking briefly about a few things that we must do to keep American workers at the forefront of commercial aerospace.

5. SOLUTIONS

Hold Europe Accountable

First, 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. And, we have to recognize that 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 grandchildren an opportunity to compete for the high skill, high wage aerospace jobs of the future.

Don’t Reward EADS

Second, we should not reward EADS and Airbus for their market-distorting, job-killing behavior. Airbus wants U.S. policy makers and the public to buy its campaign that it is a good U.S. citizen. It’s baloney, and they’re trying to mask the real harm that they pose to America 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 that 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 here in Washington, D.C.

If we reward their underhanded methods, if we let them steal the tanker contract away from American workers, then 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, and we can’t let it happen.

So we need to hold Europe accountable for what it’s done and we need to make sure that Airbus is not rewarded for its bad actions.

Adopt the Commission’s Recommendations

Finally, we should act boldly to embrace many of the recommendations from the Commission on the Future of the U.S. 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 a Joint Committee. It will help Congress recognize that our future is very much tied to aerospace, 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.

Conclusion

Mr. President, I have sounded the alarm. No member of Congress can claim they didn’t know about what European governments and Airbus are doing to American workers.

This is a critical industry.

These 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’s working. We’ve got to get up off the sidelines.

I am committed to working here in the Senate to make sure that American workers have a fighting chance to lead the world in aerospace, and I know that, 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 of us if we take the steps I’ve outlined and hold onto our leadership of commercial aerospace. Aviation was born in America one hundred years ago.

Let’s make sure Americans are leading it one hundred years from now.