Bob Barnett, owner of a small company in North Carolina that makes custom aerospace connectors, is visiting his Congressmen with dozens of other suppliers this week during National Aerospace Week. Like many small-business owners across the country, he’s worried about the prospect of a double-dip’ recession, but as a successful supplier in the aerospace and defense industry he is confident the industry has the wherewithal to weather most any economic turmoil.
[IMGCAP(1)]What worries Barnett more than the economy are burdensome government contracting and export control regulations, along with stifling tax policies, which threaten to chip away at his business and 40 years as a provider of dozens of jobs in his community.
National Aerospace Week, which runs Sept. 12 through 18, is an opportunity for Barnett and thousands of other Americans to highlight the crucial role the aerospace and defense industry plays in our economic well-being, our national security and our technological superiority, as well as the industry’s history of producing good, high-paying jobs.
The aerospace and defense industry employs 819,000 workers across the nation, supporting more than two million middle-class jobs with more than 30,000 suppliers from all 50 states. On its own, the aerospace industry employed 644,200 workers in 2009, and while overall manufacturing employment dropped 11.4 percent last year, aerospace employment fell a modest 2.4 percent.
With all the talk about creating jobs, we believe our industry is being overlooked as a job generator. In fact, aerospace is a job multiplier. Economists estimate that every aerospace and defense industry job generates 2.5 additional jobs for our economy. We are our own stimulus package, if you will. But while healthy and strong, the industry’s strength is being compromised by overly burdensome government regulations.
We are pleased by the recent announcements of the administration’s proposed changes to the export control system, and we hope Congress steps up to the plate and works with the administration to implement these proposals. Changing our outmoded export control regime allows the United States to share technologies with important allies. Of equal importance, a simplified system will provide more opportunities for companies to compete for foreign contracts, thereby creating new revenue and new jobs.
“A lot of potential customers tell us We like your service, but we won’t buy from you because we won’t do your compliance paperwork.’ So they walk away and buy from an entity in Asia or Europe, costing us millions of dollars,” said Tim DiDonato, a manufacturer Yarde Metals in Southington, Conn.
Export controls aren’t the only thorny business issue.
Since 1981, the U.S. R&D tax credit has spurred innovation, thus strengthening American competitiveness and creating high-tech jobs domestically. But Congress has failed to renew this job-promoting provision this year, despite the well-documented benefits. We’re extremely pleased that President Obama has announced his intention to make the R&D tax credit permanent.
The cost-benefit proposition for extending the tax credit is huge. On average, U.S. firms invest an additional $94 in research and development for every $6 the government invests through the R&D tax credit. More than 75 percent of the R&D tax credit dollars are earned on wages paid to individuals directly involved in research conducted in the United States.
Chuck Gray, vice president and chief operating officer of Frontier Electronic Systems, can attest to how important the tax credit is for this woman-owned, Native American small business employing 150 engineering and manufacturing professionals in Oklahoma.
Since 2004, the company has leveraged the tax credit to support its R&D for new product development involving several highly skilled professionals. Company projects include high-density battery technology for the aerospace industry and a composite carbon fiber equipment rack for ships and aircraft that is 50 percent lighter than current market offerings.
The company would like to hire several more engineers for the R&D programs this year, but with the renewal of the tax credit in doubt, new hiring will be at risk, Gray said.
These are real-world examples that could be replicated over and over — and not just in the aerospace industry, but in other industries across the country. Clearly, job creation is a nonpartisan challenge on which the administration and Congress need to join forces.
National Aerospace Week is a time to press these issues. Established by Congress to occur during the third week of September, National Aerospace Week is an expression of gratitude to thousands of workers in businesses large and small who have the strength to lift America. Let’s hope our government doesn’t let them down.
Marion C. Blakey is President and CEO of the Aerospace Industries Association and served a five-year term as administrator of the FAA.