Air Carriers, Builders Enter Heavy Turbulence : Aerospace: We are in danger of losing our edge and even more jobs if the government doesn’t offset foreign subsidies.

Last week, Boeing and Pratt and Whitney announced layoffs of up to 30,000 aerospace workers. This followed McDonnell Douglas’ decision to reduce its work force by 5,000, on top of those laid off in 1992. In addition, over the year, we have witnessed the elimination of thousands of jobs in the U.S. airline industry.

At first glance, these announcements may not appear related. However, because of the buyer-seller relationship between U.S. air carriers and U.S. aircraft manufacturers, these layoffs point to a grave problem within the American economy, and demonstrate that we must act now to ensure the viability of both industries and their suppliers and millions of related jobs across the country.

Any approach toward bolstering these U.S. industries involves a variety of options that should be considered by the Clinton Administration as it begins to work with U.S. industries toward improving their competitiveness and creating jobs at home. Accordingly, our government should review past trade agreements and consider incentives, under U.S. bankruptcy law and the tax code, to strengthen McDonnell Douglas, Boeing and their suppliers as well as our air carriers.

A good starting point for shoring up our aerospace industry and supplier base would be to assess the weaknesses of the 1992 European-American Airbus agreement. This agreement did make a stab at reducing the extensive subsidies provided to the consortium Airbus Industrie by European governments over the past decade. However, it did not adequately protect the right of U.S. companies to use our trade laws to combat the substantial subsidies locked into the agreement itself. Accordingly, the U.S. government might consider bringing a case to impose offsetting duties against remaining Airbus subsidies.

Next, our trade and technology experts should look at the recent announcement of a pending cooperative arrangement to study development of a 550-to-800-seat superjumbo aircraft. The arrangement joins Boeing with British Aerospace, Deutsche Aerospace, Aerospatiale of France and Construcciones Aeronauticas of Spain, all members of Airbus Industrie. At first glance, such an arrangement, with its probable requirements for foreign sourcing of parts, does not appear to be advantageous to U.S. workers or the health of our domestic aerospace industry.

Finally, there is no question that airlines operating under Chapter 11 are destroying the balance sheets of relatively healthy airlines, such as United, American and Delta. Thus, it may be necessary for Congress to revisit the bankruptcy law reform bill it considered but did not pass last year, as well as enact a tax incentive for the purchase and/or lease of U.S.-made aircraft.

Provisions to adjust relevant time limits and improve procedures and standards for companies already in bankruptcy would help with the restoration of the financial stability of the airline industry as a whole. A tax incentive, although not without cost, could also provide long-term benefits to the U.S. airline industry and economy.

We simply must do more to maintain the hundreds of thousands of jobs in commercial aerospace provided by McDonnell Douglas, Boeing and their suppliers located in California and across our country. We also cannot afford to lose the manufacturing base and technical expertise developed over many years, which has been the key to the success of American firms and workers in the fiercely competitive international aircraft market.

The above actions will help ensure the health of our aerospace manufacturing and airline industries, and the continued employment of their workers, thereby helping to revitalize the U.S. economy.