25/06/17
Aerospace industry opposes US section 232 measures
London, 17 June (Argus) — Major US-based original equipment manufacturers (OEM)
have voiced opposition to a section 232 national security investigation into
imports of commercial aircraft, jet engines and associated components, with most
calling on the commerce department to commit to a tariff-free regime. The probe,
launched on 1 May, elicited input from 205 stakeholders — ranging from
individuals to leading aerospace companies — during a three-week comment period.
The US is host to the largest aerospace and defence (A&D) industry in the world,
and has maintained a positive trade surplus for over 70 years, according to the
Aerospace Industries Association (AIA). The US exported $135.9bn worth of A&D
goods in 2023, with a positive trade balance of $74.5bn, AIA data show.
Respondents attributed this surplus to the World Trade Organization's 1979
Agreement on Trade in Civil Aircraft, which covers trade in civil aircraft,
engines and parts between 33 signatory countries including the US, EU, UK,
Canada and Japan. Domestic OEMs warn of supply chain disruption Boeing noted
that while it relies heavily on domestic sources for its supply chain, around
75pc of its revenue comes from overseas customers, so "foreign market access is
critical to Boeing's competitiveness". US carriers will account for only 18pc of
the nearly 44,000 new aircraft projected to be built over the next 20 years to
meet growing air travel demand, it added. Boeing emphasised the need for diverse
global supply chains, adding that quality and regulatory constraints make rapid
onshoring of manufacturing capacity a challenge. The critical nature of aviation
requires articles to be subject to stringent safety and quality standards. "It
may take up to 10 years to establish a new domestic supplier and ensure they
meet necessary, rigorous safety certifications," the AIA said. High standards
make any short-term disruption to a suppliers' operations particularly damaging.
"The loss of one supplier can take many years to rectify," Boeing's head of
government, global public policy and corporate strategy Jeff Shockey wrote.
"There are often no viable alternative suppliers that can quickly meet the
required certification standards, and compromises on those standards — many of
which are grounded in aviation safety — are not an option." Kansas-based
fuselage manufacturer Spirit AeroSystems urged the commerce department to
prevent the implementation of import tariffs because higher duties would
increase operating costs, upend long-term supply negotiations and add financial
burdens to the industry. The firm highlighted the importance of its UK
operations in supporting major aircraft programmes, and said any trade
restrictions on that country would create risk for its production schedules.
Virginia-based engine maker RTX cautioned that any tariffs levied under section
232 could threaten investment in its domestic manufacturing operations. This
includes more than $1bn earmarked for its Asheville facility in North Carolina
to expand production capacity of engine blades and vanes, and to add foundry
operations for castings in the next few years. RTX warned that any undue
pressure on its US supply network — comprising 20,000 companies — could result
in small businesses, which are still recovering from Covid-19, to "close their
doors". That would have a cascading effect on the wider multi-tiered supply
chain, RTX said. RTX subsidiary Pratt & Whitney's PW1100G-JM geared turbofan
engine helps power Airbus' A320neo family. EU, UK stress ties with US partners,
facilities The investigation drew responses from several European and UK OEMs
that have significant ties to US aerospace supply chains. Europe-based Airbus,
through its US subsidiary, stressed that commercial aircraft manufacturing
depends on a global supply chain and onshoring that entirely to any single
country is neither realistic nor sensible. Airbus' A320 aircraft has 340,000
unique parts, each requiring years of certification. Airbus operates a final
assembly line for its A320 and A220 jets in Mobile, Alabama, and has already
said tariffs have hit assemblies imported to this operation . French engine
manufacturer Safran pointed out that CFM International — its joint venture with
GE Aerospace — produces the LEAP engine, which exclusively powers Boeing's 737
MAX aircraft. Safran also supplies the low-pressure compressor module to GE
Aerospace for its GEnx engine fitted to Boeing's 787 Dreamliner. Boeing's
alternative engine for the 787 is the Trent 1000 supplied by UK manufacturer
Rolls-Royce, which commented that 60pc of aircraft with its engines are based in
the US. It further highlighted the negative effect that tariffs have already had
on maintenance, repair and overhaul operations, leading customers to delay
repair work or seek unapproved alternatives. Ti forgings characterise broader
tariff risks Aerospace parts often rely on unique metals, alloys, composites,
forgings and castings that have specific properties, Boeing wrote. Machinery to
manufacture these items is purpose-built and limited in capacity. Large
structural forgings require unique forging presses capable of exceeding 30,000t
hydraulic force, located in the US, Russia, China, France, Japan and Austria.
Austrian forger Voestalpine Bohler Aerospace underlined that transatlantic
reciprocity extends from finished aircraft and engines down to approved raw
materials such as titanium and nickel-based alloys. "The industry cannot rapidly
replace suppliers without creating significant cost overruns, supply chain
bottlenecks, and safety risks," Voestalpine wrote. Pennsylvania-based Perryman,
a key producer of titanium ingot and mill products, said continued access to
global suppliers and aerospace-grade raw materials is crucial to avoid
disruptions to domestic manufacturing. Perryman also argued that the
interconnected nature of the titanium and aviation industries requires balanced
trade solutions. The US relies solely on imports of titanium sponge, a necessary
input for ingot melting, while also drawing approximately 50pc of its scrap
needs from overseas. By Samuel Wood and Alex Nicoll Send comments and request
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