The global decentralization of commercial aircraft production: Implications for United States-based manufacturing activity

This research explores the role of industrial offset agreements and international subcontracting patterns in the global decentralization of US commercial aircraft production. Particular attention is given to the manufacturing processes involved in the design and assembly of large passenger jets (100 seats or more). It is argued that the current geography of aircraft production at the global level has been shaped by a new international distribution of input costs and technological capability. Specifically, low-cost producers within several of the newly emerging markets (NEMs) have acquired front-end manufacturing expertise as a direct result of industrial offset contracts and/or other forms of technology transfer (e.g. international joint-ventures, imports of advanced machine tools). The economic and technological implications of industrial offset (compensatory trade) are examined with reference to the commercial future of US aircraft production. Evidence gathered via personal interviews with both US and foreign producers suggests that the current Western duopoly (Boeing and Airbus) faces a rather uncertain future. In particular, the dissertation shows that the growth of subcontracting and industrial offset portends the transformation of Boeing from an aircraft manufacturer to a systems integrator. The economic implications of this potential reconfiguration of the US aircraft industry are discussed in the context of several techno-market futures, some of which look rather bleak for US workers in this industry.