Sunday, June 29, 2003

Ohio's place in flight lags

Once-proud leader scrambles for jobs

By Mike Boyer
The Cincinnati Enquirer

The future of Ohio's aerospace industry is drawing increased scrutiny as the centennial celebration of the Wright Brothers' first flight approaches.

Gov. Bob Taft's chief aerospace adviser says the Buckeye State needs to do more to promote and develop the industry if Ohio is to remain a player when the bicentennial rolls around in 2103.

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"We've got to scramble real hard to contain and retain the core disciplines we're good at. Every six months there is something happening. We lose more and more (aerospace suppliers)," retired Air Force Brig. Gen. Richard Browning says.

Ohio is not alone. In the face of the worst downturn in commercial aviation's history and increased competition from foreign aerospace companies, the pre-eminence of the U.S. aerospace industry, which traces it roots back to the Wright Brothers' Dayton bicycle shop, is under attack.

"This nation has generously reaped the benefits of prior innovation in aerospace, but we have not been attentive to its health or its future," the 12-member President's Commission on the Future of the U.S. Aerospace Industry said in a report last fall.

Industry employment has fallen to 689,000, a 50-year low, according to the Aerospace Industry Association, a Washington, D.C., trade group.

"The airline industry is nearly bankrupt, the commercial space market has almost ceased to exist and the manufacturing base is contracting at an alarming rate," AIA president John Douglass told Congress in March.

More than 115,000 jobs have been lost since Sept. 11, 2001, he said.

Despite its importance, hard data on the size and scope of Ohio's aerospace industry is difficult to come by.

Browning, a Zanesville native who came out of retirement last fall to advise Taft and the Ohio Aerospace and Defense Advisory Council, said he hopes to complete an analysis of the companies making up the state's aerospace industrial base by this fall.

The presidential commission calculated there were more than 600 aerospace companies in Ohio, but Browning said that so far, he's been able to document about 450.

The commission also calculated Ohio's aerospace employment at 62,275 jobs.

While that pales against the almost 300,000 aerospace workers in California, the nation's largest aerospace employer, it ranked Ohio as 10th in the nation.

But that number isn't all good news. While Ohio's overall aerospace employment has stayed relatively stable in the last decade, the biggest portion of those jobs, about 41,000, are classified as air transport jobs.

They represent jobs that have been created by air cargo companies, such as Airborne Express in Wilmington, and by the growth of metropolitan airports across the state, Browning said.

"They're important, but not high-pay, high-skill jobs that the (Ohio) Aerospace Council and I are focusing on," he said.

Since 1990, Browning said, "Ohio arguably has lost more than half, maybe approaching 60 percent, of its imbedded aerospace business."

Federal figures down

U.S. Department of Labor data bear him out.

Aerospace product and parts manufacturing employed 37,000 Ohioans in 1990, according to the federal agency. At the end of last year, that number had fallen to 15,300.

Browning says a variety of factors ranging from the end of the Cold War in 1989 and the subsequent decline in military spending to the makeup of Ohio's aerospace industry itself have contributed to the decline.

Unlike bigger aerospace states such as California, Texas and Washington, Ohio doesn't have a large aircraft manufacturing plant anymore.

The state's last large aircraft manufacturing plant, operated by the former McDonnell Douglas in Columbus, closed in the mid-1990s.

That plant employed about 10,000 people at its peak and built the Air Force's B-1 bomber for a time.

"The only other first-tier aerospace company we have in Ohio is GE Aircraft Engines in Evendale," Browning said.

All the other aerospace suppliers in Ohio are what Browning calls second-, third- or even fourth-tier suppliers of aerospace parts and services.

"We have lost a lot of those," he said. "Some are premier companies with 30 or 40 years in business."

But as the aerospace industry has declined, they've either closed, merged or moved on to other markets, he said.

Going for Boeing

The lack of a large aircraft manufacturing plant hasn't stopped Ohio from pursuing big fish.

Ohio is one of a dozen states bidding on Boeing's 7E7 program, a proposed new midsized, fuel-efficient jetliner.

Boeing hasn't yet decided to build the new jetliner, its first since the 777 debuted in 1995. But if it does, it expects to employ about 1,200 at the plant with adjacent airport runway.

The Ohio Department of Development says airports in Toledo, Columbus and Youngstown have submitted bids on the project. The runways at Cincinnati's Lunken Airport aren't long enough to meet Boeing's requirements, state development officials say.

Ohio is probably a long shot for the 7E7. Washington state has offered an incentive package valued at $30 billion over a number of years, according to media reports.

But even if it is a long shot, Ohio could end up an important player in the program, Browning said. Boeing's development plan would dramatically increase the use of outside supplied components, increasing the role of vendors.

Union leader decries losses

The loss of aerospace manufacturing jobs is a concern of Tom Buffenbarger, a Cincinnati native and president of the International Association of Machinists and Aerospace Workers.

Buffenbarger, a second-generation machinist who started with the union at GEAE's Evendale plant in the early 1970s, said the president's aerospace commission didn't go far enough.

Buffenbarger, the only member of organized labor on the commission, said it focused too much on things like tax incentives for industry and not enough on the need to preserve aerospace jobs.

"My union has lost over 50,000 jobs in the last eight years," he said. That includes about 3,000 in Ohio since 1998.

He's particularly upset by the industry move to outsource more jobs to lower-cost overseas suppliers and engage in the practice known as "offsets" - doing a portion of the work on aerospace contracts in the country placing an aircraft order to secure the order.

"These activities threaten the U.S. workforce and our nation's economy and national security by, among other things, transferring production and technology to other countries," Buffenbarger said in a dissent filed with the presidential commission report.

Jim Williams, dean of the engineering school at Ohio State University in Columbus, said that while the state is losing manufacturing jobs, "the high-value jobs aren't going away."

The engineering and management expertise for aerospace manufacturing is still here, said Williams, a former executive at GEAE in Evendale.

For example, while manufacturing at GEAE's Evendale plant is just a shadow of what it once was, the company still employs thousands of engineers in Greater Cincinnati involved in all its engine programs.

U.S. fading in aerospace, too

Williams' concern is that Ohio invests in industries that play to its strengths, and doesn't try to crack industries where it doesn't have expertise.

"They say it takes a dollar to retain an existing customer and five or 10 dollars to go after a new customer," he said.

Browning said he understands Buffenbarger's concern but thinks it's misguided.

"I hate to see any jobs go overseas," he said. But the fact is the United States isn't the dominant player in aerospace that it once was.

"If I was to criticize the commission's report, the thing, I think, they failed to recognize is that aerospace worldwide is now a mature industry," he said. "We can't say we're the industry leader anymore.

Boeing Co., the last large U.S. commercial airplane maker, is being outpaced for new orders by Europe's Airbus. And the two largest makers of regional jets, the industry's fastest-growing sector, are Canada's Bombardier and Brazil's Embraer, he said.

He said Ohio and U.S. aerospace companies need to focus on how they can expand their share of the increasingly competitive global aerospace market.

That means Ohio should play to its strengths in aerospace propulsion technology and new aerospace materials.

Those are two primary focuses of the Air Force Research Institute at Wright-Patterson Air Force Base outside Dayton and the NASA Glenn Research Center in Cleveland.

Wright-Pat - which employs about 20,000 directly and double that when you include contract and support workers through the region - and NASA Glenn, which employs about 2,000, have been working closely with area companies and universities to develop new technology, Browning said.

"Certainly we have the intellectual capital," he said. "We have core competencies that haven't been exploited nearly enough."

Browning said once the state identifies who the aerospace players are in Ohio, the next step is developing "a realistic and practical marketing strategy on how we position Ohio in the aerospace world, both nationally and internationally, and raise our profile."

"We've been so far off or so far low on the radar screen that we haven't been noticed," he said.


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