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Concerns have been expressed recently, as in 1986, about the ability of the FAA to survey foreign repair stations, and that the use of foreign repair stations will export jobs from the United States. I would like to address both of these concerns.

First as to surveillance. Pratt & Whitney has supported the Air Transport Association's 1987 petition that would call for inspection fees to be charged by the FAA in order to help defray the cost of surveillance at qualified foreign repair stations.

Pratt & Whitney has supported the concept of reciprocal agreements between the FAA and foreign regulatory agencies. The reciprocal maintenance agreement that the United States has had with Canada has proved to be a good example.

Pratt & Whitney has supported the ATA's suggested use of designated airworthiness representatives, DAR's, on site to authorize the return to service of high-quality, serviceable material. All major manufacturers currently have an extensive field service organization on site at these foreign repair stations. Perhaps this existing network could support the FAA under the DAR concept.

The second public concern of which we are aware is that the use of overhaul and repair facilities in foreign countries supposedly results in loss of domestic jobs. We believe, as several other individuals have said, that the opposite is true.

Our competitiveness in new engine sales and access to foreign repair markets directly translate into American jobs. Access to foreign markets is a key factor in our growth. Currently, more than half our overall sales are to foreign operators.

As an original equipment manufacturer, we sometimes are requested, as a requirement of a sale, to provide offsets. Offset may be anything of economic or technological value to the purchasing country.

Under certain circumstances, overhaul and repair business can fulfill the offset obligations of a foreign sale. Preserving this flexibility is essential to the growth of our business. Limiting the availability of repair activities which can be used to meet offset requirements could result in lost new engine sales. We consider it better for domestic job growth to produce 70 to 80 percent of a product rather than to produce nothing at all.

In the overhaul and repair market, the majority of Pratt & Whitney's total commercial sales is also to foreign airlines. In 1987, foreign airlines accounted for 51 percent of our commercial sales; in 1988, for 55 percent; and in 1989, we estimate this percentage will rise to 68 percent.

In addition, much or our military work includes repairs for many of the foreign countries which have purchased F-15 and F-16 aircraft with our F-100 engines.

We continue to expand our facilities to meet this need, and we have added personnel to our overhaul and repair operations in Connecticut. In other words, our foreign overhaul and repair business is helping to create more jobs in the United States. We plan to hire more personnel as our business expansion proceeds. The present FAA rule will continue to enhance our expansion plans for our Connecticut operations.

Pratt & Whitney is concerned that if foreign countries impose restrictions on U.S. overhaul and repair facilities, similar to the pro

posed legislation, this could mean a substantial decline in our repair business and the loss of U.S. jobs.

Foreign aviation regulatory agencies, for example the French DGAC, the British CAA, presently do not impose any restriction on the use of United States domestic suppliers and repair stations in the support of their respective airline equipment. The proposed legislation would restrict foreign repair stations from working on domestic U.S. airline equipment, except in unusual circumstances.

We are convinced that the new FAA rule, which allows domestic manufacturers to use foreign repair stations, has not and will not result in the export of U.S. jobs.

We also firmly believe this rule has not sacrificed the FAA's capability to conduct surveillance. Domestic manufacturers can provide substantial assistance in this regard by conducting their own surveillance in conjunction with FAA requirements such as the designated airworthiness representative concept.

In conclusion, Mr. Chairman, we believe that permitting original equipment manufacturers to conduct overhaul and repair business overseas will help foreign sales and will result in increased employment in U.S. facilities, with no reduction in flight safety.

Thank you.

Mr. CLEMENT. Thank you.

Mr. Wires.

Mr. WIRES. Thank you, Mr. Chairman. At your request, I will go through this, and be brief and hit the highlights of my testimony.

Like the others, Boeing Commercial Airlines is pleased to be here and to be able to present our views. I would like to emphasize that we stress the importance of recognizing that the air transportation industry by its very nature is truly international and is without boundary.

Airplanes flown by the many operators throughout the world move freely across most borders and continents, and the support system therefore must be international in nature, with the only limitation being competence.

I think that point has been made very clear today. We are concerned about safety, and competence is certainly the major item that we ought to be concerned about. We testified in July 1987, and we expressed concern about three areas:

Certification of used buyer-furnished equipment; return to service of products repaired by a foreign OEM, and certification of used spare products included with the sale or trade of used aircraft.

Although we are in favor of continuing with the rule as promulgated in December 1988, we recognize that there have been some amendments and proposed changes to the proposed rule, but we have not heard enough about the proposed changes to be satisfied that those changes were going to cover the areas that we are concerned about.

There are four additional considerations that I would like to briefly touch on. The first is experience gained subsequent to the rule that was promulgated in December 1988. Based on our understanding of the impact of the change to date, the FAA, although receiving a substantial number of applications for foreign repair station approval, has moved cautiously and well within the surveillance capability to formalize approvals.

Many were from foreign stations which already established exemptions with the FAA to practice as an FAA-approved foreign repair station. It is also our understanding that the incidence of overhaul of U.S.-registered aircraft has not noticeably increased as a result of the 1988 rule change, and does not support claims of the substantial loss of jobs to U.S. workers.

You heard about aging airplanes. I would just like to give you a scope of the amount of work that we are looking at on the Boeing fleet. For the Boeing fleet of airplanes, we estimate that about 200 aircraft will be affected, requiring upward of 4 million man-hours, or approximately 20,000 manhours per airplane to perform all the necessary work.

This work will be spread over 4 years from the time the program airworthiness directive becomes effective, which is expected this year. We anticipate that this kind of work will necessitate extensive worldwide repair station involvement and may require an expansion of the U.S. facilities.

I would like to mention briefly airplane leasing. There are two considerations here. Some leased airplanes remain on the U.S. registry, although they may be operated by foreign airlines. The other is leased airplanes which fly from country to country at short notice.

Airplane leasing is becoming an important part of Boeing Commercial Airplane's business, and it is imperative that Boeing support these customers in every respect of aircraft maintenance, overhaul and operation. Any reversion of the foreign repair station rule which might call for work on such airplanes and their associated equipment, to be performed by U.S.-based repair stations will invoke needless hardships, and you can readily imagine the difficulties which a foreign airline will experience if the leased airplane must return to the U.S. repair station each time overhaul is required.

You have also heard words about the wind shear equipment, and TCAS equipment installation requirements. We believe that the industry will call once again on repair stations to perform this work. This program, along with the others we have highlighted, will provide ample business opportunities for U.S. repair stations.

The freedom of world carriers, many of whom are Boeing customers, to select the repair station source without impediment is vital to smooth international operations.

Just a few words about the importance of foreign carriers to Boeing and to the United States, and again, this is reflecting on the possibility of retaliation, which we have heard a lot about today, but the numbers I think are significant.

For 15 of the past 18 years, Boeing Commercial Airplanes has sold at least 50 percent of its airplanes to foreign carriers. We have contributed a substantial offset to the U.S. trade imbalance.

I would like to site these figures. In 1986, the total foreign Boeing sales was $7.3 billion, which was 3.4 percent of the total U.S. export. In 1987, the figure was $6.3 billion, and that is 2.5 percent of the total U.S. export. In 1988, the figure is $7.8 billion, and again, 2.5 percent of the total U.S. export. Over the past 5 years, 14 foreign operators have ordered Boeing aircraft totaling $40.6 billion.

To conclude, we believe that by far the greatest potential for expanding jobs for Americans in the commercial aviation industry lies in the design, manufacturing and sale of new and improved aircraft and associated products. But in order to sell these aircraft, the quality and availability of product support services must be adequate and major considerations of all buyers. This is why customer service is a significant factor in our business strategy, and to a large measure, the reason we have been able to maintain over a 50-percent share of the overall market.

Gentlemen, we must recognize that the airplane transportation industry knows no boundaries in terms of worldwide operation. To establish any limits, beyond those necessary to ensure competence, which the regulatory agencies of the world are doing, will impede the industry's effectiveness and efficiency, and we urge that this committee support the foreign repair station rule as written and promulgated in December 1988.

Thank you very much.

Mr. CLEMENT. Thank you, Mr. Wires.

Mr. Vanduyne.

Mr. VANDUYNE. I am program general manager of Worldwide Operations, Aircraft Engine Group Field Service, of the General Electric Co.

First, I would like to say that GE fully supports the recent revision of the FAA regulation, Part 145. The jet engine business today is extremely competitive, and in order for GE to sell its engines overseas, it must offer full product support throughout the engine's life.

GE therefore markets more than just an engine. It markets the associated product support that goes with it. GE audits these facilities, foreign customer repair stations, reviews their capabilities, assigns on-site technical representatives and provides, through an overall repair agreement, authorization for those customers to do work for the General Electric Co. and other customers.

This enables them to become a primary contributor to GE's overall worldwide product support capability. Over 50 percent of GE's commercial sales are overseas, and many alliances have been established in order to serve that market.

Sixty-four percent of GE's end product is produced by outside suppliers or partners, of which 2,211 are domestic and 129 are overseas. This share to gain principle has been successful, as evidenced by the fact that GE aircraft engines are one of the United States' major export products.

GE has gone from zero commercial engine sales in 1970 to $3 billion plus in annual commercial engine sales in 1989, and GE's domestic employment has risen from 27,600 in 1970 to 38,700 in 1988. GE's worldwide product support capability includes a GE component repair shop, a facility that was established in Singapore in 1980. Reverting back to the 1949 Federal air regulation would create a significant hardship for the U.S. operators who use this facility, and would eventually adversely impact the public in the form of increased prices and possible interruption of scheduled services.

Although there are some U.S. shops in the United States which can repair some GE engine components that are currently repaired

by the Singapore shop, the amount and degree of repair by these U.S. shops is very, very limited.

Moreover, it is clearly evident that there is not sufficient capability and/or capacity available in the United States to handle the volume of repairs necessary to keep aircraft flying without interrupting service. To duplicate this repair capability and capacity in the United States would require a considerable expenditure and, as you have heard today, and take over 2 years to bring it on line if we could find the capable people to run it.

It is clear that future projections of new U.S. aircraft and engines sales overseas could be seriously impacted if Congress repeals the December FAR-145.

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Mr. ALEXANDER. Yes, I am John Alexander, general manager of special products and services of the Douglas Aircraft Co., division of McDonnell Douglas Corp. As a representative of a major air frame manufacturer and as one responsible for the repair and modification of commercial transport aircraft, I appreciate the opportunity to testify this afternoon on this vital issue.

Again, I have submitted my statement for the record, so I will be very brief and hit a few highlights of that. First of all, in the arena of economics, I think we have all heard testimony today of the global multinational business that we are all dealing with in the aviation industry.

We at McDonnell Douglas are a part of that. There is a great concern on our part of the erosion to the dominance we have had in that business to foreign manufacturers, and that is certainly of public record as well.

I think it is interesting, if we go back and look at the McDonnell Douglas history and that of the Douglas Aircraft Co., which produces the aircraft for McDonnell Douglas in the 1983 timeframe. We were on the verge of going out of the commercial transport business. We employed around 15,000 people and couldn't get any sales for our new aircraft.

As a result of some good sales tactics, one of which was a collaborative agreement with a foreign government, we sold 20 MD-80 aircraft to a foreign airline, and in turn we agreed to put work into that country's aerospace industry. That plus an increased marketplace.

Since that time, the Douglas Aircraft Co. has increased its employment to over 40,000 people in this year's time frame. So, we have seen a tremendous advantage in economics in our business. And we found out one thing, that collaborative agreements will be a way of life for us to do business in the future.

I have talked about the issue of employment, so I will keep those comments as brief as they were, and I would simply like to say, on the issue of safety, that I am impressed that virtually everyone who spoke today, and I am sure every member of the subcommittee, recognizes safety as the number one issue in our business.

We are certainly of that opinion. From a personal standpoint, over two years ago, as I was standing on the lawn of a church

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