Many sectors of American manufacturing are in sudden danger of collapsing, due of course to the economic shock to the world economy we are seeing as a result of the coronavirus. While politicians focus on crafting responses and a way to provide some financial aid to struggling American companies, Chinese and European competitors are already ahead of the curve. For they have a permanent government backstop and subsidy that helps them weather an economic storm of this intensity. Because America’s competitors subsidize their corporations as a matter of routine, they have a built-in advantage during times of crisis.
One critical sector under attack is the aerospace industry. This segment of the American economy cannot be allowed to go down, lest Chinese and European aerospace companies snap up the American manufacturing market long-term. At this time when only serious America-first measures can see American manufacturing through the storm, President Trump has taken decisive action.
The package that the Trump Administration is now sending to Congress is targeted and may be as large as $1 trillion. ABC News reports, “the proposal, obtained Wednesday (by ABC News), would authorize two $250 billion rounds of direct payments to individual taxpayers, with the first payment issued beginning on April 6. Another wave of payments would be distributed to taxpayers beginning on May 18.” On the business side, the proposal also includes $50 billion for secured lending to U.S. passenger and cargo air carriers, and $150 billion for other ‘severely distressed sectors’ of the U.S. economy, and finally, a $300 billion small business interruption loan program (as a small businessperson, that last one hits home for me).
Two state-subsidized foreign outfits poised to attack our companies like Boeing are the Chinese government-owned Commercial Aircraft Corporation (COMAC) and Airbus, the European subsidized aerospace company hit in 2019 with a $7.5 billion penalty for illegal subsidies. These two companies would like nothing more than to use their permanent government benefits to help drive American aerospace companies out of business at a time like this when they can essentially backdoor it.
The American aerospace industry will not survive without a bridge access to liquidity, and the governments of China and the European nations supporting Airbus are rooting for the U.S. Congress to do nothing. Outsourcing and increasing foreign ownership of critical American aerospace market share will spell the end of American dominance in the sector. Capitalism always beats socialism and government-subsidized corporations, but we will lose if a band-aid is not provided to American producers of aircraft when the coronavirus has, out of nowhere (well, out of China, actually but…different article), stunned the U.S. economy.
Manufacturers, including Honeywell, General Electric, Boeing, Spirit AeroSystems, and all the smaller companies that make components and parts for aircraft will be devastated without immediate and significant financial help and may not be able to recover. The U.S. economy is teetering on a potential collapse without some strong leadership in Congress to expedite President Trump’s stimulus plan through Congress. The final product should be temporary, of course, yet sufficiently large to help get businesses through this trying time.
President Trump understands that we need to use the tools of government to protect American business. Trump has promised support for engine-maker General Electric and for Boeing. Fox Business reported on March 17, 2020, “U.S. airlines and cargo carriers have said they are seeking at least $58 billion in loans and grants along with additional tax changes, while airports have sought $10 billion.” The airlines have taken a beating because of the lack of travel and the airports are going to feel a pinch when travel slows even further. This causes a ripple effect in the supply chain all the way from the manufacturers of aircraft to flight attendants on commercial aircraft. The end result of a failure to help these industries will be foreign-made aircraft dominating the market.
We live in ever more dangerous times and are now facing an unprecedented and elusive threat. America has survived two world wars, 9-11, a civil war, and countless other daunting challenges large and small yet this new threat is something that we have never faced – a pandemic that has instilled fear in Americans to the point they will not engage in any commerce. State governments are rightly reacting by shutting down everything, further crushing commerce and the ability of people to engage in work. The economy is paralyzed. Out of nowhere. The only way out is for emergency government action until the crisis passes, as our nation figures out how long it will all last.
May Congress pass this plan immediately to help extremely vulnerable sectors like the American aerospace industry, key sectors that cannot be allowed to be stripped bare. Failure to act would lead to Chinese and European manufacturers taking advantage of this crisis, steamrolling American manufacturing.
Christian Josi is a leading communications advisor, author, and a veteran of center-right / libertarian politics and non-profit management. He is the Founder and Managing Director of C. Josi & Company, a global communications resource firm based in Virginia Beach and Washington, and Principal of SLAYMEDIA, based in same. Along with Dr. Keith Ablow, Josi is co-author of the forthcoming book “Trump Your Life.”