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Old 15th Aug 2004, 18:54
  #20 (permalink)  
humble_dor
 
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EU subsidies will decrease naturally

Commercial airplane industry has always been and still is an industry that employs many workers. Historically this industry is inside the military-industrial complex. Since this industry generated so much employment, in the past governments have been subsidizing it. Although commercial airplane industry is young, it is now entering maturity. Maturity means cost reduction and rationalization.

New materials, new manufacturing techniques will increase the productivity of aircraft development and production more rapidly than what we have seen in automotive industry. As the industry requires less and less manpower, governments will be less and less interested to subsidy airplane manufacturing. So, the first reason why EU governments will reduce subsidy to commercial airplane manufacturing industry is the fact that the next all new airplane will be developed and built with LESS workers (my first estimate is that there will be a redundancy of 50% in the next five years).

The second reason is that many skilled workers are available worldwide in aerospace industry (Japanese, Russians and so on). Many factories are available worldwide to build parts of aircraft cheaply. Wind tunnels and research facilities are readily available worldwide. Any new aircraft will be without any doubt very international, just like cars are. Airplane parts (lighting, cables, equipment, interior, etc.) will be standardized and built in countries where production costs are lowest. The content of any new European aircraft will be less European than it has been before. EU governments are certainly not interested in subsidizing foreign workers or foreign factories. In other words it is GLOBALIZATION.

The third reason is that European subsidy can be diverted easily to subsidy non-European projects. EU financed research on fuel cell APU in Madrid done by Spanish universities FOR BOEING is a good example. Is this financing for European interest or is it for BOEING ? Research on fuel cell based APU spin off can be interesting for automotive industries as well, but the first who will take benefit of the research organized by Boeing is Boeing itself.

The long term strategy of US aerospace industry is naturally to sip this European financing by establishing Europe based research centers. The second way is to use more and more EU firms to build parts of US product. Let us not forget that these suppliers had developed their capability using indirect EU financing. Is EU interested in subsidizing firms working for foreign interests ? What is the level of benefit EU can get by continuing the subsidy to such firms ?
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