# Presentation: 691088

## NASA Aerospace 2002

**Richard Golaszewski, Executive Vice President**
**GRA, Incorporated**
**115 West Avenue • Jenkintown, PA 19046 • USA**
**Telephone: 215-884-7500 • Fax: 215-884-1385**
**E-mail: richg@gra-inc.com**

***NASA Aerospace 2002***
***Turning Goals into Reality Conference***
***Executive Issues: Perspectives on the Future of Aerospace***
***Aerospace Technology and the Government Role***
***May 22, 2002***
***Santa Clara, California***

## THE U.S. GOVERNMENT ROLE IN AEROSPACE

***Overview***

**May 22, 2002**

- Long history of funding civil and military aerospace R&D
- Industry has undergone decade of consolidation raising questions
- Does government still have a role in funding R&D?
- What is unique about aeronautics?
- Is there sufficient competition among firms?
- Why doesn’t the private sector invest enough in R&D?
- Are aeronautics/aviation mature technologies?
- Current trends in government R&D expenditures and loss of U.S. market share seem to be related

**GRA, Incorporated**

## RESEARCH AND DEVELOPMENT UNDERPINS

***RESEARCH AND DEVELOPMENT UNDERPINS***
***TRANSPORTATION’S IMPACT ON THE ECONOMY***

**GRA, Incorporated**

**May 22, 2002**

## ECONOMIC IMPACT OF AVIATION INDUSTRY

**GRA, Incorporated**

***ECONOMIC IMPACT OF AVIATION INDUSTRY***

- N/C = not calculated
- Source:  National Research Council, ASEB, “Recent Trends in U.S. Aeronautics Research and Technology,” p. 8.

- Estimated Economic Impact
- by Air Transportation and Related Sectors
- ($ billions 1999)

**May 22, 2002**

## FUTURE MARKETS FOR AERONAUTICS PRODUCTS 

***ARE LARGE***

**GRA, Incorporated**

- Source:  National Academy of Sciences, Committee on Strategic Assessment of U.S. Aeronautics, Aeronautics and Space Engineering Board, “Recent Trends in Aeronautics Research and Technology (1999), p. 13.

**May 22, 2002**

## THE U.S. HAS REDUCED AEROSPACE R&D EFFORTS

***THE U.S. HAS REDUCED AEROSPACE R&D EFFORTS***
***Funds for Industrial Research and Development ***
*** ******in the Aerospace Industry****

**GRA, Incorporated**

- *Companies classified in SIC codes 372 and 376, having as their principal activity the manufacture of aircraft, guided missiles, space vehicles, and parts.
- Source:  Aerospace Industries Association, *Aerospace Facts and Figures*, 2001-2002.

**May 22, 2002**

## U.S. SHARE OF AEROSPACE MARKETS HAS FALLEN

**GRA, Incorporated**

- Source:  *Commission of the European Communities, Trading Position and Figures* (1997) for 1985 to 1995 data; and AECMA for 1996 to 2000 data.

**May 22, 2002**

## AIRBUS AND BOEING SHARE THE MARKET

***AIRBUS AND BOEING SHARE THE MARKET***
***FOR LARGE COMMERCIAL TRANSPORTS***

**GRA, Incorporated**

- *Includes McDonnell Douglas
- Source:  Aviation Specialists Group

**May 22, 2002**

## AIRBUS AND BOEING SHARE THE MARKET

***AIRBUS AND BOEING SHARE THE MARKET***
***FOR LARGE COMMERCIAL TRANSPORTS***

**GRA, Incorporated**

- *Includes McDonnell Douglas
- Source:  Aviation Specialists Group

**May 22, 2002**

## RATIONALE FOR GOVERNMENT INVESTMENT

**GRA, Incorporated**

- Public goods:  National defense/aviation security
- Externalities (unpriced transactions)
- Noise
- Emissions
- Safety
- Capacity/delay reduction
- Appropriability:  Ability of private sector to capture full returns
- Growth/high technology industries
- High research intensity
- Wide technology base
- International trade
- Barriers to entry
- Learning curves
- Increasing returns

**May 22, 2002**

## SPHERES OF INDUSTRY 

***AND GOVERNMENT ACTIVITY ***

**GRA, Incorporated**

- Proof of Conception

- Concept in Laboratory

- Concept in Controlled Environment

- Prototype Demonstration

- Prototype Validation

- Actual System Demonstrated

- Operational Use

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- Basic Research

- Concept Formulation

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**May 22, 2002**

## SAMPLE STATISTICS FOR NASA TECHNOLOGIES 

***MATURING FROM TRL 1 TO TRL 9***

**GRA, Incorporated**

- Source: “Case Studies: Time Required to Mature Aeronautics Technologies to Operational Readiness,” prepared by SAIC and GRA, Incorporated, November 1999.

**May 22, 2002**

## NEW DEVELOPMENTS ON GOVERNMENT ROLE

**GRA, Incorporated**

- Increased productivity is key to higher standard of living and economic growth—R&D key to increased productivity
- Strategic trade theory
- Declining costs
- Entry barriers
- Increasing returns industries
- Transportation networks and competitiveness
- Transportation cost reductions
- Enhanced mobility
- Increased focus on the system that vehicles operate in
- Airports
- Air traffic management

**May 22, 2002**

## THE 3 TIER WORLD AIRCRAFT INDUSTRY STRUCTURE

**GRA, Incorporated**

***THE 3 TIER WORLD AIRCRAFT INDUSTRY STRUCTURE***

- Source:  Adapted from Industry Canada, *The World Aircraft Industry, *
*Part A Industry Structure, *1995, _[http://strategis.ic.gc.ca/SSG/ad0115e.html](http://strategis.ic.gc.ca/SSG/ad0115e.html)_

**May 22, 2002**

## POTENTIAL FOR TECHNOLOGY TO AFFECT 

**GRA, Incorporated**

***POTENTIAL FOR TECHNOLOGY TO AFFECT ***
***TOTALLY NEW AIRPLANE DESIGNS IS SMALL ***

- Source:  Boeing

**May 22, 2002**

## SUPPORT OF FUTURE NAS

**GRA, Incorporated**

- Investments in technology that affect the system, or that can be retrofit may have larger near-term payoffs
- Collaborative roles
- NASA R&T
- FAA application
- Invest for risk reduction/validation
- Make R&T implementable
- No specific FAA R&D funding for incorporating NASA research results
- Need better handle on air transportation demand
- Impacts of September 11th
- Changes in security processes
- Travel time and cost impacts
- New airline business models
- The potential benefits of improved technology and processes for aviation security are large

**May 22, 2002**

## RESEARCH LEVEL OF EFFORT

**GRA, Incorporated**

- Both public and private investment in aerospace R&D have fallen in real terms
- Military and civil
- U.S. losing share to foreign competitors
- Large transports
- Regional jets
- Rotary wing aircraft
- Engines
- Systems
- ATC technology
- Need to fill gap prior to commercialization
- Validation/risk reduction important for complex high consequence systems
- Private sector may not have incentives to utilize research outcomes if too risky
- Also applies to FAA adoption of NASA technology

**May 22, 2002**

## U.S. VERSUS FOREIGN 

***INDUSTRY-GOVERNMENT COLLABORATION***

**GRA, Incorporated**

- Competition is global
- All countries support research
- Military
- Civil
- Research laboratories/test facilities
- Foreign products are both quality and cost competitive
- Europeans also use repayable development grants
- Per U.S./EU agreement
- Rationale was state-owned companies/capital market failures
- Reduces risks of technology application
- Does infant industry rationale still hold?
- Increasing U.S. R&D as an effective counter strategy
- Invest in technology validation/risk reduction
- Avoid “picking winners”

**May 22, 2002**

## SUMMARY

**GRA, Incorporated**

- Strong rationale for government support of civil and military aeronautics R&T exists
- Shift has been from traditional vehicle/performance technology to classic pubic goods
- Airport/ATC congestion/delay
- Engine emissions/noise
- National defense
- Safety
- Europeans establishing strong aeronautics program that includes vehicle and performance technology components as well as ATC technology
- Frameworks program
- Vision 2020

**May 22, 2002**