That Used to Be Us: Through the Eyes of the Aviation Industry

The U.S. economic success was rooted in an industrial policy which had five pillars of a prosperity formula that served as a catalyst for development and growth: 1) public/private cooperation on education, 2) immigration policy, 3) infrastructure, 4) risk/capital management, and 5) government-funded scientific research. In this paper, the development and growth of the aviation industry is viewed in the framework of such a prosperity formula in order to face the four areas that the entire economy will need to face in the current market in order to be competitive in the global market in the 21st century. Since the aerospace and aviation industry is an integral part of the US economy, it stands that those elements will also challenge the aviation industry's future. Considering the economic history of the industry and the prosperity formula, the industry has opportunities for not only normal growth but potentially can be used as a catalyst for industry health, significance and renewal in the future as well as the indirect aviation-related industries. It is clear that further research and thought are needed to provide pathways to meet the four economic challenges in the aviation sector identified in this paper. It is hoped that this paper will serve as a foundation for that research. [PUBLICATION ABSTRACT] Links: Linking Service Full text: Headnote Abstract The U.S. economic success was rooted in an industrial policy which had five pillars of a prosperity formula that served as a catalyst for development and growth: 1) public/private cooperation on education, 2) immigration policy, 3) infrastructure, 4) risk/capital management, and 5) government-funded scientific research. In this paper, the development and growth of the aviation industry is viewed in the framework of such a prosperity formula in order to face the four areas that the entire economy will need to face in the current market in order to be competitive in the global market in the 21st century. Since the aerospace and aviation industry is an integral part of the US economy, it stands that those elements will also challenge the aviation industry's future. Considering the economic history of the industry and the prosperity formula, the industry has opportunities for not only normal growth but potentially can be used as a catalyst for industry health, significance and renewal in the future as well as the indirect aviation-related industries. It is clear that further research and thought are needed to provide pathways to meet the four economic challenges in the aviation sector identified in this paper. It is hoped that this paper will serve as a foundation for that research. Introduction Thomas Friedman is an award winning American Pulitzer Prize foreign policy journalist who spent a large portion of his career since 2000 writing about globalization and economic growth. Friedman's 2011 book with co-author Michael Mandelbaum, That Used To Be Us, presents a five-part formula for success derived from U.S. economic history and advocates this formula as a vehicle for future economic growth against current challenges (Friedman &Mandelbaum, 2011). According to Friedman and Mandelbaum (2011), U.S. economic success was rooted in an industrial policy which had five pillars of a prosperity formula that served as a catalyst for development and growth: 1) public/private cooperation on education, 2) immigration policy, 3) infrastructure, 4) risk/capital management, and 5) government-funded scientific research. The authors argue that collectively, the five pillars are at a cross roads and current trends do not bode well for U.S.'s economic future. Worse, no one pillar had reached a point of criticality that would spur immediate action and reversal (Issacson, 2011). 29 January 2015 Page 1 of 11 ProQuest In this paper, the development and growth of the aviation industry is viewed in the framework of Friedman and Mandelbaum's (2011) prosperity formula and also presents four areas that the entire economy, and certainly the aviation industry will need to face in the current market in order to be competitive in the global market in the 21st century. Quantifying the Aerospace and Aviation Industry Customarily the entire aviation industry is divided into two major subcategories, aerospace and aviation. The aerospace industry is defined as the manufacture of general, commercial, and military aircraft, and related products such as spacecraft and missiles. Aviation is a shorthanded way of referring to air transportation that includes the operation of scheduled commercial airlines, freight operations, and nonscheduled passenger and freight air transportation (Aerospace Industries Association of America, 2011; Bureau of Economic Analysis, 2011). It is safe to say that the aviation industry did not have a large place in the U.S. economy before the Wright Brothers flew at Kitty Hawk in 1903. The industry was not really an industry at all but a collection of enthusiasts and scientists. The Bureau of Economic Analysis (BEA) accounts of economic output began breaking out data by industry in 1947. In 1947, aerospace manufacturing was lumped into the aggregate manufacturing accounts and air transportation did not even exist as a subaccount. The distinctions and importance of separate economic data between aerospace and aviation industries probably began during the industrial military buildup from the Cold War, which also coincided with a maturing air transportation industry. Air transportation output was specifically broken out from the transportation accounts in the BEA for the first time in 1977. In 1977, aerospace and aviation accounted for only 1.5% of the US economy. By 2010, the US aerospace and aviation industry was 0.8% of the total U.S. employment and contains one of the last remaining strong manufacturing sectors of the US economy; however, recent trends in this industry show that the industry is declining (Aerospace Industries Association of America, 2011; United States Department of the Labor, 2011). Evidence of the Five Pillars in the Industry's Development Public/Private Cooperation on Education. When World War I ended, the future aviation industry was highly uncertain as many government contracts were cancelled and companies liquidated to leave the industry operating at only 10% of its wartime peak. The industry needed to refocus away from a military product to develop a commercial product demanded in the ensuing peacetime. The Manufacturers Aircraft Association, headed by Samuel S. Bradley, embarked on the 1919 version of the modern day "Got Milk" campaign by publishing the Aircraft Year Book, in order to educate the public and promote flying. By the time Mingos (1930) wrote a historical commentary on the birth of the aviation industry, he noted that a great industry had grown from aviation enthusiasts. Since industry output breakdown was not available, the only way to estimate what portion of the economy was devoted to aviation production was by the number of workers employed in the industry. At the end of World War I, 175,000 workers or 0.4% of the U.S. labor force was directly employed by the aviation industry (Mingos, 1930; United States Department of the Labor, 2011). Aviation had gone from a cottage industry to an identifiable industry of 24 aircraft companies representing a $23 million capital investment that was intertwined with 75 different industries within 21 months during World War I. The initial push for the organization of the industry, technological cooperation, patent royalty sharing agreement, and product demand came via the US Government as a direct involvement in World War I, but was buoyed by the private industrial association's education and promotional campaign of aviation. Formal flying schools were also established in the 1920s, but it was the experience of World War II that drastically expanded not only the military pilot training programs but also the private schools that were contracted by the government. This educational push strengthened the advancement and development of the industry. When World War II was over, military pilots came home and helped fuel the general aviation expansion to five times what it was prior to the war (McCurry, 2000). Numerous isolated aviation educational experiences began at the University level before the Wright Brother's 29 January 2015 Page 2 of 11 ProQuest first flight. The early beginnings of formal aerospace education programs began before 1920 with the first master's degree awarded at Massachusetts Institute of Technology (MIT) in aeronautical engineering and the first Department of Aeronautics was established at the University of Michigan. Others soon followed. Beginning in 1925, the Guggenheim Foundation, a private institution, also contributed much to the development of early programs in aeronautical engineering. In the 1940s, the number of aerospace engineering programs rapidly expanded as a result of World War II and these programs were substantially subsidized by the government. (American Institute of Aeronautics and Astronautics, 2009; McCormick, 2004). Many argue that the achievement of manned flight would have occurred sooner with better communication between the practitioners' experiments and the theoreticians (Kiernan, 2011b; McCormick, 2004) . It is difficult to determine which came first, education or industry. Air transportation had just begun to take-off as more respected aerospace educational programs became established. This formalized transfer of knowledge, research results and educational discovery with industry began to take place with the establishment of formal aeronautical educational programs and helped fuel the development of the industry. As more aerospace technology was created, a myriad of aviation uses became available which were not considered before. But just as important, as necessity presented itself, academic researchers rose to the occasion to solve the aeronautical technologica