AIA’s Melcher Mixes Optimism with Caution

Association head says the aerospace industry’s contributions to the economy are sometimes overlooked.

Aerospace Industries Association
David Melcher, president and CEO of the Aerospace Industries Association, speaks at an annual media luncheon in Washington, D.C.Aerospace Industries Association

David Melcher, president and CEO of the Aerospace Industries Association (AIA), began Tuesday’s annual media luncheon by alluding to the continuing social media “saga” created throughout 2016 by President-elect Donald Trump. Melcher was referencing a tweet posted just a few hours before the lunch, in which Trump called the cost of the two new Air Force One Boeing 747-8s as “out of control” and saying that the “order should be canceled.” The AIA luncheon audience, of course, included Boeing employees.

Each December, AIA, the trade association for the United States’ major aerospace and defense manufacturers, holds a media luncheon in Washington, D.C., to reflect on the past year and peer into the crystal ball for the next. This year, Melcher addressed more than 300 members of the media, saying, “There’s a collective recognition … that we have some serious challenges we must tackle in this industry … I wonder what the new administration will mean for the country.”

Melcher said he met with the president-elect six months ago, sharing some of AIA’s campaign white papers, and said Trump listened carefully to the need to beef up U.S. defense capabilities.

“But we have no illusions that getting positive action will be easy,” he said, especially over issues like trade. Referring to the dramatic change to the Republican party’s overwhelming control of elective offices after last month’s election, Melcher said those results clearly show “something is happening across the country,” although the effects of those changes, on topics like defense and trade, are yet to be seen.

In support of the industry, Melcher said AIA members and their employees represent the “tip of the spear” on technological innovation, as well as the source of many thousands of well-paying jobs. The average salary of the 1.7 million people employed in aerospace currently hovers around $93,000. With over $605 billion in sales, $276 billion of which comes from commercial aerospace, Melcher said the “industry could and should be doing better on behalf of our nation.” Explaining that he thinks the aerospace industry’s contributions are sometimes understated and underappreciated, he outlined four mega-trends AIA wants the incoming administration to keep an eye on.

He wasted no time clarifying how much damage the deficit politics of recent years have created through budget uncertainty and its unthinking austerity, especially when it comes to funding real and emerging security needs in the global aviation and space sector. He said AIA was disturbed by the increasing threats to expanding the industry’s trade competitiveness, some of which have led to several self-inflicted wounds. The industry is also hoping the new administration will see the need for smart government regulation, as well as a more rapid transition to a global digital economy to address the risks of cyber threats.

Speaking on the eve of the 75th anniversary of the Japanese attack on Pearl Harbor, Melcher said national security should be the nation’s top priority without concern to arbitrarily set limits. “Only by being prepared,” he said, “can we prevent the next attack on America, whether it comes as a massive cyber attack or some other insidious means of aggression.”

The topic of the emerging UAV market also came up, with AIA suggesting the nation handle the uncertainties of this new aircraft type much the way it did the helicopter decades ago, by recognizing how little is actually known about all the potential uses for these new machines and simply being open to the possibilities.

Prior to taking questions from the media, Melcher mentioned other hot topics like making a serious dent in the corporate tax rate to spur new investment and help repatriate overseas corporate profits. He also strongly supports re-energizing the Export/Import bank, as well as the need for Congress to pass a strong FAA reauthorization bill to energize infrastructure spending on airports, the national airspace system’s NextGen and NASA.

A retired U.S. Army Lt. General, Melcher used an old West Point phrase to help focus the new Congress that takes office next month.

“I hope they’ll choose the harder right, rather than the easier wrong,” a reference to kicking the financial can down the road again with continuing budget resolutions.