Domestic Aviation Manufacturing: Challenges and Opportunities

DOMESTIC AVIATION MANUFACTURING:
CHALLENGES AND OPPORTUNITIES
(11377)
HEARING
BEFORE THE
SUBCOMMITTEE ON
AVIATION
OF THE
COMMITTEE ON
TRANSPORTATION AND
INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
JULY 23, 2014
Printed for the use of the

Committee on Transportation and Infrastructure
(
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska
NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin
PETER A. DEFAZIO, Oregon
ELEANOR HOLMES NORTON, District of
HOWARD COBLE, North Carolina
Columbia
JOHN J. DUNCAN, JR., Tennessee,
Vice Chair
JERROLD NADLER, New York
JOHN L. MICA, Florida
CORRINE BROWN, Florida
FRANK A. LOBIONDO, New Jersey
EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri
RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia
MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan
TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California
MICHAEL H. MICHAUD, Maine
ERIC A. RICK CRAWFORD, Arkansas
GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania
DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas
TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana
STEVE COHEN, Tennessee
BOB GIBBS, Ohio
ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania
DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York
JOHN GARAMENDI, California
CARSON, Indiana
DANIEL WEBSTER, Florida
ANDRE
STEVE SOUTHERLAND, II, Florida
JANICE HAHN, California
JEFF DENHAM, California
RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin
ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky
DINA TITUS, Nevada
STEVE DAINES, Montana
SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina
ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma
LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas
CHERI BUSTOS, Illinois
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
MARK SANFORD, South Carolina
DAVID W. JOLLY, Florida
SUBCOMMITTEE
FRANK A. LOBIONDO,
THOMAS E. PETRI, Wisconsin
HOWARD COBLE, North Carolina
JOHN J. DUNCAN, JR., Tennessee
SAM GRAVES, Missouri
BLAKE FARENTHOLD, Texas
LARRY BUCSHON, Indiana
PATRICK MEEHAN, Pennsylvania
RICHARD L. HANNA, New York
DANIEL WEBSTER, Florida
JEFF DENHAM, California
REID J. RIBBLE, Wisconsin
THOMAS MASSIE, Kentucky
STEVE DAINES, Montana
ROGER WILLIAMS, Texas
MARK MEADOWS, North Carolina
RODNEY DAVIS, Illinois, Vice Chair
BILL SHUSTER, Pennsylvania (Ex Officio)
ON
AVIATION
New Jersey, Chairman

RICK LARSEN, Washington
PETER A. DEFAZIO, Oregon
EDDIE BERNICE JOHNSON, Texas
MICHAEL E. CAPUANO, Massachusetts
DANIEL LIPINSKI, Illinois
STEVE COHEN, Tennessee
CARSON, Indiana
ANDRE
RICHARD M. NOLAN, Minnesota
DINA TITUS, Nevada
SEAN PATRICK MALONEY, New York
CHERI BUSTOS, Illinois
CORRINE BROWN, Florida
ELIZABETH H. ESTY, Connecticut
NICK J. RAHALL, II, West Virginia
(Ex Officio)
(II)
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CONTENTS
Page
Summary of Subject Matter ....................................................................................
iv
TESTIMONY
PANEL 1
Margaret M. Gilligan, Associate Administrator for Aviation Safety, Federal
Aviation Administration ......................................................................................
Gerald L. Dillingham, Ph.D., Director, Physical Infrastructure Issues, U.S.
Government Accountability Office ......................................................................
5
5
PANEL 2
Marion C. Blakey, president and chief executive officer, Aerospace Industries
Association of America .........................................................................................
Peter J. Bunce, president and chief executive officer, General Aviation Manufacturers Association ............................................................................................
Joseph W. Brown, president, Hartzell Propeller Inc., and chief operating
officer, Tailwind Technologies .............................................................................
Dave Cox, lead administrator, Air Washington project, and dean of instruction, Technical Education Division, Spokane Community College ..................
28
28
28
28
PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS

Hon. Elizabeth H. Esty, of Connecticut .................................................................
46
PREPARED STATEMENTS SUBMITTED BY WITNESSES

Margaret M. Gilligan ...............................................................................................
Gerald L. Dillingham, Ph.D. ...................................................................................
Marion C. Blakey .....................................................................................................
Peter J. Bunce ..........................................................................................................
Joseph W. Brown .....................................................................................................
Dave Cox ..................................................................................................................
47
59
87
99
112
120
SUBMISSIONS FOR THE RECORD

Margaret M. Gilligan, Associate Administrator for Aviation Safety, Federal
Aviation Administration, responses to questions for the record issued by
Hon. Frank A. LoBiondo, a Representative in Congress from the State
of New Jersey .......................................................................................................
Peter J. Bunce, president and chief executive officer, General Aviation Manufacturers Association, responses to questions for the record issued by Hon.
Elizabeth H. Esty, a Representative in Congress from the State of Connecticut ..................................................................................................................
54
109
ADDITION TO THE RECORD

Ed Bolen, president and CEO, National Business Aviation Association, written statement .......................................................................................................
123
(III)
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DOMESTIC AVIATION MANUFACTURING:

CHALLENGES AND OPPORTUNITIES
WEDNESDAY, JULY 23, 2014
HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON AVIATION,
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:01 a.m. in Room
2167, Rayburn House Office Building, Hon. Frank A. LoBiondo
(Chairman of the subcommittee) presiding.
Mr. LOBIONDO. Good morning. The subcommittee will come to
order. I would like to thank you all for being here.
Before my statement, I would likeMs. Gilligan, I would like
you to think about possibly making some comments to us. We are
all very concerned about thesome of the situations around the
world, and the decisions that the FAA made, especially in respect
to suspending for 24 hours the flights into Israel, and if you could
give us a little bit of an update after my statement and Mr.
Larsens statement, about how the FAA is looking at this, and
what we may see in the future, and how you come to make a decision like that.
So, again, I thank everyone for being here.
The American aviation manufacturing is a critical sector of our
Nations economy, contributing billions of dollars and supporting
millions of jobs annually. We are the world leader in aviation safety, standards, and manufacturing, delivering thousands of aircraft,
aircraft components, and systems worldwide every year.
Today this subcommittee will look at the state of domestic aviation manufacturing and some of the challenges that it faces. Since
recently encountering a hit during the economic downturn, our
aviation manufacturing sector has seen positive growth, and key
economic indicators support this. We in Congress want this vital
component of the aviation sector to succeed and surpass where it
was prior to 2008. However, despite the industrys success, manufacturers continue to face some challenges as they work to bring
products to the market.
All aircraft, aircraft components, and aviation systems which operate and are manufactured in the United States must meet specific design and operational certification standards set by the Federal Aviation Administration. The role of thethat the FAA plays
is absolutely critical and necessary to ensure our standards continue to be the gold standard, and provide for the safest air system
in the world.
(1)
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As manufacturers design and build to meet these standards they
can experience delays in approval, both internationally and domestically. These delays can result in the loss of real dollars and jobs
for our aviation manufacturing sector. And we have had some very
specific instances that have pointed to that, which concern us a
great deal.
The previous FAA reauthorization bill required the FAA to develop and implement plans to address inefficiencies and inconsistencies in the certification process. Currently the FAA, along with
industry, is working to implement these plans in a cooperative
fashion. We look forward to hearing what progress is being made
on this front.
In regard to aviation certification, the FAA is truly the gold
standard across the world. As the aviation industry continues to
push technological boundaries, it is important that the FAA certification processes also adapt to accommodate for this innovation.
Furthermore, as American manufacturers compete in a global market, it is vital that the FAAs leadership is recognized and maintained globally, and we in Congress do all that we can to help ensure that it stays that way, and true.
In addition to an effective and efficient certification process, the
manufacturing industry relies upon a dedicated and well-trained
aerospace workforce. Today we will hear from a witness who can
speak directly to some of the important work that is being done to
respond to the need for innovation and skilled aerospace workforce.
In my own district, Atlantic Cape Community College has recognized the need for a well-trained workforce in the growing industry
of unmanned aerial systems. Under the leadership of college president Peter Mora, they are currently working to develop a curriculum that will bring the next generation of an already technologically savvy youth into this growing industry.
In addition, I have the privilege of representing the FAAs Tech
Center, which is the premier FAA facility in the Nation for research and development, and for safety and security. Through their
important research, experts at the Tech Center assist manufacturers as they work to bring innovative products to the market. For
instance, CSC and dozens of other companies utilize the expertise
of Tech Center employees and laboratories as they develop their innovative technologies.
I am interested in hearing what role the Government can play
to promote the aviation manufacturing industrys success. It is key
we listen to the input of those in the real world, and what they
have to offer to us. Today we are fortunate to have a company who
has been part of Americas aviation manufacturing industry since
the Wright Brothers first took flight, and who can speak to the day
in and day out complexities of the industry and the challenges they
face.
I look forward to hearing from our witnesses on these topics, and
thank them for joining us.
Mr. LOBIONDO. Before I recognize Mr. Larsen, I would like to ask
unanimous consent that all Members have 5 legislative days to revise and extend their remarks, and include extraneous material for
the record.
[No response.]
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Mr. LOBIONDO. Without objection, so ordered. Now I would like
to recognize Mr. Larsen.
Mr. LARSEN. Thank you, Mr. Chairman, for calling todays hearing to discuss domestic aviation manufacturing.
U.S. aviation is vital to our economy. Domestic aviation manufacturing, the reason we are here today, is one of the major reasons
why the aviation industry in this country is such a powerful economic engine. In 2012, U.S. aviation manufacturing generated a
total output of over $150 billion.
This topic, obviously, is close to home for me. In my home State
of Washington, about 650 aerospace companies support as many as
209,000 jobs. These companies range from Boeing to the many
small businesses that are a critical part of the aviation supply
chain. Aerospace is the States largest exporting sector, accounting
for over 40 percent of the States exports in 2011.
The issues we are exploring today are the ones we have explored
before, and I want to thank Chairman LoBiondo for remaining focused on them. Last October we had a subcommittee hearing about
FAAs certification process, where we discussed opportunities to
make these processes more efficient, and to bring more consistency
to FAAs interpretations of regulations. I look forward to an update
today about the FAAs progress from that hearing.
The predictable and timely certification of aircraft and aircraft
components is critical for domestic manufacturers to get their products to market. We must also ensure FAA does not cut corners so
it continues its critical mission of ensuring the highest level of safety. The FAA reauthorization, enacted in 2012, included two provisions directing the agency to conduct an assessment of the aircraft
certification and approval process, section 312, and addressing
FAAs personnels inconsistent regulatory interpretation, section
313.
As we continue to conduct our oversight of FAAs implementation, I hope to learn more today about the progress FAA has made
in these areas, and where the agencys efforts have stalled. Specifically, I hope to hear about how the labor unions and affected FAA
inspectors and engineers have played a part in FAAs efforts, and
if they have signed on to the agencys certification reform efforts.
Labor involvement is critical. FAA leadership can say one thing,
but the people doing the day-to-day work need to beneed to buy
in before moving forward with major changes. We also have to
work to be sure that FAA has adequate staffing resources to do the
job, and to keep pace with new technology. For example, I understand the workload of FAAs 204 manufacturing inspectors continues to increase, while the size of its inspector workforce does
not.
And there is no question that FAA must streamline the process
under its Organization Designation Authorization, or ODA program, because of growing workload and limited resources. But we
must continue at all times to ensure that certification efforts are
subject to thorough and proper oversight, so that the high level of
safety the FAA maintains is not compromised.
Another common theme I continue to hear from manufacturers
is that our neighbors abroad are unnecessarily delaying their validations of FAA-certified products. We must make sure that other
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countries do not question FAAs gold standard, so that our manufacturers remain competitive in an increasingly crowded global
market.
More broadly, we must do all we can to avoid disadvantaging
U.S. manufacturers, as they compete vigorously with foreign manufacturers. To this end, last year Chairman LoBiondo and I asked
GAO to explore the FAA certification process in the U.S., as it compares with those of its counterparts around the world. And I look
forward to reviewing that report when it is issued later this year.
Global competitive demands depends on having a highsorry, a
robust pipeline of well-trained and highly skilled workers. A Government industry panel convened in 2010 by then-Secretary of
Transportation LaHood recommended several measures to improve
the training and development of the Nations aerospace workforce.
To speak to this issue, I want to extend a special welcome to
Dave Cox of the Air Washington project. Dave is on a later panel.
The Air Washington project is a unique consortium of community
colleges that are working together for the sole purpose of training
and educating workers in a wide variety of aviation jobs, such as
aircraft maintenance, manufacturing, and assembly. In Washington
State we have made investments in the people that will keep our
manufacturing base strong. And I look forward to Mr. Cox sharing
those lessons with the panel.
So, Mr. Chairman, I want to thank you for holding this hearing.
I look forward to hearing from our witnesses.
And, if I may, Mr. Chairman, just askperhaps ask unanimous
consentit is a little bit of a surprisethat Ms. Gilligans comments on the FAAs decision with regards to air travel not be included in her 5 minutes, so she can brief us on that. Yes.
Mr. LOBIONDO. Yes, that was not intended for you to be in your
5 minutes. Good point, Mr. Larsen.
Mr. LARSEN. Thank you.
Mr. LOBIONDO. And we have Ms. Peggy Gilligan, Associate Administrator for Aviation Safety at the Federal Aviation Administration. And if you could, give us some comments on this crisis we are
seeing around the world, and then get into your statement after
that, please.
Ms. GILLIGAN. Certainly, Mr. Chairman. First, let me just make
a small comment on the Ukraine. As you know
Mr. LOBIONDO. Can you pull your mic a little closer, please?
Ms. GILLIGAN. Sure. As you know, there is an international effort
underway to secure the site of the crash of the Malaysian Flight
17. FAA does not have technical experts in Kiev at this time. The
National Transportation Safety Board has sent an expert, and we
remain ready to support any investigation, onceif necessary, once
the site is secured. That airspace over eastern Ukraine continues
to be closed to all operators, because the Ukrainians have actually
closed that airspace.
As to yesterdays initiative, as you might imagine, this is a very
fluid situation. We are in close contact, the FAA is in close contact
with the civil aviation authority in Israel. We initiated the action
after it was confirmed that there had been a rocket attack that occurred within just beyond a mile from the airport.
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Obviously, our mission is to ensure the protection of our operators and the passengers on those operations. And it was determined that it wasand the appropriate action was to close access
to Ben Gurion Airport for U.S. operators for a 24-hour period. And
we continue to monitor the situation.
The Administrator has been, again, in close contact with his own
counterparts, with the State Department, with the U.S. Embassy
in Israel. And we will monitor the situation and make a determination before 12:15 this afternoon, which is the 24-hour period, for
the original Notice to Airmen concerning the airport.
We have also been in close contact with our operators, the airlines, U.S. airlines that operate into Ben Gurion. There was a
United aircraft on the ground after the NOTAM took effect. We did
authorize that aircraft to be moved from there. As you know, most
of the other aircraft that were in flight diverted and did not continue their flights into Israel. That continues to be the situation at
this point.
Mr. LOBIONDO. OK, thank you. Now, if you would, proceed to
your statement.
TESTIMONY OF MARGARET M. GILLIGAN, ASSOCIATE ADMINISTRATOR FOR AVIATION SAFETY, FEDERAL AVIATION ADMINISTRATION; AND GERALD L. DILLINGHAM, PH.D., DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Ms. GILLIGAN. Thank you again, Mr. Chairman, Congressman

Larsen, and members of the subcommittee. Thank you for the opportunity to appear before the subcommittee to discuss the FAAs
role in supporting domestic aviation manufacturing. Through our
high safety standards, rigorous certification processes, and strong
collaboration with industry stakeholders, the FAA operates the
most complex and the safest airspace system in the world.
Civil aviation manufacturing is vital to the U.S. economy. Last
year, civil aviation supported 11.8 million jobs, accounted for $1.5
trillion in total economic activity, and contributed 5.4 percent to
the U.S. GDP. Civil aircraft manufacturing represents a top U.S.
net export. Between 2009 and 2012, the growth in new civilian
commercial aircraft sales in both domestic and overseas markets
averaged 9.2 percent per year, outpacing the overall U.S. economic
growth. That underlies the fact that people around the world buy
and rely on U.S. aviation products because the FAA sets the gold
standard for aircraft design and manufacture.
For more than 50 years, FAA has certified all civil aviation aircraft, aircraft engines, propellers, and parts that operate in the
U.S. airspace. FAA has played a key role in the safe operation and
growth of the aviation industry. The FAA oversees the life cycle of
an aircraft, from design and manufacture to the operation and
maintenance of the aircraft, once it enters service. As the aviation
industry continues to grow, it is incumbent upon us to improve our
processes and make them as efficient and effective as possible,
while maintaining the highest safety standards.
The FAA Modernization and Reform Act of 2012 contained a provision, section 312, that required the FAA to work with industry
and representativeswith industry representatives, and to develop
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recommendations to reform the aircraft certification process. The
FAA and industry agreed on six recommendations that we believe
will streamline and re-engineer the certification processes. FAA developed an implementation plan that mapped the recommendations
to 14 agency initiatives.
Since the original release of the Implementation Plan in January
of 2013, we have made progress on all of the initiatives. And to assure transparency on our progress, we post an update on the FAA
Web site every 6 months. The next update will be published by the
end of this month.
FAA encourages and facilitates the growth of U.S. aviation manufacturers, both domestically and internationally. We continue to
authorize expansion of production facilities in the U.S., and ensure
that we have sufficient resources to oversee domestic manufacturing.
We have bilateral aviation safety agreements with over 47 countries, including an agreement with the European Union that covers
28 nations in Europe. These agreements allow U.S. manufacturers
to export their products and expand their business all around the
globe.
The agreements also allow aircraft and components produced in
other countries to be imported for use in U.S. products. But products manufactured in other countries must still meet FAA safety
standards to operate in the U.S. We ensure the safety of all civil
aviation components and aircraft that operate in our airspace,
wherever they are produced.
Bilateral agreements also allow foreign manufacturers to establish production facilities in the U.S., which creates additional jobs
and stimulates local economies. FAA recently issued a U.S. production certificate to Embraer to establish a manufacturing facility in
Florida. Airbus also recently opened a manufacturing facility in
Mobile, Alabama, through an extension of its European production
approval.
In this era of growing technological sophistication and
globalization, we collaborate with our industry partners to more efficiently oversee the certification and production process. We use a
risk-based approach to improve aviation safety by focusing our resources on the areas of highest risk.
And to leverage our workforce, we use the designee system,
which was established by Congress in 1938, and is critical to the
success and effectiveness of the certification process. The designee
program plays a critical role in our ability to efficiently certify the
wide range of aviation products designed and manufactured in the
U.S.
There are currently over 600 engineers in the aircraft certification service, and over 200 inspectors. But we have over 5,000 individual designees, and over 80 organizational designations. Without the designee program, we could not complete the volume of
work we have today or in the future. Assuring that we have a robust and successful delegation system is imperative to the continued growth of domestic aviation.
Aviation is a constantly evolving industry, and our certification
process must evolve with that industry. We know that we cannot
remain static. We continue to work with our industry partners to
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foster innovation and economic development so the United States
will remain the global leader in aerospace.
Mr. Chairman, that concludes my testimony for today. I look forward to answering any questions.
Mr. LOBIONDO. We thank you very much. Next we are pleased
to welcome back Dr. Gerald Dillingham, Director of Physical Infrastructure Issues for the U.S. Government Accountability Office.
Dr. Dillingham, you are recognized.
Dr. DILLINGHAM. Thank you, Mr. Chairman, Ranking Member
Larsen, Chairman Shuster, members of the subcommittee.
We have conducted several reviews examining the efficiency of
FAAs aircraft certification and approval processes, and industrys
concerns about inconsistent regulatory interpretation. FAA has implemented several initiatives to address these longstanding issues,
but they do persist.
As the ranking member noted, Congress established requirements in sections 312 and 313 of the 2012 FAA Reauthorization
Act to spur additional actions on these items. In response to those
requirements, FAA chartered two rulemaking committees: one on
the aircraft certification process, and another on the consistency of
regulatory interpretation. Both committees produced a series of recommendations to assist FAA in addressing these issues.
My statement today focuses on, one, FAAs progress in implementing the certification process and regulatory consistency recommendations; and, two, the challenges affecting successful implementation, and how they might be addressed.
Regarding the certification process recommendations, FAA has
established 14 initiatives to address these recommendations. These
initiatives include developing a comprehensive roadmap for major
change initiatives; improving the project sequencing process; and
updating the aircraft certification regulations. Most of these initiatives are scheduled to be completed within the next 3 years.
However, FAA has established performance metrics for only 5 of
the 14 initiatives, and has not developed metrics to measure the
overall effectiveness of the collective efforts. These metrics are essential in helping FAA and the industry determine whether these
initiatives are leading to improvements.
Moreover, although several initiatives are said to be on track, we
are concerned that FAA expects to miss interim milestones for two
of the most critical initiatives, due to concerns raised by the unions
representing inspectors and engineers. Missing these milestones increases the risk of delays in scheduled implementation of the initiatives.
Turning to the regulatory consistency recommendations, FAA
has begun implementing these recommendations. In its July 2013
Report to Congress, FAA included a preliminary plan for implementing these recommendations. FAA has indicated that its final
plan would include an implementation strategy, assign responsibilities to individuals and offices, and establish milestones and measures of effectiveness. The plan is now projected to be completed
next month, which is about 8 months beyond the initial target
date.
Looking ahead to potential implementation challenges, FAA will
likely be under increased pressure to establish more efficient proc-
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esses as new aircraft materials, aircraft types, and NextGen avionics are introduced into the National Airspace System. FAA could
significantly increase its chances of improving its processes and
successfully adapting to changes in the industry by working to address some key challenges.
Specifically, FAA should focus on, one, identifying the necessary
resources to sustain these efforts when faced with fiscal pressures.
Two, making the cultural shift required to implement a risk-based
approach in making certification and approval decisions. This shift
necessitates buy-in, support, and accountability throughout the
agency, from the highest FAA management levels, to the designees
and safety inspectors in the field. Additionally, FAA must ensure
early and continuous involvement of industry stakeholders, and establish and use performance metrics that measure outcomes, rather than outputs, to help show what is actually being achieved
through these initiatives, and to hold those responsible for implementation accountable for the results.
Thank you, Mr. Chairman. This concludes my statement.
Mr. LOBIONDO. Thank you very much. Dr. Dillingham, what
you covered a lot of territory there, I am trying to sort of digest
some of that. Pretty concerning.
But whatcan you sum up what you would say are the biggest
challenges the FAA faces in implementation and recommendations
related to sections 312 and 313 of the Modernization and Reform
Act?
Dr. DILLINGHAM. Yes, sir, Mr. Chairman. I think the recommendations that the two ARCs produced are basically a roadmap to making significant improvements in both the regulatory interpretation issues, as well as the approval issues.
I thinkleave asideassuming that the resources are availablebecause it will take some resources to implement all of the
things that FAA has on its platebut a major issue is the cultural
change that is involved in this. FAA is moving from the way it
used to do business, where you had a more hands-on approach, to
where they are using risk-based safety management system kinds
of principles thatit is different for the inspectors, different for the
designees. And that culture change takes time, and it is very,
veryit is a tough thing to do.
But I think, you know, implementation of the recommendations
is the first step and to be consistent with implementing those recommendations over time.
Mr. LOBIONDO. So when you talked about the FAA possibly missing these key milestones, what effect would these delays have?
What is the downside to this?
Dr. DILLINGHAM. I want to be clear that the issues that were
raised by NATCA and PASS either have been resolved or are being
resolved with collaborative discussions between FAA and the
unions. But when FAA set their initial milestones, they set them
without knowledge that they were going to need as much discussion as has been necessary with those two unions.
So, the idea is that if, in fact, FAA does miss the milestones, or
those interim milestones, the final completion date may be expanded, as well. But again, those issues have been worked, and are
continuing to be worked with the two unions.
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Mr. LOBIONDO. OK, thank you. Ms. Gilligan, the aviation manufacturing industry is constantly innovating and growing. What
steps has the FAA taken to ensure that the certification process is
able to respond to such innovation and growth, while maintaining
safety?
And I am asking this question because Mr. Larsen and I have
heard from some stakeholders, where they are very concerned that
the FAA is not keeping pace with what the real-world industry
needs, and it is potentially costing us jobs and a downturn in economic activity.
Ms. GILLIGAN. Yes, Mr. Chairman, we have certainly heard those
same concerns, that the industry, as I noted in my testimony, and
we are all well aware, the aviation industry in the U.S. is a very
innovative industry. They are always looking for ways that they
can improve their products. And we work with them hand in hand,
in being able to support that.
So, there are a couple ways that we approach staying up with
that. First, on the technical side, obviously, our standards arent
prepared to address every new innovation that comes along. And
so, we have a process in place that allows our manufacturers to innovate and to document a wayworking with FAA, to document a
way that their new whatever it is will be able to be safely introduced into the system.
So, we have always been mindful that we dont want our regulations to be a hindrance to innovation, because innovation tends to
improve safety. New concepts tend to enhance safety. So we do
have a technical way of being able to do that. So, as we move toward composites, as they bring in new avionics systems, or whatever it might be, we have a process to document with the applicant
what is the safety standard that will need to be met, and how they
will go about demonstrating that they can actually meet it. So,
technically, I think we are ready to do that.
I think yourthe bigger concern is, as has been highlighted in
some of these recommendations, and as Dr. Dillingham highlighted, we need to look differently at the work we do. We need to
think differently about what it isFAAs role, and what is the role
of the manufacturer. And I think these recommendations and the
plan that we have to implement the changes under section 312 recognize that.
So, as you have highlighted, we do have a new plan for how we
will sequence new applications. We are working with our unions to
finalize that. But it is a tool that will allow our workforce to evaluate what is the safety value of this new product. How widely does
it affect the system? Because those are important things. We want
to get safety products in, we want to get in changes that affect the
larger part of the system.
So, it will give our employees a way to prioritize the work with
nominal timeframes for when they, then, should take certain actions. In addition, we always enter agreements with our applicants,
with the manufacturer. When they bring us a new product, we and
they agree to a schedule. They tell us when they are going to
present information or tests or data, and we tell them when we will
be able to review that and return it. And we hold each other accountable to those schedules.
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So, we have learned that the better planning we can do upfront,
along with the manufacturer, the more successful we and they can
be at managing those projects. So we are approaching it, I think,
from a number of ways to just try to continually be more efficient.
Mr. LOBIONDO. Mr. Larsen?
Mr. LARSEN. Thank you, Mr. Chairman. Can you discuss a little
bit about the inspectors workload increasing beyond their
headcount, especially as it relates to managing the demand for that
oversight, while accelerating the use of ODAs? Can you put it in
that context? And then, maybe outside of that context, as well?
Ms. GILLIGAN. No, I think that is exactly the context. So, again,
as I said, this industry is very innovative. And the Federal workforce and the resources that we have will always be limited. I appreciate Dr. Dillingham putting aside the question of resources.
But, unfortunately, we really cant.
So, given what we know to be the resources we have available,
that is why the FAA is turning toward this risk-based approach.
We want our employees working on and overseeing those elements
of design and manufacture that have the highest safety risk, and
we want to use our designees, the thousands of people who have
been designated to work on behalf of the Administrator, to take
care of those morethe more well understood, the more mundane
activities that are a regular part of certifying products. We think
that that is the right balance.
So, the approach that we are taking is for our employees to focus
on those high-risk elements, things like new applications of composites, for example. That is something that we, at the FAA, want
to work with our manufacturers on closely. But the fundamental of
physics for flight are very well understood. And approvals of systems and designs that meet those fundamentals can certainly be
handled by designees on our behalf.
Mr. LARSEN. You mentioned thatto Mr. LoBiondo, Chairman
LoBiondo, a few examples. But can you just be just even more crystal clear about the specific actions that FAA has taken to provide
more clarity on what activities would be delegated, specific activities would be delegated?
Ms. GILLIGAN. Yes. The approach that we are putting in place is
for our engineers, actually, to assume that the project can be delegated, and that then they must really look at what are the highrisk elements, and they must document why it is theywe, FAA
need to retain certain elements for our own approval. And I think
it isas Dr. Dillingham indicated, it is a different way to think
about the process. There are many, many very highly skilled designees throughout the system. They have very much the same
training as our engineers, and they are competent to make findings
on our behalf.
So, it is really up to the FAA to determine what are those unique
characteristics, those particularly high-risk elements, the new and
novel applications where the FAA needs to retain that determination. And, other than that, we should allow for designees to make
findings on our behalf.
Mr. LARSEN. Dr. Dillingham, in your testimony last October you
explained FAA had not developed performance measures to track
the success of improvements that the agency makes in its certifi-
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cation process. Today you described that continued lack of performance measure as a missed opportunity. Why would you call this a
missed opportunity?
Dr. DILLINGHAM. Mr. Larsen, the reason we called it a missed opportunity, it relates to the adage of, you know, success builds upon
success. And a couple of things are associated with that.
As FAA moves forward and implements the various recommendations that are associated with approval and certification, and it has
some success in improving those processes, that, to the extent that
the industry is made aware of that, to the extent that FAA can
point to, with metrics, that success is being achieved, that increases the likelihood, as FAA moves forward with what could be
some more difficult changes along the change management chain,
there is the idea that this can happen, this can make a difference,
and you are more likely to get industry buy-in withwhen you
move towards that risk management, change management that
would be necessary to overhaul the whole process.
Mr. LARSEN. Yes, good. That is fine. Thank you very much, and
I yield back.
Mr. LOBIONDO. Chairman Shuster, thank you for joining us.
Mr. SHUSTER. Thank you very much, Mr. LoBiondo. I am confused. The FAA comes before us and says they are moving in a certain direction. Mr. Dillingham tells us that this risk-based approach, for instance, that they are not moving fast enough, or you
are not moving in that way. Industry tells me that they dont
sensethere is no sense of urgency they see moving towards this,
and that is where they want to move to.
So, Mr. Dillingham, are they moving to a risk-based approach, or
is it just so slow that it is going to take years and years to get
there?
Dr. DILLINGHAM. They are absolutely moving towards a riskbased approach, not only in this area, but in many other areas that
FAA has oversight over. Data-based risk management, safety management systems, all those things are the new FAA.
I think what you hear, and what we hear, is that it may not be
happening fast enough, or, in some cases, what we just talked
about a moment ago is that communications can be improved so
that industry and others can see that this is going on. And I think
it is important to recognize thatand we have said this a number
of times, and others have said itthat cultural change is not an
overnight thing. It is going to take some time. We know it has been
some time
Mr. SHUSTER. How long, 20 years?
Dr. DILLINGHAM. Well, I cant put a date on it, Mr. Chairman.
But change is taking place. But, as we just said, sometimes it
is
Mr. SHUSTER. Well, that is my concern, that we are going to lose
our lead in the industry if we dont make these changes.
The other thing that I have heard over and over again is an inconsistency throughout the country of the FAA. So people shop the
different regions to find somebody that is going to be easier to deal
with, not sacrifice safety, but just be able to move through the
process.
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The other thing that I heard just recently, a small rebuild firm,
they take small aircraft and they rebuild them, they get it done
quicker and cheaper, or less expensive, in other countries. Now, I
can get my head around why Brazil may be faster, because they
are an emerging economy. Or Canada has to deal with a giant
right next door to them, so they are nimble and fast. But when
they tell me they are taking their planes to Germany because it is
easier to deal with, less expensive, more efficient, I cant understand that. Germany is a country that is loaded with regulations.
But they are able to do it.
So can you talk to me aboutyou said the FAA is working with
their partners. But why would an American firm go to Germany to
do a rebuild on a plane, when it should be doing it right here, in
America?
Ms. GILLIGAN. Mr. Chairman, I am not familiar with that example. And, if you would, I would ask that we talk to your staff, because I would like to look at that one, in particular, because we
and the Germans have exactly the same standards. We have a bilateral agreement. And through that agreement, they accept when
FAA has certified a product, and we accept when the Europeans
have certified a product.
So, it is an example I am not particularly familiar with, and will
definitely be glad to look into it, and get back to you with what
those specifics might be.
Mr. SHUSTER. Right, and I am pretty confident we can get a
number of those. But, again, if we have the same standards, it has
to come down to the process and the people, as they apply the
standards, it seems to me. You know, and that is something I
talked about. Throughout the United States I hear that they shop
around to the different regions, where they know that it is a more
efficient process. Can you talk about standardization across the
FAA regions?
Ms. GILLIGAN. Yes, sir. We also, as you know, from the reauthorization bill, we did have a direction to look at how to improve
standardization. The recommendations that came from that committee are really quite all-encompassing, and they are much more
robust, much broader, than the recommendations that came, as it
related to aircraft certification process.
Standardization is an important initiative, and we have focused
on that. And, actually, I think we have made good improvements
over time. We have put in place opportunities and tools to elevate
issues or questions if at a particular field office there is a disagreement between the applicant and our inspector. We have a process
in place to elevate that to get an accurate and consistent answer.
That can take time, and so we are looking at how we can refine
that.
The recommendations on improving consistency, the fundamental
one is to start with a much broader database that will allow us to
integrate all of the information about a particular regulation, for
example, so that our inspector or engineer, and the industry, can
go to a single source and find out what is all the information to
help them understand how to implement or how to apply that regulation.
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We have a prototype program underthat will be underway in
the fall, which I find very exciting, that is ayou know, new technology has allowed us to find ways that we can search the many
databases that we already have to start to address that particular
concern. And I think you are going to see us starting to make real
headway on some of those initiatives.
But it is an issue that is well known to us at the FAA, and that
we are constantly working with industry to bring those to our attention. If there is inconsistency, we willwe want to work with
them, and we want to get to a single solution.
Mr. SHUSTER. Well, and then I will just finish up by saying, you
know, we really got to move fast on these things. Because I have
a great concern that we are going to lose our lead in the industry
across the board, and all the aviation industry. And we need to do
things differently. And on my watch, and on Mr. LoBiondo and Mr.
Larsens watch, I dont want to sit here and watch our aviation industry go the way of the textiles and the auto industries, and every
other industry that we put these hurdles and these burdens on
that they are not able to move forward and be innovative.
So, again, we need to consider things differently. And, you know,
one of the things I sit here today and think about is, it has been
customary for as long as I have been in Congress, we always let
the administration come up and testify first, and industry goes second. I think we need to take into consideration letting industry go
first to help the Members here understand the problems, so we can
have example after example, so that the administration comes before us and then defends itself, and hears these problems firsthand.
So, that is something we need to take and consider. We need to
do a different approach across the board on everything we do when
it comes to aviation. And again, we are going to be doing that here
in the next months and years. Thank you.
Mr. LOBIONDO. Well, Mr. Chairman, with your permission, this
is going to be a big focus of what we do with the reauthorization
bill, to try to understand how all this is coming together, and then
with very specific language make sure that we can keep ourselves
on the cutting edge of things. So thank you.
Ms. Johnson?
Ms. EDDIE BERNICE JOHNSON OF TEXAS. Thank you very much,
Mr. Chairman, and thanks to both of our witnesses for being here.
As I have listened to the dialogue, it appears to me that you
could easily say that staffing resources and funding necessary to
both maintain safety and make these ambitious improvements
could be a problem. Has the agency grasped the fact that you
might have to do more with less?
Ms. GILLIGAN. Congresswoman, absolutely. We believeand Congress has always been very supportive of the aviation safety program, and we appreciate that. But we are also realistic, and we
read the newspaper, and we know there are pressures on the Federal budget. And that is exactly why we are pursuing some of the
initiatives that we have been talking about. We want to make sure
that our technical experts are focused on those areas of highest
risk, and that we at the FAA are overseeing the safety of those programs.
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And it is important to keep in mind it really is the manufacturers responsibility to assure that they are designing and building a
safe product. It is the airline operators responsibility to provide
safe transportation. The role for FAA is to set the standards that
allow them to do that, and then make sure that they are meeting
those standards. And we believe that we can manage our resources
to effectively continue to build on our safety mission. I think our
record is clear. We are very good at what we do now, and we intend
to maintain that.
Ms. EDDIE BERNICE JOHNSON OF TEXAS. Are you current with
the reports that you are supposed to send to Congress on your
progress?
Ms. GILLIGAN. Yes, maam. I believe at this point we are. The followup reports are not required to be submitted to Congress. That
is why we are posting them on our Web site, so that we and the
industry can track our progress.
But asthe reports related to certification, I believe, have been
properly submitted.
Ms. EDDIE BERNICE JOHNSON OF TEXAS. What would you consider your major handicap right now in trying to get up to par?
Ms. GILLIGAN. Well, I think the challenges are as we have been
discussing. Bringing all of our workforce along on this change is
something that, as leaders, we are required to do. But, as Dr.
Dillingham has suggested, it is a challenge.
Employees are comfortable doing work as they have done it in
the past, and as they understand it. And it is up to us to make sure
they are properly trained and have the tools ready to be able to
make these changes. We believe we are putting those kinds of tools
and training in place, and that, in fact, the employees, our engineers and inspectors, will be able to focus on those higher risk
areas, and allow designees to perform other activities on our behalf.
Ms. EDDIE BERNICE JOHNSON OF TEXAS. Thank you very much.
Dr. Dillingham, prior GAO studies dating back to 2004 raised
some concerns about the strength of FAAs oversight of designers,
including FAAs staff workload. Can you provide us some of the
specifics of those concerns, and how you see the progress being
made?
Dr. DILLINGHAM. Yes, maam. When we first looked at the designees and the organizational delegation issues, our concerns were
that FAA may not have enough resources to adequately oversee the
actual designees, and that, in fact, some of the designees were not
actually trained as they should have been to do the job that they
were being asked to do. And it was a question of whetherhow difficult it was for FAA to remove those designees when it was determined that they were not meeting the standards.
Since that time, those issues have been addressed by FAA, and
they are continuing to be addressed by FAA and industry as well.
So those issues are on the wane.
Ms. EDDIE BERNICE JOHNSON OF TEXAS. Thank you very much.
Thank you, Mr. Chairman.
Mr. LOBIONDO. Mr. Meadows is not back yet. Mr. Ribble?
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Mr. RIBBLE. Thank you, Mr. Chairman. Thank you both for being
here this morning. I just really have one question I wanted to address to Ms. Gilligan.
Thank you for being here. The FAA air certification serviceI
am quoting out of page 3 on your written testimonythe FAA aircraft certification service has both a high volume and wide range
of certification applications under review at any given time. In fiscal year 2013 alone, the FAA approved 189 revisions to aircraft
type certificates, 440 new supplemental type certificates, STCs, for
aircraft components, and an additional 397 amended STCs, and
over 2,200 parts manufacturer approvals for replacement parts on
aircraft.
I am curious. Do you know how many of these approvals were
done with the ODA certification process?
Ms. GILLIGAN. I dont offhand, sir, but I am sure we can get you
that data.
Mr. RIBBLE. Could you give me your take on how the ODA is
working?
Ms. GILLIGAN. Yes. We are very encouraged by how it is working.
We think that there are some that have been very successful. Certainly the larger manufacturers that we see are able to implement
them more effectively so far.
I think one of the concerns you may have heard is that it needs
to be a scalable process, and we agree with that. So we are looking
at how we can continue to improve the use of the organizational
delegation, because we do see it as a tool in the future that allows
us to delegate even more of the decisionof the findings of compliance.
So, I think we are learning as we go. I think we have seen some,
again, that have been very successful, and there are still improvements that can be made.
Mr. RIBBLE. In your opinion, is the ODA pretty much fully implemented now?
Ms. GILLIGAN. I think
Mr. RIBBLE. And why wouldnt you use it, if it is not?
Ms. GILLIGAN. Well, again, I think it is fully implemented at
some of the larger manufacturers, when they have applied for it,
and they have put in place the process that is necessary for it.
I know we have heard concerns raised by some of our smaller
manufacturers, that it is overwhelming for them to put in place,
and so they are not pursuing it. And that, I think, is something we
need to continue to work with, those manufacturers, to scale it so
that it is appropriate for their needs, so that we and they can take
better advantage of it.
Mr. RIBBLE. OK. Thank you very much.
And, Mr. Chairman, I yield back.
Mr. LOBIONDO. Mr. Nolan?
Mr. NOLAN. Thank you, Mr. Chairman. I just got a short statement and a couple of things.
One is I want to add my concern to the concern expressed by
other members of this committee, with regard to the need to expedite the certification process, the need to findI am not sure it was
addressed, but, you know, better training and education programs
for the workforce that is necessary for this industry, and express
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my concern about the FAA workforce and the workload that is required to meet this incredibly rising demand.
My question is this committee and the Congress here this past
year passed a new regulatory regime for the manufacturers of
small aircrafts. And, Ms. Gilligan, I would appreciate if you would
kind of update us on how that is progressing. That is very important to many of us, including those up in Duluth, Minnesota, where
Cirrus Manufacturing exists, and it is doing a remarkably good job
in creating a new aircraft, both for the domestic and the international market. Thank you, please.
Ms. GILLIGAN. Yes, sir. Part 23, the rewrite of part 23, is an extremely important initiative for the Administrator and our Deputy
Administrator. It is also a first of its kind project, to take an entire
part of our regulations and rewrite all of it.
As you might imagine, there is a lot of interaction among all the
parts. And as we do this, we want to be certain that we are improving the certification process, and not losing any of the safety requirements that we have in place. We have a very dedicated team
led by one of our executives in Kansas City, who is responsible for
small aircraft certification. He brings a personal dedication to this
project.
The schedule is somewhat slower than the legislation had envisioned. But going through notice and comment rulemaking, and
then through final rulemaking, it does take a period of time. But
we monitor this project on a monthly basis at our executive level.
I keep the Administrator informed, as well.
We are meeting our internal schedule. We are identifying and
solving issues that come along, so the team can continue to make
progress. And we will be glad to keep you and your staff informed
of the progress as we proceed.
Mr. NOLAN. Thank you. Can you give us a date as to when you
project
Ms. GILLIGAN. Yes, sir. The final rule is right now planned for
I believe it is December of 2017. That is later than the statute,
which called for a final rule by the end of 2015. But again, first,
the complexities of writing the rule, and then getting it published
for notice and comment, and considering those comments, and finalizing the project, will take a considerably longer period of time
than was anticipated in the statute.
We arewe have a detailed schedule. We are meeting that
schedule at this point. And, again, we will be glad to keep you informed about that schedule.
Mr. NOLAN. Well, thank you for that. And, please, I know it
means a lot to all the members of this committee to have that
whole process be a focus of important attention for your agency to
get that done as soon as possible. Thank you.
Mr. LOBIONDO. Thank you, Mr. Nolan.
Mr. Rodney Davis?
Mr. DAVIS. Thank you, Mr. Chairman. Ms. Gilligan, thank you
again for being here. It is great to follow the chairman and Mr.
Nolan, because they took my two questions for you.
Ms. GILLIGAN. I appreciate their efforts on my behalf.
Mr. DAVIS. But I do want to also let you know I too am concerned
with the section 313 implementation, or lack thereof in many cases.
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And I am also concerned, as Mr. Nolan was, with getting the Small
Airplane Revitalization Act, you know, implementation moving
along much more quickly.
So, I will move to Dr. Dillingham. Welcome again, sir. It is good
to speak with you again. Your testimony reinforces that change is
tough, and the FAAs workforce seems to be a little reluctant to implement some significant changes to the way business is currently
being done there. The GAO usually provides good recommendations. But what can you recommend to change the culture of an
agency?
Dr. DILLINGHAM. Thank you, sir. What we have found from our
work is that italthough change takes time, if in fact there is commitment and accountability for that change from the top all the
way through to the field locations that have to implement it, that
is helpful. If that change is incentivized, that is also helpful.
It is, in fact, a tough thing to do. But what we said earlier this
morning is that when FAA has some successes, those successes
need to be communicated broadly and widely. And FAA is also currently working with major industry partners to implement that cultural change, which is also very critical.
So, we are guardedly optimistic that, although it may take some
time, it will, in fact, happen.
Mr. DAVIS. OK. My next question. Industry is concerned about
the FAAs lack of performance measures. Nine out of fourteen of
those measures have yet to be developed. What is the overarching
factor holding the FAA back from establishing these performance
measures?
Ms. GILLIGAN. I would be glad to answer that one. I think, as Dr.
Dillingham has identified, first of all, performance metrics are very
difficult. And so, we are working with industry to try to develop
what are the right ways to measure this.
I understand there was a discussion within the last 2 weeks between our aircraft certification leadership and industry leaders.
And, again, what we tend to come down to are counting things.
How many of these did we do, or how many of that did we do? And
I think, as Dr. Dillinghams testimony makes clear, that is not a
measure of your performance, or the effectiveness of your changes.
It is simply a number. And what we are trying to do is understand
how do you really measure that if we make this change, it has effectively made the process more efficient.
So, we will continue to work with industry so that we and they
can reach an agreement on these are the right measures. You
know, if you implement this thing, and you get to this outcome, we
will know we were successful. And that is what we are struggling
with.
Mr. DAVIS. Well, and that is what we are struggling with, too,
as policymakers. We want to see the performance measures put in
place, but I dont want to create a new bureaucracy that discusses
performance measures and how to measure performance measures,
and et cetera, et cetera. So that is our concern, too.
And, Dr. Dillingham, issues with the FAA certification approval
process has obviously resulted in delays and higher costs for the
aviation industry. And as a policymaker, I want to push the FAA
to become more efficient more quickly. What are some rec-
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ommendations you have for future FAA reauthorizations that
would get us this result?
Dr. DILLINGHAM. I think theprobably the most important thing,
and probably the most efficient thing that could be done, is to make
sure that those recommendations that have been made, those initiatives that have been identified to address those recommendations, that there is actual implementation of those, that there is accountability associated with them.
The recommendations that are on the table from the 2012 reauthorization are pretty robust, and cover most, ifcover most of all
the issues that have been brought to the Congress over the last few
years, and have been identified by our study. So that is the first
thing, is do what is already on the table. Accountability and oversight, as this hearing is doing.
Mr. DAVIS. Well, thank you both for being here, and thank you
for your testimony.
I yield back, Mr. Chairman.
Mr. LOBIONDO. Thank you. Ms. Titus?
Ms. TITUS. Thank you, Mr. Chairman. When you go last you get
to hear all the questions, so you can kind of look for themes. And
it seems to me that every question kind of has the same theme:
FAA is understaffed, it is too slow, it is too old fashioned, it cant
keep up with the industry, and it just needs more time.
Well, the industry doesnt have a lot of time. They are moving
rapidly. And one of the areas where you see this that impacts domestic aviation is in the unmanned aircraft development. Nevada
I represent Las Vegaswas one of the six States, as you know,
chosen as a test site for the integration of these UAVs, and we are
no stranger to that. We have Creech Air Force Base, we have the
Predator, we have the Reaper, we are ready to go. But it doesnt
seem like a lot of people are starting to test, because of the uncertainty. They dont know what the rules are, or what is going to
happen.
So, Ms. Gilligan, could you kind of update us on how the test site
program is progressing, and thewhat is happening with the development of the UAV small vehicle rule that you all were going
to develop? Tell us where we are with that, so we can kind of go
back and give folks some reassurance that we are moving forward
in this area.
Ms. GILLIGAN. I would be glad to, Congresswoman. As you know,
four of the test sites are already up and operational, and we are
working closely with them to understand what research and development initiatives they are undertaking, and how we can learn
from and take advantage of that data.
As you know, we will be sharing the data that they collect. We
will be using the Technical Center up in New Jersey to help us do
the analysis of all of that data. And all of that will help inform
what standards, both for operation and as well as for design and
manufacture, that we need to put in place.
On the manufacturing side, or the design side, we actually have
approved two aircraft systems already. They are operating up in
Alaska. They started last summer. They are operating this summer. Obviously, that is a low-risk environment. But they arewe
are learning a lot about the design requirements that we had for
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those systems that can help us better understand how to set the
design standards for sort of a more robust operation.
And the small UAS rule is makingI will tell youmaking great
headway. We have completed our review at the FAA. It is in the
executive review process now. It is a top initiative for our Administrator. And so, I think we will see somewe are hoping to see
strong support in getting it through the process and published, so
we can begin to get comments. And I think that will begin to answer a lot of the questions that I know some of the applicants at
the test sites are concerned about.
Ms. TITUS. And will that be this year? Next year? By Christmas?
What
Ms. GILLIGAN. Our schedule calls for it to befor the notice to
be published by the end of this year. And, as I said, the Administrator is pushing hard to see if we can beat that schedule.
Ms. TITUS. I appreciate that. And my second part of the question
is this is going to open up a whole new industry, new myriad of
products and procedures that will fall under your domain. How do
you see this affecting the other work that you do that we have been
talking about this morning? Have you got the personnel and the resources to take this part of the industry on, and still keep up with
these other things that have been asked about?
Ms. GILLIGAN. Well, certainly, in future budget years we will
need to look at whether this is driving a new need for resources,
both in numbers and in skill sets. We may need a different kind
of skilled employee, as well. And so that will be addressed in the
budget process.
But in the meantime, yes, I think we are confident, as you know,
I believe, at the test centers we are arranging four designations
there, for us to be able to designate representatives to be able to
make safety findings at the test sites, so that those operations can
be determined to meet the appropriate safety standard without additional FAA oversight. So we are looking at how we can take advantage of the designee system to begin the support for UAS systems right now, from the ground up.
Ms. TITUS. I hope that will be some kind of standardization, and
we wont see a problem of shopping the test sites, like we heard
earlier about shopping the different areas because different regional offices do different quality of work.
Doctor, were you going to say something?
Dr. DILLINGHAM. Yes, I wanted to just note that this subcommittee has asked us to conduct a pretty comprehensive review
of UAS integration into the NAS. And, as a part of that review, a
lot of focus is on research and development. So we are going to be
looking at the issues and concerns of the test sites, and how that
process is going. We are going to be looking at what are going to
be the resource needs and timelines involved in integrating UAS
into the NAS.
So, hopefully, by the end of the year or early next year, we will
have that comprehensive report for this subcommittee.
Ms. TITUS. Thank you. Would you keep our office updated as you
move forward with that study?
Dr. DILLINGHAM. Absolutely.
Ms. TITUS. Thank you. Thank you, Mr. Chairman.
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Mr. LOBIONDO. Mr. Hanna?
Mr. HANNA. Thank you. Thank you, Ms. Titus. I have Griffiss Air
Force Base, which is one of the 6, and the 174th, and of course,
Watertown.
But I have a different question. Correct me if Im wrong, Ms.
Gilligan, but you stated that you have adequate resources. And
Mr.Dr. Dillingham has said that there are cultural issues. We
have heard from the FAA director of flight standards that there is
a backlog of over 1,000 certifications and authorizations for the national airspace. And then we go on to findto hear from the manufacturers the FAA has made some progress towards addressing
this is Mr. Dillinghams statement, but we are hearingbut this
committee is hearing the absolute opposite from interested parties
and stakeholders. So, if you have adequate resources, maybe I
misheard you.
The other problemthe other thing I want to ask you, just fundamentally, is there a difference between a risk-based approach
that you talk about, and the outcome-based approach that Dr.
Dillingham talks about? You both use a different language, but it
isnt clear to me that you mean the same thing. So I am kind of
curious.
Ms. GILLIGAN. I think actually, Congressman, there are two
parts of the process.
When we talk about a risk-based approach, we mean that we
want to make sure that we are focusedwe a the FAA, the limited
resources that we have are identifying where a manufacturer may
be adding a new element to their process, or a new product that
might introduce risk into the system that we havent fully understood and analyzed. And that is the project that our inspectors or
our engineers should be focused on. That is how we determine
what work we should take on and determine what work can be left
to the designees who work on our behalf to make certain findings.
That is kind of at the front end of the process.
Mr. HANNA. Dr. Dillingham, would you like to comment about
that? Am I reading something into this that doesnt exist? You talk
about the cultural issues. And, of course, Ms. Gilligan admitted
that there were cultural changes going on that present some issues,
which are, I guess, understandable. But how big a barrier to getting this whole thing moving forward is there between those two
elements?
Dr. DILLINGHAM. It is hard to put an exact percentage on it. But
let me talk a little bit, and see if I can add some clarity to what
we said before.
The resource issue for FAA isit is there. There is a resource
issue. And thatI think that is why the designee program, which
has been going on for, you know, many years now, and now being
expanded to organizational designees, is there to supplement those
resources and to address that resource constraint.
When we talk about culture change, we are talking about the difference between what FAA has traditionally done, where they had
the inspectors who could go out and touch each wheel, touch each
cert that it needed to, that was a part of its portfolio, as well as
do its other surveillance activities. That day has long since passed.
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And the idea now is to move towards, you know, delegating more
of those kinds of things to the industry with FAA oversight.
The outcome versus output that we were talking about referred
more toor at least in part to the metrics, that when FAA talks
about, you know, We are implementing various and sundry recommendations, andor, We are installing certain amounts of
equipment, we are saying that that is not the measure. The measure is what difference does it make in the certification process.
How much more efficientwhat are the gains for industry?
And so, all of those concepts are sort of
Mr. HANNA. So you are kind of saying to me thatcorrect me if
I am wrongthat they have lost their ability to be practical in
their work process, that they have become excessively bureaucratic.
Is that close, or
Dr. DILLINGHAM. I wouldnt say that. I think they are being practical by recognizing that they cant do everything that is required
of them, and moving towards this ODA process in concert with industry. I think I would say it that way.
Mr. HANNA. Thank you. My time has expired.
Mr. LOBIONDO. Thank you. Mr. Meadows?
Mr. MEADOWS. Thank you, Mr. Chairman.
Dr. Dillingham, I want to come to you with regards to the certification process. And if you could help me understand a little bit better, I guess, sequencing and why that has worked or has not
worked.
Dr. DILLINGHAM. I think theone of the major concerns with the
project sequencing was that it was
Mr. MEADOWS. Now you are saying was. It probably should be
is.
Dr. DILLINGHAM. Yes, is.
Mr. MEADOWS. OK.
Dr. DILLINGHAM. Is.
Mr. MEADOWS. All right.
Dr. DILLINGHAM. Thator at least the concern has been expressed is that it took ait came from headquarters, or was centrally located, whereas anotheran alternative would be to be
more locally based, where the decisions could be made quicker and
more efficiently.
Mr. MEADOWS. So, do you see the prioritization program as being
an improvement?
Dr. DILLINGHAM. I would say it is an improvement. And although
it is early on in the process, I think the efforts that FAA has made
to work with the unions and work with industry will make it get
better in the future, as we go on.
Mr. MEADOWS. So right now, though, in terms of if I were a civil
aerospace company, would I know with certainty whether I was
going to get a certification or not, based on either first come first
servedhow do I plan? I mean can I properly plan? Because it
doesnt appear that I could.
Ms. GILLIGAN. If I may, Congressman, I think you have identified
exactly what we have seen, as well.
The issue is notit is a little less about timing, and much more
about predictability. So the process that we had in place notified
the applicant every 30 or 60 daysI forget what the interval was
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whether we could or could not begin their project until we could.
And so, the dilemma for the manufacturer was they didnt know if
it was going to be in 60 days or 6 months.
The new process
Mr. MEADOWS. So you are telling me there is no certainty whatsoever, and we are investing millions and millions of dollars, and
they have to hope that one day they get a letter and say, Oh, by
the way, we are going to certify you, or start the process?
Ms. GILLIGAN. So that was the way we were doing it. And we
were also tryingwe had a metric to approve projects within, I believe, a 90-day timeline. And for most of the projects, we actually
made that. But the applicant may not know that that was what the
measure was.
What the new process will do is allow for that predictability.
When we receive the application, the engineer involved will analyze
howwhat the value of the project is, from a safety perspective,
and some of the other criteria that we have in place, and determine
when that project can be turned on. The applicant will be given a
project number, which means that the project is underway. And
they can use their designees in the interim. We can enter the
agreement for what the schedule will be.
What we are trying to address is that concern about predictability, so that the applicant, the manufacturers, can know when
they can expect that the project will move forward. We believe that
that will go a long way to improvingor to addressing the concerns.
Mr. MEADOWS. OK. You identified thisam I correct, Ms.
Dillingham? You identified this back inGilligan, I apologizein
2011. Is that correct? The FAA recognized that this was a problem,
and then again in 2012.
Ms. GILLIGAN. Well, we had the sequencing program in place for
a number of years. And throughout all that time we were always
trying to find ways to improve it and enhance it. So we moved it
away from where the local office would say, No, we dont have the
technical skills so we have to delay your project, to a national approach, where we could see does thedo we have the appropriate
skills somewhere around the country, so that we can get the project
started more quickly?
So, over time we have made improvements. And this will be the
next
Mr. MEADOWS. OK. Tell me why you are not going to meet your
milestone. I think that isaccording to testimony, it looks like
that you are not going to meet the milestone for implementation
this year. Is that correct?
Ms. GILLIGAN. No, sir. We actually disagree with Dr. Dillingham.
It is true we had interim milestones in order to get this in place
by the end of the year. One of the interim milestones has been delayed because of additional consultation with our unions. But we
are still focused on implementing this by the end of this calendar
year.
Mr. MEADOWS. Yes, but the milestone was July. So we have got
8 more days. So that milestone, you are going to meet that milestone, as well?
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Ms. GILLIGAN. No, the final milestone for implementation has
been the end of the
Mr. MEADOWS. The milestones are exactly that, they go
Ms. GILLIGAN. Yes
Mr. MEADOWS [continuing]. One step at a time
Ms. GILLIGAN. Yes.
Mr. MEADOWS [continuing]. So you dont have to wait until the
end.
Ms. GILLIGAN. I agree.
Mr. MEADOWS. So you are not meeting your milestones. So he
would be correct.
Ms. GILLIGAN. There is the interim milestone that has been delayed. We acknowledge that, and we agree. We are now working,
though, to assure that we have itthe program in place by the end
of the year.
Mr. MEADOWS. We will be waiting for those results. I appreciate
the patience of the Chair.
Mr. LOBIONDO. Mr. Williams?
Mr. WILLIAMS. Thank you, Mr. Chairman. I want to thank both
of you for being here today, as always.
I am from Texas. And Texas is home to two major rotorcraft
manufacturers, Bell Helicopter and Airbus Helicopters. My question today concern the challenges in the certification. We have
talked about that, installation of equipment and safety-enhancing
technology to rotorcraft, compared to large transport airplanes and
small airplanes.
So, Dr. Dillingham, my question would be to you. In the course
of your review of the certification process, have you found any particular concerns or frustrations expressed by rotorcraft manufacturers? And if so, can you discuss the concerns and why they are happening?
Dr. DILLINGHAM. I think, to the extent that we have looked at
certification and had a chance to do some interviews, the rotorcraft
manufacturers had similar concerns as did the regular aircraft
manufacturers, in terms of delays or different regulatory interpretations.
I think the thingthe example that I remember was more on the
international front, in which an approval was granted by FAA
here, but when that rotorcraft was taken overseas, the time that
it took, and the cost, was similar to what the original cost and time
was for the FAA certification. And the concern was expressed that
this was sort of duplicating and having a very negative effect on
that manufacturer.
We propose to look at that issue for rotorcraft manufacturers and
others, as we pursue the committees request to look at international issues and how international certification is going.
Mr. WILLIAMS. I know they would appreciate that. And just one
additional question. Are there any initiatives that could help address some of these things we are talking about, like making
progress on reducing regulatory inconsistency, which we talked
about? Are there any best practices that could be learned from directorates like transport or small airplane?
Dr. DILLINGHAM. I think the key initiative that we have heard
from, you know, almost unanimously, is the idea of setting up this
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automated database that brings all of the regulations and all of the
guidance under one umbrella, where it can be searched by both industry and FAA inspectors, so that that inconsistency will start to
go away.
When an inspector can punch up, you know, the various and sundry ways that certifications and approvals have been made in the
past, and they dont have to start anew, or impose their own particular interpretation on something, and the next move up is if
there is a disagreement, then there is a procedure being developed
that will address that. We think that that is the most critical element necessary to move forward on regulatory interpretation.
Mr. WILLIAMS. New concept. Make it easier, right?
Dr. DILLINGHAM. Yes, sir.
Mr. WILLIAMS. I appreciate you being here, and I yield back, Mr.
Chairman.
Mr. LOBIONDO. Mr. Lipinski?
Mr. LIPINSKI. Thank you, Mr. Chairman. I want to thank you for
holding this hearing on domestic aviation manufacturing. And very
pleased that our subcommittee continues to remain active in monitoring of the work to improve FAAs regulatory process, and also
the domestic manufacturing sector.
I am a big promoter of American manufacturing. Aircraft manufacturing is also especially important to me, and maybe it goes
back to 35, 40 years ago, when I played little league baseball at
Aircraft Gear Field in Bedford Park. I know how importantespecially aviation aircraft manufacturing is to the American economy.
Now, we are all mindful that the FAA reauthorization is coming
up. We need to get that done next year, and welcome this opportunity to learn more about what has been done and what is being
done.
And one of the biggest issues that I focused on during my time
on this subcommittee is streamlining the FAAs certification process to make sure that manufacturers can move innovative, safetyenhancing ideas from the design table to assembly line into the
cockpit without months of delays and unnecessary costs. I was the
lead Democrat cosponsor of the Small Airplane Revitalization Act,
which requires the FAA to streamline its certification process of
small aircraft by December 2015, and I hope to learn how Congress
can continue to support other parts of the aviation manufacturing
sector.
Whether it is implementing this bill, developing regulatory certainty under section 312, or finalizing the competition to develop a
new aviation gas, progress in this area is absolutely necessary to
improve aviation efficiency, enhance safety, and help support
Americas status as a global leader in aviation, which leads me into
a question for Ms. Gilligan.
As you know, the American aviation industry, the FAA included,
has set the standard for innovation, quality, and safety. But there
are always challenges to our leadership on this. You noted that the
FAA facilitates the import and export of aircraft components in a
global economy, and cited the establishment of bilateral agreements with 47 countries. I am interested to learn what efforts the
FAA has made to advance the reputation and standing of its stand-
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ards in American aviation products generally, and how our bilateral partners view the FAAs type certifications.
So, how do the FAAs efforts measure up in comparison to those
of its bilateral agreement partners? Are there ways this can be improved? And also, you know, what constraints in improving this
does the FAA face? I think this is all vitally important that we
make sure that America remains the gold standard here. So just
interested in what the FAA is doing right now in this area.
Ms. GILLIGAN. Thank you, Congressman. First, I think it is quite
widely accepted that the actual standards for design and manufacture of aircraft originated in the United States, and in only a few
other countries around the world. And theywecontinue to lead
the world in setting what is the safety standard against which one
designs and builds an aircraft. So I dont think there is really a
question about whether the U.S. standards for design are the gold
standards.
I do think what we are seeing is a phenomena around the world,
where other countries are expanding, trying to build their own
technical expertise in aviation safety. And we have seen countries
where they are taking a more active part in the review of product
certification before they allow that product into their country.
Those authorities have the same responsibility we in the FAA have
of determining that a product that is coming into their country is
safe.
Now, we believe that that will change with time, and that those
emerging economies will understand that it can be much more efficient for them to take advantage of the expertise of the U.S., or if
it is a European product, of the Europeans. Now, just as we and
the Europeans have already made thatcome to that realization.
So, when the U.S. certifies aa product, rather, it is not at all uncommon for the Europeans to issue their approval the very same
day, or the next day, because we and they have worked together
with the manufacturer throughout that project to determine compliance with the appropriate safety standards.
Now, we continue to work with the bilateral partners, who are
at times, we believe, interposing or asking for more than is necessary for them to accept a U.S. approval. And we are making
headway.
Mr. LIPINSKI. Not to interrupt you, I am just running out of time.
I just want to ask one other question. Why is there going to be a
2-year delay? What is the cause of the 2-year delay in the implementation of the Small Airplane Revitalization Act?
Ms. GILLIGAN. Yes, sir. The deadline that was given in the statute, in our opinion, was notwas just too difficult to meet. The
part 23 is a very big, complex part of our rules. And a complete
rewrite isthis is really the first time we have ever taken on a
project like this.
So, what we want to make sure is that we are, in fact, streamlining the process, but that we are not reducing the level of safety
in those standards. We have a dedicated team that is working hard
to keep this project moving forward. But we do need to do the rewrite, we need to put it out for comment. We do expect that the
industry will want a fair amount of time, because it is such a complex project. And then we need to consider those comments, and
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make whatever changes are necessary to the final rule. And that,
we believe, will take an additional 2 years.
Mr. LIPINSKI. And I want toI am over time. I thank the chairman for letting me go here. But I just want to say I would like to
follow up later on, you know, what we can do here, so that we can
move this process forward more quickly. Thank you.
Ms. GILLIGAN. We will be glad to follow up with you, sir.
Mr. LOBIONDO. OK. Mr. Bucshon?
Dr. BUCSHON. First of all, thank you both for being here. It is
very much appreciated. I haveyou know, most of my questions
have been answered, except for thewhat I am hearing a lot of is
that part of the delay process is a cultural change that is required at the FAA, at a Federal agency. And almost every Federal
agency I have ever had testify in front of Congress, they have said
the same thing.
And so, at some point, you know, my question basically is, you
know, the leadership at the FAA knows what needs to be done,
Congress has mandated it, put it into law. And so, what are the
cultural impediments to change? I mean if you were at a private
companyand I know I am not naive enough to think that it is not
a totally fair comparisonand a new CEO came in, and there was
going to be a cultural shift, it doesnt happen overnight, first of all.
But people that are working at the company that dont feel comfortable with that working environment leave orand, at the end
of the day, ones that are impediments to that cultural shift are
fired.
So, what is the realI mean what is the impediment? You mentioned, you know, you are in discussions with your unions about,
you knowdiscussions with the unions about what? I mean there
needs to be a cultural change at the FAA. It is mandated by Congress. It is put into law. What is the discussion?
So, yes or no, is that the main impediment to a cultural change
at the FAA?
Ms. GILLIGAN. No, sir. I think that the reality is change is always difficult. But I can assure you that the Administrator has, as
one of his significant initiatives, that FAA will move to a risk-based
decisionmaking process. The leadership at FAA understands that,
and the workforce is actually coming to understand what that
means for them.
So, we have, I think, takenwe have made good steps in bringing this change. And we just needI think Dr. Dillinghams point
is we need to manage it actively. We need to not assume this will
just work its way out. And that is why the action plans that we
have, for example, with the milestones are a way that we can continue to measure that we are making progress at bringing about
this change.
Some of the recommendations are that we need to change the
training we provide to our inspectors, or to our engineers, so they
can better understand what it means to identify risk, and how to
mitigate it, and those kinds of things. We agree. That training is
under development. And that will be provided. That will beginexcuse me. That will support this continued move forward toward
this kind of approach.
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I can tell you, broadly, the workforce wants to make this move.
They believe that there are risks that they can understand and
mitigate, and they want to focus on that. They are a conservative
workforce, in that when you are a safety professional, change introduces risk. And you want to make sure, before you make the
change, that you are doing the right thing. So that is what we have
towe have to bring them along to be confident that they have the
skills to make thisto take this kind of an
Dr. BUCSHON. And I am not criticizing the workforce at all. I am
just saying that, you know, thatthemselves, but maybe the leadership of the workforce maybe I am slightly criticizing. But, you
know, how long is this type of thingbecause weI do hear almost
every Federal agency say the same thing. When Congress has put
something in the law, set a deadline, and the deadline is not met,
they say it is because there is this big, difficult cultural shift that
has to happen, and we have to make all these changes.
And then, frequently, hide behind safety issues. Well, it is a safety issue because if we quickly change this process, you know, it
might impair safety, and there might be somethingI mean this
is a common narrative. And frankly, I think, you know, Congress
gets frustrated by that, both political parties, sometimes, when, you
know, when you have an issue like this.
And, clearly, when industry is frustratedand, honestly, when
American competitiveness is at risk, not only in aviation, but
across our manufacturing sector, whenyou know, when we cant
quickly changeI mean just use FDA as an example. I was a medical doctor before. Businesses in Indiana, in my district, are introducing their new products in foreign markets before they are in the
United States. Why? Because they cant get approval fast enough
to introduce them here. It is a travesty when you have American
manufacturers cant produce their own products and release them
in their own country because a Federal agency, you know, has cultural changes that have to be made, and that areI think somebody mentioned might be 20 years ago.
For example, Cessna is building planes in China. You know? And
so I would just implore the FAA to do everything they can to comply with what Congress has asked FAA to do. Lets help American
manufacturing and continue to make America the best place in the
world to manufacture. I yield back.
Mr. LOBIONDO. Thank you. Ms. Gilligan, you touched on this
with, I think, Ms. Titus, but I would like you to try to expand a
little bit. Given the many different types of small, unmanned aircraft, will each need to be certified, each platform need to be certified? Or how are you going toI know you started this in Alaska,
but this is an area where technology is moving very quickly. Can
you shed any light on this for us?
Ms. GILLIGAN. Yes, sir. I think, as you know in the reauthorization bill, you provided us some guidance on how to address small
UAS, up to 55 pounds. Those will be covered in the small UAS rule
that we expect to publish by the end of the year. And I think you
will see there that we have hit a good balance in terms of what the
safety standards or determinations need to be for the operation of
those small systems.
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For larger systemsand, as you know, these systems can be as
large as any of our standard aircraftwe believe that there will be
safety design requirements and manufacturing requirements that
will be appropriate. The two certifications that we issued for the
aircraft systems up in Alaska gave us an opportunity to look at our
standards and to identify those that would seem appropriate to
apply to this kind of system.
So, for example, we have a number of design standards that
apply to making the aircraft safe for people or crew who are in the
aircraft. Obviously, those standards dont need to apply in this setting. So that is what we are really working on.
We have three other applicants for certification right now in our
L.A. office. We believe that there may be another one or two that
will come along. And we will work through that process to identify
what are the applicable standards, and what are standards that
they dont need to meet in order to demonstrate that the system
is safe, both in design and for manufacture.
Mr. LOBIONDO. OK. I would like to thank you, Ms. Gilligan, Dr.
Dillingham. We will recess briefly while the first panel moves out,
and welcome the second panel.
[Recess.]
Mr. LOBIONDO. I would like to welcome our second panel today.
And our second panel includes Ms. Marion Blakey, president and
CEO of Aerospace Industries Association of America; Mr. Pete
Bunce, president and CEO of General Aviation Manufacturers Association; Mr. Joe Brown, president of Hartzell Propellers; and Mr.
Dave Cox, lead administrator of Air Washington project.
Ms. Blakey, you are now recognized.
TESTIMONY OF MARION C. BLAKEY, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, AEROSPACE INDUSTRIES ASSOCIATION OF AMERICA; PETER J. BUNCE, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, GENERAL AVIATION MANUFACTURERS ASSOCIATION; JOSEPH W. BROWN, PRESIDENT,
HARTZELL PROPELLER INC., AND CHIEF OPERATING OFFICER, TAILWIND TECHNOLOGIES; AND DAVE COX, LEAD ADMINISTRATOR, AIR WASHINGTON PROJECT, AND DEAN OF
INSTRUCTION, TECHNICAL EDUCATION DIVISION, SPOKANE
COMMUNITY COLLEGE
Ms. BLAKEY. Thank you, Mr. Chairman. And I do want to thank

not only our chairman, but Ranking Member Larsen. I am delighted to see Congressman Lipinski here, and others that I know
we have worked very closely with, in terms of aviation safety and
manufacturing issues.
I am also very pleased to be able to discuss our views, from the
standpoint of the Aerospace Industries Association on the state of
domestic aircraft manufacturing and, frankly, the challenges that
we face in an increasingly competitive global market.
We are proud that commercial aviation manufacturing remains
the leading contributing sector to U.S. net exports, and that domestic aircraft sales continue to climb. Last year, we had a positive
trade balance of $72 billion, our best in history. This healthy export
record underscores our industrys deserved reputation for both safety and quality.
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But it is also a testament to an industry that invests billions of
dollars in R&D in order to keep our competitive edge. The use of
higher strength, lighter weight materials, nano technologies, 3D
printing, and cleaner biofuels all help to make our aircraft more
durable and efficient, and illustrate our commitment to being second to none.
But as much as the United States leads the pack, we face stiff
competition in a global market, often by foreign firms that are
highly subsidized by their governments. However, if we have the
support of strong U.S. Government policies to streamline the regulatory environment, provide equitable financing terms, and invest
in the modernization of our air transportation infrastructure, our
industry can then continue to do what it does best: innovate, compete, and create jobs for literally hundreds of thousands of highskilled workers.
Let me discuss some of the challenges our industry faces. First,
we appreciate this committees strong support for streamlining
FAAs aircraft certification processes. Now it is imperative that the
FAA follow through and ensure, at the working level, that their organization designation authorization, ODA, is used as intended.
This will allow the FAA to take advantage of industry expertise,
and increase the collaboration and partnership that leads to improved aviation safety.
Secondly, we are concerned by the millions of dollars it costs our
manufacturers to get other nations to certify equipment that the
FAA has already certified. We are eager to work with the FAA to
improve the acceptance of FAA-approved beyond our own borders.
Lets turn to the big issue before Congress right now, and that
is the reauthorization of the Export-Import Bank of the United
States. I cant stress enough that our industry counts on Ex-Im
guarantees and credit assistance to compete with international
sales on a level playing field. Thousands of U.S. workers who build
our wide-body and general aviation aircraft and helicopters at companies up and down the supply chain owe their very jobs to that
support. If Congress fails to reauthorize Ex-Im by September 30th,
there will be fewer workers at plants across our country, and more
at the plants of foreign countries. It is just that simple.
The future of our aviation infrastructure is another major concern. As this committee well knows, because you all have worked
on this a great deal, our Nations air transportation system is experiencing serious capacity challenges. Ongoing NextGen modernization efforts are making a huge difference in helping to reduce congestion, delays, and improve safety. But to be fully effective,
NextGen must be fully funded.
Unfortunately, FAAs NextGen budget request for the coming
year is $200 million below the administrations request of only 2
years ago. If sequestration returns in fiscal year 2016, we urge the
Congress to take a hard look at needed investments for the future,
and ensure that NextGen doesnt fall behind.
We also hope to see additional progress toward the integration
of the beneficial use of unmanned aircraft systems in the domestic
airspace. The FAA has taken initial steps on UAS integration, but
more needs to be done. For example, the agency needs to ensure
that the proposed rule for the development of equipment and oper-
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ating standards for small UAS remains on track for later this year,
and isnt further delayed.
Finally, for our industry to meet future market demand, we need
to address an aging workforce with a major commitment to STEM
education and customized workforce training.
In conclusion, we believe that U.S. aviation manufacturers are in
a strong competitive position today. With appropriate policies to
spur innovation, improve air transportation infrastructure, and replenish the workforce, our industry can continue to lead the world
in aviation progress. Thank you.
Mr. LOBIONDO. Thank you.
Mr. Bunce, you are recognized.
Mr. BUNCE. Thank you, Chairman LoBiondo, Mr. Lipinski. I just
want to again commend this committee for the deep dive that you
continue to do into certification, and our ability to be able to get
product to market. It is vitally important to us, as manufacturers,
and for the jobs that we provide in the Nation.
It is a lot of jobs, 1.2 million jobs. And the world has really
changed since the economic downturn. We now export 50 percent
in virtually every segment of general aviation. So even piston aircraft, 50 percent of those aircraft are going overseas, because it is
an expanding market. It is a growing pie. The rest of the world is
waking up to general aviation, as well as commercial aviation. And
that is why I would like to start with just voicing my extreme frustration in what we heard in the first panel today.
The United States Congress unanimously last year passed the
Small Airplane Revitalization Act. Both chambers, unanimously.
The President signed into law the Small Airplane Revitalization
Act Thanksgiving last year. It requires that the FAA have this rule
done by December of next year, 2015. And yet, we have the Associate Administrator come up here this morning and say, No, we
are going to be 2 years late.
Now, we have worked on this whole initiative since back in 2007.
So it is nothing new. And the FAA coined the term, Twice the
safety at half the cost. So think about that. We are talking about
doubling the amount of safety in the light end of general aviation
and reducing the cost by half to both the Government and industry,
and yet the bureaucracy is saying, We dont care what you, Congress, say. We dont care what the President says. We are going to
get it done when we want to get it done, and it is going to be 2
years late. And that is exactly what we have to put up with with
industry.
One of the questions earlier today was predictability. We have no
predictability. And when you are in a development program that
you are trying to certify aircraft, and your burn rate in a large aircraft program is $10 million a month, and yet you dont have any
predictability of when it is going to get done, how are you going to
be profitable in this industry? How are you going to continue to
employ folks in this industry? We have got to make this change.
And to Chairman Shusters comment about 20 years for cultural
change, we dont have that amount of time. And we heard about
this continually in the last panel, cultural change. We have got to
be able to give tools to managers to drive this change. This is the
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new world. We are not going to get more resources for the FAA.
We have got to let managers manage.
We have got to measure the workforce. There is resistance within
the workforce to be individually measured. We have got to
incentivize these different offices, so that those that underperform
and are not allowing industry to use their delegation authorities
dont get the same bonuses that those that are at the other end of
the scale, that are allowing us to use those.
And we have to be able to force the FAA to do things that they
tell industry that they are going to do, such as sequencing, as you
heard this morning. Again, they are well behind, after talking
about it for 2 years.
Now, on the consistency of regulatory interpretation, the 313 portion that you all wrote into the law in the last reauthorization. Our
frustration is very high there, too. A thousand authorizations and
certifications are awaiting through the flight standards portion of
the FAA right now. Think about that. A thousand road blocks are
in place. Now, this is for new charter operators, it is for new flight
schools to be able to go and train more pilots. And it is for repair
stations. Each one of those is directly translatable to jobs.
And now you put that in the context of the fact that you have
an FAA that duplicates expertise in many offices around the country. And if you have one inspector that says, OK, it is all right to
do it, another inspector in another office can say, No, I dont accept what that FAA inspector said, that is not good enough for me,
this is the way I look at it, how are we in industry supposed to
do business in an environment like that?
So it is vitally important to us of the work that this committee
is doing, the great questions that you all ask in the previous panel,
and we ask you to continue the pressure, because it is only through
pressure from the United States Congress that is going to drive the
change that we need for industry to be able to keep moving in aviation. Thank you, Mr. Chairman.
Mr. LOBIONDO. Thanks. I wish next time you could be a little
more clear about how you feel on this whole thing.
[Laughter.]
Mr. LOBIONDO. Very well done, sharing a lot of our frustrations,
capsulizing it. That is part of what we are continuing to attempt
to do here.
Mr. Brown, you are recognized.
Mr. BROWN. Thank you, Mr. Chairman. Thank you, Mr. Lipinski.
I am delighted to be here today. It is an honor. Frankly, let me
start
Mr. LOBIONDO. Could you pull your mic just a little closer,
please?
Mr. BROWN. I will.
Mr. LOBIONDO. Thank you.
Mr. BROWN. So I said some thank-yous, and that it was an
honor. And I would like to start by saying I really think we are
talking about the right things. I am a small manufacturer in Ohio,
and this subject matter resonates with me perfectly, and I find that
very encouraging.
So, the company that I am representing here primarily today is
called Hartzell Propeller. It has a storied history. It was founded
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to furnish propellers to the Wright Brothers. Our first recorded
sale is 1917. We are approaching 100 years of manufacturing in
Piqua, Ohio. We have high-tech jobs, engineers and machinists,
machinists who bring home $75,000 a year in income, own Harleys,
have fishing camps, live pretty well.
We are a global leader, and our business in the last 5 years has
really, really had to reposition, as a global exporter. Sales retracted
tremendously during the recession, North American sales. And we
have filled that in with sales to foreign countries. We have about
the same revenues today that we had at the peak, but our export
sales have gone from 30 percent to 50 percent of total revenue. And
that means that we are competing in a much more complex environment than what we have been accustomed to over almost a century of business.
Why is it complex? Because we have to go make markets for ourselves in over 30 different countries. We have to engage with customers there. We have to engage with civil authorities there. We
have to develop product support, systems, and propeller shops
there. Much more complicated. In a little company in Ohio with
300 people, we have two native Chinese speakers on our payroll to
help us make a market, and to help us engage with the civil aviation authorities.
We travel to about 30 countries a year, and export to all of them.
And significantly, in order to make those exports, we need foreign
validations. Since 2007, we have gotten approximately 300 foreign
validations, 150 in the last 2 years. So we are fully invested and
growing our sales internationally. We are all in.
I would like to just say I am a big proponent of Ex-Im financing
for our customers. We dont engage it directly, but I have these
validations because I am following my customers to market, and
my customers appreciate Ex-Im. It levels the playing field, and it
creates great jobs in the States.
I would like to turn quickly to the fact that, in order to get to
market, whether it be in the United States or in a foreign country,
we must get some form of certification. In the United States we get
a type certificate, just like an air frame or an engine manufacturer.
And then, to sell internationally, that type certificate needs to be
validated. So we are engaged regularly with the FAA and civil authorities across the world, and we have an ODA to do that.
I think the ODA subject was very interesting today, particularly
from the first panel. I think ours is about 7 years old. We were
asked to adopt the ODA system, and we traded one delegation system for another. And after 7 years, I think the main point for me
is that we have about the same level of service, which was good to
begin with, but it costs us more to get the job done. ODAs are more
expensive. So, if you dont get better efficiency, it is a net loss to
the business. And I think that we can make ODAs more efficient.
And in Q&A I hope I will have a chance to opine on that some
more.
Let me talk also about foreign validations. It takes an enormous
amount of time to have a foreign country tell us that the FAA did
a good job. We have put 300 validation requests in, we have gotten
300 affirmatives. FAAs bat 1,000 with their type certificates. But
it takes us, on average, 21 weeks to receive that validation letter.
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Now, our design cycles are often 8 to 9 months. So think about a
5-month additional delay to follow a customer into a foreign market. It is very, very significant. And some of the longest validation
processes come from bilateral countries. So I think this is a wonderful opportunity; I would appreciate your help.
Let me just finish with the AVGAS initiative. I make propellers.
We put a lot of them on piston aircraft. This Congress, this committee, and the FAA have been super in driving a transition process for a fuel that does not use lead. We have lots to do, but we
are making great progress. And in Q&A it is my hope that I could
encourage us to stay on point. It is critical to the light end of general aviation. Thank you.
Mr. LOBIONDO. Thank you, Mr. Brown.
Mr. Dave Cox, you are on.
Mr. COX. Thank you, Mr. Chairman. Thank you, Congressman
Larsen, for inviting me here today. Very anxious to talk to
Mr. LOBIONDO. Could you pull the microphone up a little bit,
please? Thanks.
Mr. COX. Very anxious to talk to the committee today about a
very exciting project that we have been a part of for the last 3
years, going on our fourth year now, the Air Washington project.
And if you look at the screen, I will use three short slideswill not
create death by PowerPoint here todayto illustrate what the
project is, and hopefully answer some interesting questions that
the committee might have for me.
[Slide]
First of all, innext slidein early 2011, the college system in
the State of Washington recognized a need to look for a method to
train our workforce, specifically in aerospace. The slide on the
screen right now illustrates the scope of the Air Washington
project. It is a project awarded through the U.S. Department of
Labor. For us it is a $20 million, 3-year initial project, focused on
the aerospace industry and aerospace workforce in the State of
Washington. What is not on this slideand I wont read it to the
committee, but what is not on this slide is Washington State actually produces 25 percent of all aerospace exports for this country.
So it is a pretty big deal for us in the State of Washington. Next
slide, please.
[Slide]
In preparation for my testimony, I understood thatand I am
happy to talk about why we have had such a successful project
with this grant. And I am going to zero in on five different points
that myself and my staff and managers have identified universally
as the reasons why this project has been so well received by both
business industry and our workforce.
First of all, the fingerprint business. We matched, in this case,
a significant grant opportunity to the fingerprint of the State of
Washington. Again, I mentioned that 25 percent of all U.S. exports
come fromin aerospacecome from the State of Washington.
This was a form-fit, square peg-square hole of a project to a need.
Second was industry connection. We did not move forward with
this project, we didnt even start thinking about this project, without being closely connected with all of our industries in our area,
in our State. And that is from large, from the Boeings, all the way
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down to the small Unitechs, even stretching over the border to
Idaho.
Number three, State government connection. This is one of the
what I will claim is one of the advantages of working in the State
of Washington. In the community college system we have an organized community college system for the State. It was a relatively
easy process for us to get a consensus of the colleges that needed
towanted to and needed to be a part of the consortium for this
project, and work within that construct. So State government and
the organization of the State community college system really facilitated us getting off to a good start.
Fourth, project management. This is something we have learned
over time, how to manage a project of this size and this scope. A
consortia of colleges is somewhat like cat herding, depends on the
day, sometimes there is more cats, sometimes there is fewer. But
we learned how to do this pretty effectively, and we are pretty
happy to share those lessons learned and best practices with anybody who is willing to listen to us.
And finally, navigation services. This is really a connection with
the WIBs, our workforce development centers in the State. They
are critical functions for the project that have, quite frankly, validated to business and industry what we are doing, how we are
doing it, and the successes we are having, so that the buy-in, if you
will, or the trust level of business and industry is extremely high
with this project and what we are doing.
So, those are the five points that I would be happy to expand on
in Q&A, when we get a chance. And at this point I would like to
finish my spoken testimony.
Mr. DAVIS [presiding]. Thank you to each of you for your testimony. I will start with my questions.
And I enjoyed your lively testimony, Mr. Bunce. I do share some
concern, as you saw with the last panel, with Chairman LoBiondo,
and I think the rest of my colleagues here, on what you have to
go through as an industry.
Ms. Blakey, I enjoyed reading in your testimony about an example of a 50-year-old regulation that your folks have to make
changes to a configuration, just to pass the test, and then have the
configuration put back in its normal state. I am interested, Ms.
Blakey. What recommendation do you have, besides the fact that
we haveI have cosponsored legislation tocalled the Bipartisan
Regulatory Improvement Act. Is anything short of a new law to go
through these outdated regulationscan you give us a recommendation that can fix this now?
Ms. BLAKEY. Well, certainly, the work that is being done on the
small aircraft regulations is something that we all have great energy behind, and we think this kind of comprehensive overhaul is
a great thing.
You also heard how much time it is taking, and how complicated
it is.
Mr. DAVIS. Yes.
Ms. BLAKEY. So I think we, as industry, need to also call to your
attention specific areas, specific regulations and problems that we
think need to be addressed, where FAA does not seem to be able
to do this on their own.
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I will say, though, that the FAA, through the CAST program and
others, does collaborate. And the ARCs that they set up with industry can be highly effective. So I would call attention to that, because I think there is a great deal of incentive on both sides to try
to set aside regulations that are simply no longer valid in this day
and age.
Mr. DAVIS. So quicker implementation of 313 is obvious.
Ms. BLAKEY. Absolutely.
Mr. DAVIS. All right. Mr. Bunce?
Mr. BUNCE. Mr. Davis, just to reiterate Ms. Blakeys point, so
what the Small Airplane Revitalization Act did was, in this instance that you spoke of, where we had to modify an engine and
make it do something it physically is not able to do, to be able to
meet a test point that is for engines that were built 20 years ago
that dont have sophisticated electronic controls and software, it is
just crazy.
So what this new method of doing business allows for is it lets
international regulators sit down with industry and keep regulations fresh. So if there is new technology, or new engines, or new
composites that come online, all the regulators get together with
industry and say, This is the method of compliance that you can
use here.
So that is why this is so important to get it right and get it out
on the small airplane side, because the next step is to expand it
to rotorcraft. And, as Ms. Blakey just said, we want to extend it
to the commercial side, because it is the right way to do it, and we
can keep regulations fresh, and we dont have to rule-make continually, which we all know takes way too long. We can keep them
fresh this way, and it will be tremendously helpful for regulator
and for the industry.
Mr. DAVIS. Thank you. And, Mr. Brown, you said in your testimony you would like to expand on your frustrations with the ODA
process. Feel free to do so.
Mr. BROWN. Well, I would say that our relationship with the
FAA is pretty healthy. We have a great relationship with the folks
in our ACO. They understand what we are trying to do.
But we put in an ODA because we were asked to. And I think
my issue is that approximately 7 years later we should not be talking about the hard-to-gain efficiencies because of culture change.
Had somebody said to me, If you put this system in and spend
more annually to manage it, but 7 years from now we will be talking about whether we can make an efficiency 3 years forward, I
would have said, No, thanks. I will stick with my current program.
So, you know, I consider them allies, but I also consider them
with a narrative that doesnt quite work, and that is that there is
no culture change problem. It is a will to apply the delegation authorization, as written. And I will just give you some quick examples.
I think Ms. Gilligan hit it on the head when she said the assumption is a project is delegated. That should be the governing
theme.
I would also suggest that if a company has an ODA project
whose testing qualification methods are the typical way to take a
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product to market for that company, then by nature the project
cannot be new and novel. We have had occasions where we are
going to use exactly the same test and qual methods that we normally use to get a product to market, but we have been told that
our product is new and novel. And that makes no sense to me. And
we could be very specific in that regard.
And then, last and finally, I guess I would say that there has to
be a passionate advocate, or more than one, in the FAA who is likely to say something like, ODAs are a competitive advantage for
our leading manufacturers. They are winning in the world, and
ODAs are part of that strategy. They will be efficient, offices will
deploy them effectively, and the measurements will say so. But I
dont hear that language. The language I hear is, We are working
on culture change. And that leaves me feeling uncertain whether
or not the payoff is to be found.
Mr. DAVIS. The gentleman from Illinois is recognized for 5 minutes.
Mr. LIPINSKI. Thank you, Mr. Chairman. Since everyone enjoyed
Mr. Bunces comments earlier, I think I will give you an opportunity to expand on that, and see if anyone, any of the other witnesses want to speak to this. The frustration is obvious amongst
all of you and all of us here, up on the dais, with some of the issues
with the FAA.
So I want to just ask, as I said, Mr. Bunce first, and see if anyone else has a comment. What is the issue thatwhat is going on
at the FAA, from your perspective? What can we do as a legislative
body here, besides, you know, maintaining our oversight? Is there
anything else that can be done? We have the FAA reauthorization
coming up, as I mentioned. You see anything else that we can do
to help the FAAI will put it nicelyhelp the FAA work better on
some of these issues? And certainly the 2-year delay is really unacceptable. But what do you think can be done? What do you recommend?
Mr. BUNCE. Thank you, Mr. Lipinski. Industry has delivered everything that is required for the FAA to issue a notice of proposed
rulemaking by the end of this year, beginning of next year, for part
23. This would mean that the rule actually could be out by December of next year.
What we are hearing is delaying this process are the lawyers
withinside the FAA. It is notthis has nothing to do with the
other issue, the cultural change and the certification. This has to
do with the legal entities within the FAA that think this is major
sweeping change.
And, in fact, because the process had stalled so much was one
of the reasons why we were so encouraged that Congress took up
the issue of passing the law, versus allowing just the rulemaking
process to trudge along, or go through this long slog.
So, I think it would be particularly helpful for us toin response
back to the answers that the Associate Administrator gave in the
first panel, was to ask the questions why. What is the delay? Because industry has delivered our first portion enough to be able to
give the notice of proposed rulemaking. And I actually think that
we, industry, will be able to provide very valuable feedback if they
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got the NPRM out, to be able to meet the intent of the law and
get it out by the end of next year.
As far as the larger cultural change issue with certification is
concerned, again, trying to drive the workforce and the managers
to be managers. We hadone of our aircraft manufacturers from
Olney, Texas, that builds crop dusters was in here yesterday. And
it was great to see. We had over 100 staffers show up for a briefing
on Ex-Im Bank, and how important6 of the 7 aircraft on his line
are all Ex-Im-financed. So, right now, with seven airplanes being
built, six of them are Ex-Im-financed. And the point he was making
is he will go and submit a program to his aircraft certification office, and the manager, instead of managing it and saying, This is
the risk-based approach we want to take, just throws it over to the
engineers and says, What do you think?
So, basically, there isnt this process of trying to drive change,
and trying to give them an overall direction and goal of how can
we get this program through quickly, and how can we improve
safety as we go through it. It is just, OK, what do you guys think?
And then, what that encourages is it encourages the engineers
to go down with the sharp pencil and do what they have always
done, which is be down there in every little minute detail, instead
of using resources productively and saying, I am going to be a
safety manager of systems, and when a company has demonstrated its capability, as Mr. Browns company has, with their
ODA, to say they know how to do it, lets overall manage their safety processes to make sure that they can consistently do that, but
not be down in that level of detail. And I think that will really help
us.
Mr. LIPINSKI. Ms. Blakey?
Ms. BLAKEY. May I add to this just a moment? Because the ODA
was put in place in 2005 on my watch, when I was FAA Administrator. I believe in it tremendously, and our manufacturers believe
it can be highly effective, if fully implemented. So please understand that. We also experience a tremendous amount of frustration
at the fact that it is not being fully implemented.
I give as an example we met just the other day with the Secretary of Transportation, with several of our manufacturers. One of
them has experienced 200 days of delay on a rotorcraft project, and
said that if the decision were before him again, he would have contacted the manufacturer, taking the jobs and the certification outside the country, because this is the failure of ODA in actual fact.
So this is real.
I do want, though, to point out, having been in that position, and
understanding some of the dynamics, that when we talk about culture change we have to remember that the FAA is a highly unionized workforce, with highly effective unions. And leadership there
matters, as well as leadership within the FAAs own management
team. Trying to put in place incentives and accountability is something that has to be worked on both sides. And at this point I do
think that we, as an industry, are advocating metrics, we are advocating specific measurements as to whether things are moving forward, and we are also advocating a gated approach so that everyone says that there are gates to be passed through, and both man-
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agement and the team that is working on it recognizes that those
are incentives, to hit those gates.
So, there are mechanisms, and I do think there are things that
you all can do in the reauthorization to help address this.
Mr. LIPINSKI. Thank you. I will yield back.
Mr. RIBBLE. Thank you, Mr. Chairman. Thanks for being here.
Mr. Brown, I am going to go ahead and start with you. Give you
a word of caution. Ten years ago I owned a commercial roofing
company just outside of Appleton, Wisconsin, and I was invited to
come and testify before a House subcommittee, and now here I am.
[Laughter.]
Mr. RIBBLE. Just a word to the wise here. You never know where
frustration can lead you.
I want to read something out of your testimony, because you
didnt do it, and I appreciate that, but I think it deserves to be
heard. On page 1, In addition to Hartzell Propeller, we own three
other aviation manufacturing businesses and employ about 1,000
people in total. Joining Hartzell Propeller and our family of companies, Hartzell Aerospace is based in Valencia, California, and manufactures cabin environmental control products and subsystems for
business, military and commercial aircraft. Mayday Manufacturing
is located in Denton, Texas, and produces specialty bushings for
the entire aviation industry. Hartzell Engine Technologies is located in Montgomery, Alabama, and manufactures aircraft starters, alternators, turbochargers and fuel pumps for general aviation
aircraft. In all of our companies, we sell globally but manufacture
all of our products in the U.S. and buy all of our materials from
U.S. producers. Thank you for doing that.
I dont thinkin many cases, I dont think American business
people hear it often enough from Members of Congress and from
their Government, the appreciation that they deserve for what they
do.
I am concerned when I sense your frustration, Mr. Bunce. You
and I have spoken a number of times, and your frustration was so
eloquently presented here this morning, without even notes. You
came well prepared. We get frustrated because Congress meets and
laws are passed, and Presidents even sign them, and then sometimes they just get ignored.
But you mentioned something, and Ms. Blakey mentioned something regarding the Export-Import Bank. Could you tell me, if you
know, approximately what percent of your business, your customerswhat percent of your customers who are purchasing from
your companies here in the U.S. are using some form of Export-Import financing? Is it a large percent? Is it a small percent?
Mr. BROWN. The answer is I dont know with the specificity that
would be helpful to this conversation, in part because, until a few
months ago, I would have never imagined this would have been an
issue in my business. Ex-Im is very, very old. It is an established
way to incent exports. And the idea that it may not be reauthorized
is new to me.
What I can tell you is that when the reauthorization came under
question, 3 or 4 of my top 10 customers told me that this was a
big deal, and that a lot of my sales in my export growth was, in
fact, flowing through their products, which were getting Ex-Im fi-
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nancing, particularly in the agricultural aircraft market, where two
of my customers are the leaders.
And they called to tell me that, in part, so I was aware, but in
part to tell me that the forecast after 2013, the month-by-month
unit forecast for their build rate is in question. And they wanted
me to understand that my assumptions for 2014I am sorry, for
2015may not be founded. We heard from Air Tractor that six of
their seven aircraft on the line right now are bound for foreign
market with Ex-Im financing attached.
So, going into 2015 we have taken a totally defensive position on
hiring, and we have cut our capital budget plan in half, project by
project. And not to be alarmist, but to be prudent. And so, I guess
my best answer for you is it is significant enough that my customers called me and said, Watch your forecast. Lets be a little
bit more cautious here, because I dont want you investing in
things I cant deliver on as your aircraft manufacturing partner.
Mr. RIBBLE. Thank you. Ms. Blakey, do you have any idea, industrywide, what role the Export-Import Bank plays?
Ms. BLAKEY. It has an enormous role to play, because essentially
it is what fills the gap, if you will, between what the commercial
banks are able to do and what, in fact, is needed. When you are
exporting, as we all are, more and more, to a wide variety of countries, some of which there simply is not available good commercial
financingin the developing world sometime the risk factors are
considered to be too high. In some cases, those customers need to
diversify their financing. And so, across the board, we find, whether it is parts manufacturers or it is full aircraft, rotorcraft, et
cetera, that it is very critical.
And remember that also, when Export-Import Bank financing
helps make a sale possible, there is the whole aftermarket, which
really isnt even calculated into the figures that are now being
used. But that keeps us selling U.S. products out there.
So, it is enormously important, and something that I could not
agree with Mr. Brown more. None of us imagined that we would
find ideological rhetoric somehow coloring what should be a very
straightforward support for Americas competitiveness and our
business community. And it is taking a while, frankly, for the business community to even realize that this is in jeopardy.
So, we are very worried about this, because September 30th is
coming very quickly.
Mr. RIBBLE. Thank you for your testimony, thank you for being
here. I yield back.
Mr. HANNA [presiding]. Ms. Blakey, we havereferring to the
Export-Import Bank for a moment longer, it has been referred to
here widely as somehow corporate cronyism. I would like you and
Mr. Brown and Mr. Bunce toif you quickly couldrespond to
that. It is not something I necessarily agree with, and even understand, frankly. The phrase doesnt exactly strike me as meaningful.
But the idea, I guess, behind it is that it helps larger companies
more than smaller companies, and thatmaybe you would like to
talk about that. Because my personal opinion isand I am a pilot,
owned a small airport, I have waited years for certifications on
planes that I have ordered. Soand I am watching the industry
that I care about die on the vine in this country, but yet we know
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that it is growing in other countries. And we have the most open
airspace in the world. We are lucky for that.
But maybe you would like to speak to any part of that.
Ms. BLAKEY. It is a phrase that isnt at all apropos or relevant,
and obviously works on talk radio. It seems to pick up a little popularity here and there. But when you think about the fact that ExIms support is going 90 percent to small businesses70 percent of
Boeing aircraft, to use our largest manufacturer, in fact, comes
from suppliers. It is not as though there is some giant entity out
there that doesnt have enormous dependence upon a lot of small
companies all over this country.
And when you look at the fact that they are trying to sell abroad
to other countries who are providing massive amounts of not just
loans, but real subsidy out there, the amount of money that Ex-Im
is providing is very meager, relative to the competitive landscape
that we face worldwide.
And it is about small businesses. The idea that we are talking
about some sort of cronyism of enormous corporations
Mr. HANNA. What you are really saying is there are thousands
of people like Mr. Browns company, Hartzell, who contribute to
these massive and hundreds of millions of dollars airplanes that
trickle all the way down the food chain, so that the basic notion
is wrongheaded. Is that fair?
Ms. BLAKEY. That is fair. The 787 stands on the shoulders of
thousands of small businesses.
Mr. HANNA. Mr. Brown?
Mr. BROWN. I wear the hat of Hartzell Propeller in one respect,
and there is no question in my mind Ex-Im generates pull-through
sales for my company.
But I also serve as COO of Tailwind Technologies, which has
these other aviation concerns, and we are deep in the supply chain
for companies like Bell Helicopter and Boeing. And when they win,
we win, period. And that is about 700 employees who did not understand how much the Ex-Im Bank was facilitating our local jobs
until it came into question. And those companies are not walking
around with their hand out.
For example, to be ready to sell to the 787 in our small businesses, we had about a million-and-a-half dollars worth of nonrecurring R&D. We paid for it. We grew our workforce and our capacity and our machining business ahead of the curve, so we were
in for about 7 multihundred-thousand-dollar machine tools, and we
hired about 15 people. We did that so that when the 787 went to
market, we could meet their schedule. That is investment. That is
market risk. That is not walking around with your hand out.
Mr. HANNA. Can I ask you, Mr. Bunce, and Mr. Cox, too? It is
implicit that the extra cost associated with this approval process,
which you have indicated isthe cost has grown, even though the
process is somewhat satisfactoryhow does thatkind of self-answered a question herebut how doeshow do you see that impacting our ability to grow our aviation industry abroad?
And, Mr. Cox, in Washington State how many of the people that
you are training are working for companiesnot Boeing, but all
other smaller companies?
Go ahead, Mr. Bunce.
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Mr. BUNCE. Well, Mr. Hanna, when we go and invest in the
ODA, and get it stood up, as Mr. Brown mentioned, it cost the companies money. But the reason they did it was on the promise that
they would be able to be more efficient to get product to market,
to have that predictability that they could control their destiny, but
when they have new and novel technology that they bring on
board, they can still go in to the FAA, have the expertise come
over, in some cases train that expertise on the project that they are
working on, and then collectively the FAA and industry go and
work this together.
And it is absolutely essential for us to be able to meet the demands of time in the market to be able to make the ODA work,
because there are no more resources available to add engineers,
like we had
Mr. HANNA. So you are paying more and getting nothing more.
Mr. BUNCE. We are paying more and, as Mr. Brown said, it is
static, at best. But in some cases, actually less.
And then, imperative in that calculation is also that training for
the workforce. The workforce at the FAA, they are good people.
They want to do the right thing. But, by nature of the fact that
they are in a bureaucracy, they are risk-averse. So they are going
to take the path that is the most conservative.
So, if we give them training to be able to say, This is what it
means in a risk-based approach, we think they can produce for us.
But that training is the key, and to let them know that they have
the backing to make the change, and that the risk doesnt fall on
each and every one of their careers, that they have the backing of
FAA management and, of course, the Congress.
Mr. HANNA. Mr. Cox? Thank you.
Mr. COX. Thank you. So, as I remember the question, it is kind
of the ratio of
Mr. HANNA. Yes, that is right.
Mr. COX [continuing]. Big employer to small employer. We have
trained through this project a little over 3,500 folks at this point
in time. Atbreaking that down, probably 500 or less are employed
by the Boeing Company in our service areas. And the vast majority
are employed by tier 1, tier 2 suppliers like Mr. Browns company,
the vast majority. That is where we find our real traction in our
State. It is not to minimize the impact of the big manufacturer, of
Boeing
Mr. HANNA. I understand.
Mr. COX. But it isreally is a driven-by-the-small-company kind
of an industry.
Mr. HANNA. OK, good. Thank you. Thank you. Thank you for
your indulgence, Ranking Member Larsen. I think that might have
even been one of your questions.
Mr. LARSEN. But I have a few more. First off, I want to commend
the panel for itstheir comments on the Export-Import Bank. Obviously, it is important in Washington State, butand it is very
important beyond aviation manufacturing, as well. And I can go
through a myriad of examples in Washington State with companies
with no relation to aviation that need Export-Import Bank because
their local bank that, you know, lives on deposits, has no idea how
to do export financing. But they have these small businesses who
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increasingly have theira lot of their business model dependent
upon export.
Mr. Cox, I have a few questions for you. So, you know, we have
talked Export-Import, and we have talked certification, all these
very important roles that they play in supporting domestic aviation. But the workforce and workforce training is important, which
is why we have asked you here. And I wanted to ask you kind of
specifically over these last 3 years, how has the demand signal for
specific kinds of aviation work changed? Or are you still doing
mainly maintenance, or mainly assembly, or mainly this, or mainly
that over the last 3 years?
Mr. COX. Probably the most significant change that I think I
have observed is in the area of composites technology. We have
seen that, we started out knowing that it was going to be important, and it has kind of proven itselfthat is, increasing in importance for what we train inside the project, and for our workforce.
So, that would be the big change.
We are probably seeing pretty stable, as compared to before need
for our aircraft, air frame, and power plant mechanic side of
thingsgeneral aviation, specifically. however, there has been an
increase in demand for assembly, for instance, with the major manufacturer, Boeing as a great example.
And then, probably a smaller but growing piece that we identified early in the development process of our proposal to the DOL
that has been a little bit surprising to me is the avionics and fiber
optics piece. Now, we kind ofback in the day, when myself and
my three colleagues put this proposal together, we kind of looked
at that and said, Yes, I think we can see something, a glimmer
of something coming on the future, or on the horizon. It turns out
that there is a pretty significant demand for those two pieces of
what we have been doing.
Mr. LARSEN. Yes, right. I dont have the exact numbers with me,
but we have looked at this in Washington State, in terms of the
supplier network, and the percentage of work they provide to the
major manufacturers of Boeing, Airbus, Embraer, and Bombardier,
and when you add up the percentage of work, it adds up to over
100 percent. The point being that suppliers are not just supplying
to one manufacturer in the State. They are supplying, many of
them, to all foura few of them to all four, certainly many of them
to at least two of the major manufacturers. So there is a real ecosystem of aviation manufacturing in the State.
Do you run into any issues with training for aone company
over the next? Or is it generalized and you let them, the employer,
do what they need to do with that employee that you provide?
Mr. COX. Less so one company over another. I mean we get fairly
specific in assembly, because that really is centric to the one company. However, in the other areas that are a focus of the project,
we really are pretty diverse, I think, in the population of businesses that we serve.
And something that you mentioned, I would also illustrate or
highlight one of the things we have seen as an indirect outcome of
this project has been an increase in the number of companies in
the State of Washington to have AS 9100 certification, and now can
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get into the market of being suppliers toyou know, tier 1 suppliers, or sub-tier 1 suppliers.
All of that kind of gets us more into staying tuned in to the general market, and identifying where we might need specific or point
issues addressed, whether it is a specific composites company, or
specific avionics company. We can kind of dive into that on a local
level. But that is the beauty of the project, the project is statewide
and it gives real flexibility to the 11 colleges that do this, to kind
of jump in and do point issue addressing, rather than a one-sizefits-all kind of an approach.
Mr. LARSEN. Yes. I see my time is up. But if you will indulge me,
Mr. Chair, I have one more question for Mr. Cox.
The subtitle of the hearing is Challenges and Opportunities.
What is your number one challenge, going forward, other than the
grant runs out at the end of the year and you need to re-up it?
Mr. COX. And even that is less of a challenge, because, again,
part of our winning strategy is the fact that the State of Washington internal government has picked up the mantle on this thing,
and is moving it forward with independent State funding to keep
it going into the future. And that was never a requirement of the
DOL, as a continuation or sustainment piece.
Our biggest challenge, I honestly think, is going to be in the navigator role. We have found that to be so, so important to building
trust, building confidence in the businesses and industries that are
going to work with us as higher education. And that is not built
in to our sustainability piece that the State is looking at. They are
looking at sustaining ourbasically, our capacity expansion that
we have created.
So, if I can figure a way out to get my navigators at my 11 collegesand actually, quite frankly, it is larger than that in our
StateI would say that is our biggest challenge.
Our win, going forward, is we have set a great example. We
have, I think, in the case of this project, shown not only our State,
but nationally, how to do one of these projects correctly. And I say
that pretty humbly, actually. But I think it is very true. Our results are proof of that. And I think, if anything, it will give confidence to law-makers like yourselves to positive consider those
types of projects
Mr. LARSEN. Sure.
Mr. COX [continuing]. In the future, and balance that against
maybe some that arent working so well.
Mr. LARSEN. All right. Great, good. Thank you. Thank you, Mr.
Chairman.
Mr. HANNA. Dr. Bucshon?
Dr. BUCSHON. Thank you. We have talked about the regulatory
climate, but I want to just take this opportunity for your industry
to discuss other impediments to American competitiveness in manufacturing.
So, Mr. Bunce, I mean, do you have any comments about maybe
what your members think in the area of taxation, and how maybe
that is having some impact on your ability to be competitive? Or
other issues, you know, other than we have talkedI think we
have talked about the regulatory impediments, but there are other
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big issues, right, out there that are making American manufacturers not as competitive as they could be?
Mr. BUNCE. Absolutely, Mr. Bucshon. Something that we have
been paying attention very closely is the accelerated depreciation,
or bonus depreciation issue that Congress just dealt with, so we
were very gratified to see that. The R&D tax credit, huge for us.
I think when you look at other nations out there, and the amount
of money that they provide or incentivize their industry to do research and development for aviation absolutely is so essential to
us. And anything that we can do to make that permanent, to be
able to go and get folks to invest in R&D, that directly translates
to new technology and new jobs out there.
And then, I think also, from the nontaxation area, just also keeping pressure on the FAA to make sure that validation programs,
as Mr. Brown mentioned, are very important. You know, obviously,
in Indiana you have got a producer of engines that is a global producer. It is very important that nations that we have a bilateral
relationship with, where we have recognized their competencies to
be able to regulate, they have recognized ours, that that is very efficient across the ocean, so that if they have a product coming in,
that we dont waste a whole bunch of FAA resources looking at it,
and vice versa, that if Mr. Browns company were to go over there,
that he very quickly can get his validation, because that delay in
time in the market has significant impact.
Dr. BUCSHON. Ms. Blakey, do you have any comments, anything
to add on other impediments to American manufacturers?
Ms. BLAKEY. Well, I would certainly foot-stomp the R&D tax
credit, which, of course, the House has supported and passed. But
we desperately need that to be in place. Corporate tax reform is
certainly a big part of what we would like to see.
But let me turn also to the need for this body and the Congress
as a whole to be supportive of areas where Americas industry really does exceed. And I do have in mind the unmanned aircraft systems. You know, we sometime get distracted by issues that surround these things when you are introducing new and disruptive
technology. But this is an area right now where this country has
an enormous lead. And we should look at it as something that is
going to bring tremendous public benefit. And I am talking about
in all sorts of areas that really matter, you know, search and rescue, firefighting, public law enforcement. There is a lot to this.
But when we realize that this technology, right now, we actually
could export as well aswe could see it grow dramatically in this
country. And we have got some pretty artificial clamps on introducing it into the NAS at this point, and also in being able to export. And we need your help and support. I will be very straight
up.
Dr. BUCSHON. Thank you. Mr. Brown, you want to comment? I
mean you have obviously tried toyou have an export market.
What do you see as some of the impediments out there? There are
some obvious ones, too, American manufacturing.
And I will make these comments before I have you answer, because I am very concerned about this. When you have companies
in Indiana like Cook Medical Group, that need to expand, and unfortunately arehave so many impediments that they decide not to
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expand in Indiana or neighboring States, that is a big problem.
And, you know, we hear this all the time, that companies right
now, as you know, are buying smaller foreign companies and then,
you know, the merged company will be based not in the United
States. This is a growing trend. It is accelerating quickly because
of our tax code. Your comments?
Mr. BROWN. I think they have largely been made. I like your
phrase, foot-stomp. I will foot-stomp the validation issue. It is
very, very significant to us. And I think putting it on the radar
today sets the stage for more discussion during reauthorization.
And I think the FAA would be very inclined to focus on the speed
with which their TCs are validated. Because, eventually, there is
a quid pro quo. And so, I think that they can be more demanding
of foreign partners.
I am a big fan of the R&D tax credit. I look at my income statement, and I make investment decisions in part because I know the
Government is incenting me to do that. Very important.
I would add, at a higher level, not just with export sales, but
with all of my sales, it would help a lot if there was greater clarity
in Washington rhetoric. In the past couple of years there have been
a number of times where what is going on here ends up in my conference room on Mondays with staff. Are we going to have an FAA
during the sequester, or are they going to be shut down? Can we
get type certificates out and validation support letters out, or not?
Can my customers sell those six airplanes out of seven with ExIm financing or not? Are we going to do accelerated rate of depreciation, or are we going to talk about jets as fat cat transport
equipment? And I guess I would say, somehow or another, we have
lost sight of the fundamental thing, which is that the U.S. aviation
industry is winning. We are the world leaders. We generate a surplus in trade. We are the good guys.
Dr. BUCSHON. I would agree with that. I just would say I personally support Ex-Im, and I realize the importance to jobs in Indiana
and in our country. And with that I yield back.
Mr. HANNA. Thank you. So we have a situation where we have
the largest exporter in our country, the biggest net beneficiary to
our balance of trade, and we are hamstringing it. If there are no
further questions, I thank the witnesses for being here today, and
for your participation. This committee stands adjourned.
[Whereupon, at 12:30 p.m., the subcommittee was adjourned.]
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Domestic Aviation Manufacturing: Challenges and Opportunities

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Domestic Aviation Manufacturing: Challenges and Opportunities

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DOMESTIC AVIATION MANUFACTURING:

CHALLENGES AND OPPORTUNITIES

JULY 23, 2014

Printed for the use of the

For sale by the Superintendent of Documents, U.S. Government Publishing Office

VerDate Aug 31 2005

10:20 Aug 12, 2015

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

New Jersey, Chairman

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10:20 Aug 12, 2015

Summary of Subject Matter ....................................................................................

PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS

PREPARED STATEMENTS SUBMITTED BY WITNESSES

SUBMISSIONS FOR THE RECORD

ADDITION TO THE RECORD

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