Globalization of Commercial Aircraft Manufacturing

This paper examines the role of industrial offset agreements in the globalization of commercial aircraft production. Particular attention is given to the manufacturing processes involved in the design and assembly of large passenger jets (100 seats or more). It is argued that the current geography of aircraft production at the global level has been shaped by a new international distribution of input costs and technological capability. Specifically, low-cost producers within several of the newly emerging markets (NEMs) have acquired front-end manufacturing expertise as a direct result of industrial offset contracts and/or other forms of technology transfer (e.g. international joint-ventures, imports of advanced machine tools). We find that the growth of international offset agreements portend the transformation of Boeing from an aircraft manufacturer to a systems integrator. The economic implications of this potential reconfiguration of the US commercial aircraft industry are discussed in the context of several techno-market futures, some of which look rather bleak for US workers in this industry.