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Commercial aviation industry outsourcing threatens the viability of America’s aerospace industry and our national security interests. This is a bold statement. It’s also inflammatory, given the broad move toward outsourcing by the Big Four airframe manufacturers — Airbus, Boeing, Bombardier and Embraer — and the aerospace engine makers. And it’s not a universal opinion by any means. But there is solid reason for the Pentagon and Congress to be concerned about the growing trend in outsourcing jetliner production and the implications for America’s national defense.

Outsourcing became a hot political issue when the Air Force awarded the KC-X aerial tanker contract to Northrop Grumman, which proposed its KC-30 based on the European Airbus A330-200. Boeing’s labor unions and its supporters in Congress criticized outsourcing aerospace work deemed vital to national security to France’s Airbus. They questioned whether technology transfer to Airbus, its parent EADS and European suppliers might be compromised or whether there would be a steady, reliable parts stream in the event the U.S. engaged in a conflict over which Europeans disapproved. U.S. national security was threatened by the award to Northrop and Airbus, the critics charged.

The questions ignored the fact that Northrop, a U.S. company, would install the militarily sensitive equipment in Mobile, Ala., using American workers, or that after the first few KC-45s, all final assembly would be in Mobile.

The critics also ignored the fact that the Airbus/EADS member countries, France, Germany, Spain and — under contract — Britain are all NATO members and that, more to the point, EADS, Airbus and Northrop knew full well that if they failed to perform, the KC-45 contract will be the last ever awarded. Or that the fuselage, tail and some wing components for Boeing’s KC-767 are built in Japan, Italy and the U.K.

What is disturbing, however, is the total silence the flag-wavers professing protection of America’s aerospace industry and national security interests have when it comes to technology transfer and production outsourcing of commercial aviation and the potential for leakage to the military interests of our adversaries.

Outsourcing engineering and production in commercial aviation is nothing new; it’s been going on for decades. There are valid commercial reasons to do so. But the rapid growth in recent years changes the dynamics from even a mere decade ago. Nothing epitomizes this more than the massive outsourcing by Boeing for its 787 airliner. Boeing makes the vertical tail; the Japanese, Italians and other American companies make the rest of the airplane. Design and engineers on many critical components are outsourced overseas.

This is a thorn in the side of labor at Boeing, where its two largest unions — the International Association of Machinists and the Society of Professional Engineering Employees in Aerospace (SPEEA) — have long complained about the levels of outsourcing associated with the 787 program. For the two unions, it’s all about jobs for union members. National security is rarely mentioned, if at all.

Boeing is a partner in the Moscow Design Center, which employs 2,000 engineers and has sponsored several hundred Russians in Everett, Wash., to learn engineering from SPEEA members — a sore point that SPEEA views as training their own contract replacements. A similar China design engineering center is said to be in the works.

Such outsourcing is not unique to Boeing. Airbus just opened an A319/A320 production plant in China and has a joint venture with Russia to convert aging A320 passenger planes to freighters. The Chinese plant is a state-of-the-art facility comparable to the modern A321 assembly site in Hamburg, Germany.

Brazilian company Embraer assembles its EMB-145 regional jet in China and Canada’s Bombardier plans to outsource fuselage production for its proposed CSeries jet to China.

China and Japan interests have announced plans to produce 150-seat commercial jets, openly using experience gained from their work on insourcing from the Big Four commercial aviation manufacturers. China’s new ARJ-21 regional jet is a copy of the Boeing 717; the Japanese flatly stated they are using 787 technologies to develop new commercial airliners. The Japanese are also designing new military transports and sub-hunting airplanes.

REPAIR AND OVERHAUL

The increasing reliance on China, Russia and Japan is not limited to airframe engineering, design and production. China is the site of a large number of airframe and engine maintenance, repair and overhaul facilities. With commercial transport growing exponentially in China — and forecast to be within a decade what transportation is today in the U.S., perhaps somewhat optimistically — Western suppliers not only correctly see a viable market in China, they also have little choice: the Chinese government is none too subtle about seeking “benefit” — i.e., jobs, production and know-how — in exchange for orders.

Here’s where the national security implications arise, which have been largely ignored by the hyperbolic members of Congress hyperventilating over the possibility of KC-X work being performed in NATO countries, all allies of the U.S.

The deterioration of America’s aerospace expertise and the national security implications are real issues. Boeing has publicly expressed concern about losing aerospace expertise in connection with delays or loss of certain military fighter programs, yet it willingly and proactively outsources American jobs and engineering to overseas companies. Certainly none of the Big Four wishes to see technology transferred to the militaries of adversaries, but the reality is that there is nothing they can do to stop the Russians or Chinese from doing so.

China has a dismal record of honoring intellectual property rights, and Russia’s aggressive spying is a matter of record. To think that there won’t be improper cross-pollinating between commercial work and military uses in these countries is naïve in the extreme. In addition to creating new commercial competition, it is highly likely that their militaries will benefit. It’s virtually impossible to build a “Chinese Wall” between commercial and military here in the U.S., let alone where the political mentality doesn’t care.

Some commercial aviation members who do business in China and Russia readily see the potential harm to U.S. national security interest, but won’t say that on the record because they need to remain in good standing with the governments. But an analyst with the aerospace consulting firm the Teal Group has a different view.

“I’m on the opposite side of the fence,” Richard Aboulafia said. “In terms of aerospace design capability,” the activities in China and Russia are minuscule. Aboulafia said he looks at China’s new regional jet, the ARJ-21, and says, “When you look at the specifications, it is a monumental waste of time.” He says that the Chinese are doing $250 million worth of subcontracting versus the Japanese at $2 billion to $3 billion. “The Chinese aren’t doing risk-sharing portfolios.”

This misses the point, however. The Chinese and Russians (and the Japanese) take the long view, willing to work to improve technological capabilities over decades. Recent Chinese space shots with astronauts are clearly for more than just prestige.

Aboulafia said software, not production, is the “key to the kingdom.”

“It’s not what you have, it’s what you have the ability to create,” he says. “The secret sauce is knowing what the [commercial] market wants and to create it.

“The fighter stuff is much more worrying. China has the home market. You have to be really careful with fighter technology. If you believe that aerospace stuff you are getting can contribute to that, then you should be worried. But I’m not convinced there is that much transfer.”

That may be, but with insourcing, subcontracting and joint ventures comes knowledge.

With the aggressive industrial and military espionage undertaken by China and Russia, as evidenced by well-publicized spy cases and historical documentation, Congress should be more concerned about these commercial enterprises than whether America’s NATO allies are the “enemy” in the procurement of 179 tankers.