Poll finds exporting manufacturing has no effect on jobs

A new US commerce department survey concludes that a five-year spike in the number of foreign offset agreements has had no "discernible" impact on defence industry employment in the USA. The results appear to weaken a proposal by US lawmakers to outlaw offsets.

The value of offset deals - compensation offered or required as a condition for securing contracts from foreign governments - jumped from $1.85 billion in 1998 to $6.09 billion in 2002, a 230% increase in five years, the study says. In 2002, offsets represented 82.3% of the value of overall exports, a 25.6% increase over the 1998 total.

"Nations are also sharing information and experiences with offset agreements and offset transactions," says the study, "further adding to foreign offset demands."

Although offset deals pave the way for defence exports, the growing expense of the practice has alarmed US lawmakers, including Representatives Duncan Hunter and Henry Hyde, who fear the deals are sending US jobs overseas in a sensitive economic environment.

The House of Representatives has passed an amendment to the fiscal year 2005 defence authorisation bill that would outlaw all offset agreements, but the measure is opposed by a majority in the US Senate and the debate is likely remain stalled until after the US presidential election in November.

The Commerce study, which was commissioned under legislation introduced last year by Hunter, fails to support a key argument in favour of banning offsets.

The department's surveyors polled 685 defence contractors, including 16 foreign companies, but found "there was no discernible pattern for employment gains or losses by industry sector based on the company's positive or negative views on offsets".

Subcontractors involved in fulfilling offset agreements reported employment increases averaging 20% over the five-year study period, although offsets were not cited by the companies as a factor for the increases. On the other hand, firms reporting a negative view about offsets showed a 10% average drop in employment.

STEPHEN TRIMBLE / WASHINGTON DC

 

Source: Flight International