Testimony of Jack J. Pelton Chairman, President & CEO, Cessna Aircraft Company

Introduction

Chairman Bono-Mack and members of the Subcommittee; my name is Jack Pelton, and I am the Chairman, President and CEO of Cessna Aircraft Company.

Cessna is the largest general aviation manufacturer in the world based on unit sales. Since its inception in 1927, Cessna has delivered more than 192,500 airplanes to virtually every country in the world.

Cessna is one of 70 member companies of the General Aviation Manufacturers Association, which represents the world’s leading manufacturers of general aviation airplanes, engines, avionics and components.

General aviation is an important contributor to the U.S. economy, supporting more than 1.2 million jobs, providing $150 billion in economic activity and, in 2010, generating nearly $5 billion in exports. We are one of the few remaining manufacturing industries that still provides a significant trade surplus for the United States. These exports accounted for 62 percent of the billings generated by GA manufacturers, significantly up from 50 percent of billings attributed to exports in 2009.

Cessna, like others, is coping with the realities of a weak economy. Since late 2008, we’ve had to lay off nearly 8,000 employees out of the 16,000 we employed before the recession.

The three major manufacturers in Wichita have been experiencing significant declines in sales in recent years. In 2010:

• Bombardier Learjet was down 39 percent
• Hawker Beechcraft was down 22 percent.
• Cessna was down 28 percent.

We believe the market is stabilizing as we see an increase in orders in some segments of our industry. The tax bill that passed at the end of 2010 will be very helpful to our industry by extending the R&D tax credit and allowing 100% expensing for capital investments like aircraft, avionics, engines and cabin equipment.

Challenges to Exporting

Cessna fully supports current efforts to reform and streamline the overall export licensing and policy framework.

As an aircraft manufacturer, we have found that we have a generally positive export environment for our physical products — aircraft, spares, and ground support equipment. However, ITAR, in many cases is a problem for our utility and special mission aircraft sales. These aircraft do not contain sensitive military systems, are functionally equivalent to commercial aircraft and do not provide a significant military or intelligence impact, yet many of the existing controls and policies have slowed our globalization and sales efforts.

Aircraft Certification

Due to the high safety standards we adhere to in the United States, manufacturers cannot sell aircraft or major aircraft parts unless they are certified as airworthy by the Federal Aviation Administration. This means that the financial health and competitiveness of U.S. manufacturers in the global market depends in large part on the ability of FAA to do its job.

Unfortunately, we are concerned that the FAA will be unable to meet certification requests by manufacturers. Unless the FAA is provided adequate resources, and implements new processes and procedures to streamline the certification process, we believe it will not be able to keep up with service demand by manufacturers and this will severely diminish the competitiveness of U.S. industry and its ability to bring new products to the global market and create new jobs in the economy.

There is, however, a mechanism already in place that can help manage the resource demands on FAA. For aircraft certification, FAA established Organization Designation Authorization (ODA) in 2006. This allows FAA to delegate routine certification tasks such as the review and approval of thousands of individual drawings and tests. Most aircraft manufacturers have invested in the development of an ODA system approved by FAA, but unfortunately, the certification process efficiencies have yet to be realized.

Aircraft Financing

The availability of credit continues to be a constraint on exports. Cessna has worked to create a $500 million facility backed by the Export Import Bank of the United States. This facility has assisted Cessna with exports over the past couple of years when liquidity in the market was very tight. We applaud the Export Import bank for working with us to deliver creative solutions that support exports.

Conclusion

Madam Chairman, if government and industry work together on the issues discussed here today then we will help ensure that our country stays ahead of the pack economically and technologically in the years ahead.

Thank you for the opportunity to be here today.

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Testimony of Jack J. Pelton
Chairman, President & CEO, Cessna Aircraft Company

Hearing on “Made in America: Increasing Jobs through Exports and Trade”

House Subcommittee on Commerce, Manufacturing and Trade
Rayburn HOB Room 2322
March 16, 2011