Boeing Technology Transfer is a Warning to U.S. Companies

The Boeing 737, a “high volume, high-profit machine,” according to analyst Richard Aboulafia, is now under threat from the Chinese C919 after giving away technological secrets in exchange for production of aircraft equipment.

Parts for another plane, the Boeing 787, are constructed all over the world, from stabilizers in Italy to titanium from Russia. Previous practice was to give such suppliers ‘build to print’ instructions that only gave basic knowledge required to build a specific part.

Recently, Chinese firms demanded technical specifications as well as other proprietary know-how in exchange for use of factories and labor. With the information gleamed from 787 production, the Chinese created the C919, a plane many experts have dubbed a “737 killer.”

Boeing sales alone in 2009 made up 2 percent of U.S. exports. However, when the C919 comes into existence in 2016, it is expected to outsell the 737 because it costs 20 percent less than the 737, and Chinese companies will avoid the 23 percent duty on foreign aircraft through buying a domestic product (China is expected to be largest market for aircraft in the future).

First of all, the fact that China has a 23 percent duty on foreign aircraft is contrary to the spirit of free trade that is constantly pushed on the United States. It is yet another example of the hypocritical behavior of our international trading partners that don’t play fair in free trade, and want to take advantage of the United States.

Second, the policy of technology transfer is destroying American technological prowess. Why should a foreign company spend all the money in research, when it can have an American company just give away critical information in exchange for access to cheap labor?

Concrete action is necessary to prevent other companies from sharing the fate of Boeing. Why should one country have a tariff while the other does not? A level playing field should be established. Also, critical technologies must stay in America, and we must work to promote American manufacturing to prevent companies from sending jobs and technology overseas.

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