Changing of the guard and aerospace
Trump’s stated views bode well for military aerospace and defense, but there is more
uncertainty when it comes to commercial aviation, private space companies and
NASA...

David Tortorano
December 2016

STENNIS SPACE CENTER, Miss. - If there’s one place on the Gulf Coast that brings
together the widest variety of aerospace and military activities, it might be Stennis
Space Center, a huge NASA complex in South Mississippi.

This is where NASA tests rocket engines for the Space Launch System, and where
private companies are developing engines for their own space ventures. It’s also
where rocket engines are assembled, and where core propulsion systems and
thermal blankets are installed on military and commercial satellites. This is also where
the military uses drones in training, where jet engines for commercial airliners are
tested and where the Navy is the largest single tenant.

As is the case anytime a new administration comes to power in Washington, change
is in the air. For the first time a businessman with no political experience will be in
charge when Donald J. Trump is sworn in as the 45th president in January. And there
remain a lot of questions about what it will mean for the Gulf Coast, nation and world.

For the Interstate 10 region, Trump’s views on aerospace and defense are crucial.
The area is a hotbed of federal activity, with 18 military bases, many of them aviation-
focused, and two NASA facilities. There are thousands of defense contractors, big
and small, including major shipbuilders. It’s also a prime location for foreign
companies, many involved in aerospace, that want a foothold in the United States.

A few generalities can be made even this early in the game. A Trump administration
will mean a larger military, both in personnel and in weapons systems, and a likely
end to any future base closure and realignment round.

But the devil is in the details. Trump likes the military, but the F-35? Not a fan. He
likes space exploration, but the Space Launch System? The jury is out on that. What
programs will continue, speed up or be tossed out?

Even more difficult to determine is what a Trump presidency will mean for commercial
aerospace, where the globalization that Trump has criticized has been behind the
two-decade growth of the field. The same uncertainty is faced by NASA and
commercial space companies, a field that sees its trajectory change from one
administration to the next, as anyone who worked on the Constellation program will
attest.

Richard Aboulafia, an aerospace analyst with The Teal Group, sees a stronger
military as good for the I-10 region, but he said much will depend on the specifics.
And Aboulafia does see a potential problem for commercial aerospace if the world
drifts into protectionism. But even in that, he sees the I-10 region as being able to
cope, in part because of the foothold foreign aerospace companies have already
made in the region.

NASA
The new administration’s vision for NASA is crucial since the I-10 corridor is home to
Mississippi’s Stennis Space Center (SSC) and Michoud Assembly Facility (MAF) a
short click away in East New Orleans.

MAF is where Boeing is building the first stage of the deep-space Space Launch
System (SLS), and where Lockheed Martin built the Orion multipurpose crew vehicle
that was sent in November to Kennedy Space Center, Fla. Lockheed has also done
composite fabrication work for Sierra Nevada’s Dream Chaser, that company’s
commercial space vehicle.

Over at SSC, tests are being done on the RS-25 engines that will power the first
stage of SLS. In addition, SSC is where Aerojet Rocketdyne assembles the RS-68
engines used in the Delta IV and where it will assemble and test the AR1, designed to
replace the Russian RD-180. On top of that, SSC is where commercial space
powerhouse SpaceX is doing development work on its next-generation Raptor rocket
engine.

In light of all that work, the biggest immediate question is what will happen to NASA’s
Space Launch System and Orion?

It does appear from numerous media reports that the new administration will have a
more expansive view of human space exploration, along with a retreat from Earth
science/climate research, and increased use of public-private partnerships. But ask
NASA and you won’t get much official indication of what the expectations might be.

“We don’t have a lot of information to provide at this time related to the transition,”
said Allard Buetel of NASA’s Washington communications office, in response to a
Gulf Coast Reporters’ League query a couple of weeks after the election, “so
anything we could say would be speculation, which we’re not able to do.”

In an email to NASA employees Nov. 16, Associate Administrator Robert Lightfoot
said NASA has a team and a process in place to provide the new administration with
information it needs about NASA’s work.

Late last month the transition team for Trump named a congressional staffer and
former NASA official, Chris Shank, to head the “landing team” overseeing transition
planning for the space agency.

According to Space News, the team includes people representing a range of
viewpoints on topics such as commercial spaceflight and development of heavy-lift
launch vehicles. Among the team members is Steve Cook, who was in charge of the
Ares 1 and Ares 5 rocket programs at NASA’s Marshall Space Flight Center in
Huntsville, Ala., until leaving the agency in 2009 for a job with Dynetics. Cook has
been closely involved in Aerojet Rocketdyne’s development of the AR1 engine in his
work at Dynetics.

The Trump desire for deep-space human exploration would seem to indicate a
continuation of SLS/Orion and a mission to Mars. But there may also be a return to
the moon as opposed to the trip to an asteroid, and perhaps even a push to colonize
the moon, favored by Trump confidant Newt Gingrich.

But there are some who see issues for SLS. Brian Berger, editor of Space News, said
during a webinar right after the election that Trump could be persuaded that the SLS
program is unnecessary, in part because commercial companies are working on
rockets with heavy-lift capabilities.

But canceling the project would be expensive due to the cost of canceling contracts.
In addition, there would be a lot of push-back from politicians in states are involved in
the program.

A Trump administration would apparently be interested in a continuation of the
emphasis on public-private partnerships that are already up and running. SpaceX
and Orbital ATK both are flying cargo missions to the International Space Station
under a NASA contract, and SpaceX and Boeing are scheduled to one day begin
ferrying astronauts to and from the lab.

But one big change could be NASA’s involvement in Earth science. Jeff Foust, a
senior writer for Space News, said during the webinar that a number of Republicans
favor handing over that mission to the National Oceanic and Atmospheric
Administration, the United States Geological Survey or other agency. Earth science
accounts for 10 percent of the NASA budget.

NASA’s Earth science mission involves the use of satellites and other aerial
resources to observe land, oceans and atmosphere to detect changes and assess
the reason for changes.

A de-emphasis on NASA’s Earth science mission will have a minimal impact on SSC,
which until 2015 was home to NASA’s Applied Science and Technology Project
Office. But Earth science even without a NASA role remains a key part of the
activities at SSC. NOAA, the Geological Survey, several universities, including the
cooperative Northern Gulf Institute, and the Navy still have an Earth science mission,
including oceanography.

In one indication of what may be in store for NASA, the Senate this month passed a
NASA authorization bill, which could serve as the basis for a similar bill in the next
Congress. It authorizes $19.5 billion for NASA in fiscal year 2017. Bill proponents see
it as setting stage for a similar bill when the 115th Congress convents in January,
according to Space News.

Military
For the Gulf Coast Interstate 10 aerospace region, Trump’s policies on defense will
impact not only military personnel and base missions, but the region’s sizeable cadre
of defense contractors.

“He’s probably going to follow through on his promises to increase defense spending.
It’s just very hard to know the priorities,” said Aboulafia.

“It’s probably not going to be much of an army emphasis or much of a ground vehicle
emphasis. It will be more of a naval and air emphasis, but nevertheless, top line
defense is going to be boosted. That’s definitely good.”

But there’s a caveat.

“We don’t know how sustainable it is because you couple the big increase in defense
with a massive infrastructure spending package, which is what they promised on day
one, and a huge tax cut package, and economically that’s just not sustainable,
something has to give,” Aboulafia said.

Neal Wade, chairman of the four-state Aerospace Alliance, is also encouraged about
the military growth.

“He said he is going to rebuild the military. He has stated that as one of his goals.
Right now there’s not much depth or specific plans, but that’s what a transition is all
about,” he said, adding that stronger defense spending will have a “tremendous”
impact on the I-10 region and the rest of the Aerospace Alliance member states.

The I-10 region between New Orleans and Panama City, and regions to the north in
Southeast Mississippi and South Alabama, has 18 federal bases/facilities, including
13 with aviation activities. All will be impacted.

The Gulf Coast military infrastructure includes pilot training, aerial weapons
development, special operations - including headquarters for Air Force Special
Operations - aerial, land and ocean training ranges, the Naval Meteorology and
Oceanography Command, the Naval Surface Warfare Center’s Panama City Division
and more. It’s also home to one of the F-35 integrated training center and an
operational F-22 squadron.

Trump said during his campaign that he wants to enlarge the military and give troops
the weapons systems they need. In his campaign, Trump called for 90,000 more
Army soldiers, a 350-ship Navy, 100 more fighters and strengthened nuclear and
missile defenses, according to Forbes.

A Trump administration could undo a sequester to free up military spending an
additional 10 percent, according to many observers. That would amount to an extra
$25 billion in funding that is in the current FY 18 plan that would be lost under a
sequester.

Also likely to be dumped is another Base Realignment and Closure process. More
than 350 installations have been closed in five BRAC rounds beginning in 1988. The
last was in 2005.

While the general consensus is Trump will be good for defense spending, there’s a
potential downside for some defense contractors. There are fears a Trump
administration and its negative view of globalization and protectionist policies could
spark a trade war and jeopardize lucrative arms deals, according to Politico. And that’
s a big deal since the U.S. has a $60 billion trade surplus in defense trade.

Indeed, the impact of Trump’s trade policies is one of the biggest unknowns for the
defense industry.

Trump has been critical of government spending, and blasted the F-35 program,
saying the plane is “not very good.” In a tweet Dec. 12, he said the cost is out of
control and vowed that billions can and will be saved on military purchases after he’s
in office.

That tweet sent Lockheed Martin stock down, and piqued a lot of interest in the
region, home to the F-35 integrated training center and reprogramming offices.

But Aboulafia doesn’t think Trump and his team have a good handle on the F-35
program. He thinks once they get up to speed and understand the role of the F-35, if
they want to spend money on top of the line weapons systems for the Air Force and
Marines, “the F-35 is the only game in town.”

Besides, it’s unlikely a program that involves nearly every U.S. state and eight
nations would be jettisoned. Congress is good at protecting something important to
constituents.

Commercial aviation
There are very real concerns over what a Trump presidency might mean for the
global aerospace industry. The industry has experienced a 20-year growth thanks to
the globalization that Trump abhors.

For the Gulf Coast region, Airbus’ ability to sell planes in the United States is what led
Airbus to establish a final assembly line for its A320 series of jetliners in Mobile, Ala.
That, in turn, resulted in 20 foreign-owned suppliers also establishing roots in Mobile.

Aboulafia said a Trump presidency could be very bad for commercial aerospace,
notably if there is a trade war with China, the biggest single market for jetliners in the
world.

“This is a very bad time to be talking about a trade war with China,” he said.

But for the I-10 region, if there is a rising tide of protectionism more people are going
to want to work in the United States to circumvent trade barriers, and the South is a
great place to do that, he said.

“Globalization is the life-blood of this business whether it’s supply chain flows or
international markets, the U.S. is maybe 15 percent of this market, 15 to 20 percent.
This is a global business,” Aboulafia said.

Michael J. Olivier, director general of C100 Louisiana, has a similar take.

“It’s the Trump trade policies that could impact the aerospace sector in America as
we export so much of our aerospace products. The United States exports $131.1
billion (37.2 percent of total aerospace exports globally). The U.S. has the highest
surplus in the international trade of aerospace goods. This positive cash flow
confirms America’s strong competitive advantage for this technology-based product
category,” Olivier said.

“I don’t know how much you can look into a crystal ball at this point and be right,” said
Roger Wehner, executive director of the Mobile Airport Authority. He is encouraged
by Trump’s comments about infrastructure development, including money for airports.
Trump specifically brought out the condition of airports and the need for
infrastructure investments.

“I want to believe that will bode well for all the airports across the Gulf Coast,” says
Wehner.

“You know, for commercial aircraft, we have a lot of international partners in our
commercial aircraft sector, and that’s probably the greatest unknown is what’s going
to be the approach to international foreign direct investment in the United States.”

Wehner points out a rising tide floats all boats and he doesn’t care if it comes from
Spain or France or Germany, “it provides good, high-paying jobs in the aerospace
sector for Alabamians and people across the Gulf Coast. I guess that’s where the
jury is kind of out at this point.”


□ □ □
Underwritten in part by:
Aerospace NEWSLETTER