technology. they have the money. they have the defense infrastructure that enables this kind of thing and have a market big enough to absorb, ma to absorb the products. now, how long will that take? who knows, but they will get there. and i think that really, that really speaks to the global competitiveness issue. and i think we will, i think it's boeing's strategy to win by innovation. i don't think we're going to win by having the lowest cost airplane in every market segment over time, particularly when you have globally competitive places with lower wage rates and different kinds of banking practices. but i think, and so, back to your point that we are cheering for each other, and this may sound a little strange. boeing and airbus cheering for each other, but our strategies

are to innovate, and through innovation, win. and i think as competition globalized is and every industry you've ever seen, that needs to be the strategy for technology, technically advanced countries. and particularly this industry. so you will see more about. >> speaking of your competition, which seems in the overall company to be getting out from underneath the day-to-day political influence, the number of countries, that should be helpful to them, should and its? >> you're talking about who, the chinese? >> no, no, no. spent restructuring the airbus. airbus can, i will -- can figure out for themselves what they want to be, but i think the model does move a little closer toward i think the word tom uses, a normal company. i know that has a special

meaning in germany, but he, i think that will create a stronger competitor, which i think is good, good for the industry. >> talking about competition, one of the things you hear all the time in our country, people say, when is america only to start making things again? which as you know because of all the work you've done, not only in real terms but in the public policy arena, we were a huge manufacture, really driver of technology. how do you see -- and by the way, let's have a big respect for the 45% of the job that innovation is taken out of the manufacturing process. that how d.c. manufacturing going forward? what role do you think it's going to play in getting this economy going again? and what are going to do defined the people we need to work in

the industry? >> that's a good question. i think the quick answer, we never stopped believing in american manufacturing. we have 150,000 folks who work in and around plants in this country, and we have made a lot of long-term investments recently. but that's speaking for boeing. but i think for the country, i think we're on the verge of an american manufacturing renaissance, quite frankly. i think as wage rates around the world begin to adjust, and american wage rates still disadvantaged but not as much, as coming out -- one good thing about a long recession is, there's a lot of focus on productivity and a lot, as you find, a lot of use of technology to support that focus on productivity. and i think that is strengthening our country -- our country's manufacturing base. and i think there's also a

realization as people think about tax and fiscal policy, that the value of manufacturing in terms of its broader impacts on the economy is huge. i mean, i forget exactly the numbers are, but it's like double or triple the impact on employment as compared to other sectors of the coming because of the following services. because of the supply chain you need to support them because of the engineering you need to design a. and i think, and so from a public policy, the public policy debate as people talk about tax and fiscal, a lot of it is shaped by people like yourself, is beginning to realize the huge opportunity here, which is not to say we're all going to rein in and become u.s. companies that ignore global markets and ignore global capability. we are not, but i think many of us, boeing included, have made their supply chains a little too

horizontal over the last couple of decades. and part of the story is the 787 with some of the earlier the government issues was we lost control over some of the design and engineering of the plane, and in an effort to create a very horizontal -- we are now, i won't bore you with all the details, but a lot more investment in vertical capability, a disproportionate amount of that is in the united states because of the capability we use. the longer-term question you apply, and what really gets down to education and immigration. and i know you've been a champion on immigration. i know currently you are at the center of the debate and everybody in this room should feel good about this gentleman being in between john mccain and chuck schumer trying to get a deal, trying to get a deal done. with trumka off to the side. anyway, you are working up with these people and i think a lot of right minded people want to see this happen, including you.

but immigration, solving that problem, and addressing some of the educational shortfalls we have in this country will probably have more to do with the long-term competitiveness of the united states manufacturing than anything else. so keep those efforts going. tim, keep paying dues. keep supporting this guy. >> think big, tim. [laughter] let's talk a little bit about, so you manufacture these great products, and more and more with the help of the ex-im bank and others, exporting them around the world, which is not only exporting products but it's exporting u.s. engagement and influence and so on. let me ask you a couple of questions about that. number one, we've got a three-year extension on the ex-im bank. you know, there were so many

people that really don't understand that the u.s. government makes a ton of money on. really just for the record, how many tv cameras? six or seven of them. give us the real life story on the ex-im bank. >> well, ex-im has always been important for big manufacturers to export. under fred hochberg's leadership has become much more relevant for small and medium-size businesses who, quite frankly, who find even more difficult to export without some financial support. but, and so vitally important component to our global competitiveness. yeah, i mean, ex-im bank, i think i've got the numbers generally correct, i don't think has ever had a year when it's lost any money. in fact i think when you add up the money they've made on fees

and support, its will into the billions of dollars. this is a moneymaker, not a money loser in the name of corporate welfare at all. it's just the opposite. and so it is a business operation we would all be proud to run, quite frankly, and i know there are some voices tend to be from the far right or far left that questioned the necessity of the ex-im bank. but i think if you stop doing it, it would in effect be to unilaterally disarm, because most other countries provide support for their manufacturers, and there are treaties that guide the behavior and guide the kind of practices and business practices at interest rates that can be used. so it's not an unfair situation. it's a very fair situation, and so it's, it really, i shake my head when people say that we

ought to do away with the ex-im bank. it is all good. >> so we have great products. we've got a bank, that helps. and we're going to trade them around the world, and we've got the wto, we've all of that. there are two new things on the horizon. one is an eu u.s. trade agreement, and the second is the ttp that we are trying to do in the pacific region. what would that do to american companies exporting abroad? what would it do for your company? >> well, i think, you mentioned my chairmanship of the pack, presidents export council. so we've been actively engaged as american industry as well as boeing as the country's largest exporter in this issue.

and these agreements are difficult to get done, but it is always worth the effort, in my view. because ultimately we have been out run over the last two or three decades. other parts of the world have cut free trade agreements and we are catching a. we used to lead in fda's around the world. the tpp and eu trade great you just mentioned would put us back out ahead. and i did miss nation a great deal of credit here, quite frankly. in a, whether it was columbia, panama or korea which is really catch up in terms of catching up to deals that our competitors already have with those countries, but tpp and the eu would level the playing field in a lot of ways, and a lot of places. and take away some disadvantages that some bilateral and multilateral a prince and other countries have with these places

and would allow us to do what we only always wanted, which is put us on a level playing field. that's all we need. that's the way i feel about it. i think that's the way a lot of people feel about. i think these will be tough deal to get, the more countries you involved in these deals, the tougher it is to get done. japan has just now joined in the serious discussion on the tpp side, but japan and europe are both wrestling with very slow growth economies. so they are now at the table because they want to get very economy is going. we are at the table because we want a level playing field into these places. i think it's a recipe for something to get done here we supported. >> you know, just as a to second condition, they're not only slow growth economies, but they are demographically slow growth. and you know, demography is destiny. that's going to be really

interesting. let's shift gears and come back home for a minute. you know, every industry, every economy depends on its basic infrastructure. dwight eisenhower, you know, dealt the highways for national defense and ended, you know, started the business of an end to end infrastructure system here then we have done all the things with electrical generation and moving data around the world, you know, country. how do you see our infrastructure deal? of course you could talk for a minute or two about the airports, but you've got to get your people to work. you've got to move goods around the country. you've got, we have to have the mobility. you can have airports but if you can't get to them, that's the problem. >> this country has an infrastructure crisis. if you talk to the railroad guys, they will talk about the

ports and the lack of modern infrastructure their that becomes a bottleneck as you are moving goods in and out of the country. talk about the condition of the track. if you just bring it home to aviation for a second, i forget the number exactly, that i think over the next 20 years the number of flight segments are almost going to double in this country. we do not have an aircraft management system that can handle that. this is as important an infrastructure project as anything. and now there is a nextgen product -- project that i'm sure every one in the room is aware of. it needs to be funded. the return on the funding is infinite in terms of unlocking the ability to move around this country in the air with lower margins and with, you know, less

distances between planes and all the things that you need. but we need, we somehow have not yet made this, the kind of issue at the national level we need to make. and it's really going to slow down the growth rate of this country if we don't get after it. >> you and i really agree on that. that's what i got you to do that spirit we are the only two in an who are old enough to remember the eisenhower freeways being built in the 1950s. [laughter] >> that's true. we got a lot of easy questions. now i'm going to take one or two in a row that would be a little more difficult only because of relationships. but 18 months ago, the nrl be dropped its complaint against boeing, alleging retaliation against the machine us. during that period of time, you continue to hire more and more people into the company.

at the same time, the union members and private sector in america are dropping very, very quickly. how do you feel about the relationship between management and labor and labor's influence in terms of what the government does and how they act? >> well, i have probably a more balanced view than you would suspect. i mean, look, as our company grows and becomes bigger, we are pursuing, we need a diversity of places we build things. we need a diversity of products that we built. and come with all that is the diversity of relationships with our employees. some our union, some are nonunion. if we were starting with a fresh sheet of paper we would prefer

to deal directly with our employees without a union in the middle. but our employees have made choices and other places. we respect that and we work with them. but i think anybody like a boeing has to be able to work both sides of the street. i think some of the political influence that unions have in this town and others is strong, and has to be dealt with. do i wish it was weaker sometimes? yes, but do they have a right to petition their government? absolutely. we deal with it. i think ultimately the question becomes, for me, how do i create the most competitive aerospace company in the world? how do i do that? there are some unions that work with us toward that end. you look at human.

i was looking at my friend jurgen overy. at some of the highest wage rates can sew the strongest unions, and yet they are more productive. they more than make up the high cost of productivity. now, that's a union that you can work with, okay? and, obviously, and other place we don't have unique to have a little more flexibility to manage your cost and get to the productivity equation in a different way. as old as the union wants to the dialogue with the company and with me about how we are a worthy competitor to airbus, how we compete effectively against the upcoming chinese entry, and how we keep driving highly skilled and highly paid jobs in the united states, as long as that is the dialogue, i almost don't care who i am sitting across the table from. but that doesn't always happen so we've got to have balance. >> that leads to a subject which

you are very familiar with from your own company, but also very much being the chairman of the round table and so on. there's a lot of effort by some people to get companies to stay out of the legislative, the regulatory, the political debate, saying that that's not their role, suggesting that those that would rather we don't do that, they will do all of that and we shouldn't do it. we are all over that issue, novak, but from a perspective of running -- no, but from the perspective of running one of the most exciting companies in the country and working overtime on the government issues, what's your reflection on the? >> i think it's hogwash. i mean, i think we have as much of right to petition our

government as anybody does. and with that right comes a responsibility. whether we work with you on some issues, who tirelessly supporters in that endeavor, or whether we do it directly, i would go farther than the right. i would say a responsibility. we need to be actively engaged in the government process right now, whether it's on the regulatory side, legislative side, and it's at your own peril if you don't. >> okay, did everybody get that? all right, let's shift a little bit. we've got a few minutes left. >> sure. >> you started at boeing and a difficult period for the company. made great plains, and -- they had some high profile ethical issues and so. and you came in, and i do

remember when everybody was trying to recruit you to do that, there is no question you could run the company. i think everybody is really interested in how you came in and fundamentally changed the character, the institution, and what it stood for and how it was going to function. and i think you should tell us about it. >> you're giving me a chance to be a modest,, and no, i think, i think the root cause of the situation back then was boeing had made a lot of acquisitions that have never been stitched together. so you had three or four different cultures, languages were different. the functional processes that protected the country, whether it's finance, h.r., legal, were not stitched together across the company of some mischief could happen. clarity on expectations of employees, not only their

activities but their behavior was not as clear. so i think the first order of business was to decide what we wanted to be and how we wanted to be it. and that's sort of one conference room at a time, just moving around the company and deciding what the mission of the country come with a strategy of the company, and what we wanted to be, the six things that defined a boldly to come down from 161 and a police the list from all different parts of the company. and so that's what i would call a leadership circle the wagons, and it was more returning, it was less me defining some apocryphal new set of values and the way forward. i think is more reminded people what they were, more reminded people what boeing was. and what mcdonnell douglas was. and rockwell was. and hughes was big because these are all fine companies that have lost their way for some reasons.

answer returning to what we wanted to be and articulating exactly how we're going to go for but i think, i think people renewed confidence. so it was sort of one conference room at a time. >> so how would we do the one conference of added time up on the hill? i say to this one question in case we had a little time. you know, we talked about sequestration. we talked about the fundamental issues of our economy, but it is time for us to come together, business and labor, everybody we can get in the realm, to talk about how we deal with this budget reality that we face in the reality. we had a good chat about that and i think an interesting if we

could hear it from the position of somebody that really sitting in all the conference rooms at the same time, a major company, the roundtable, other groups in town working all over the world. give us your view about that. >> well, it's extremely frustrating right now. the inside game on the politics is, dominates, which means the two parties are more about who gets credit sometimes than getting things done. that's a little bit of a harsh assessment, but i see more of that than i would like. on the other hand, i see the moderate side of both parties when you talk to them independently, you can see a solution. so, you know it's there. if we can just shift the debate of being dominated by the

fringes and get us back to the people who are right minded but are caught up in politics right now, i have confidence we're going to get there. i mean, this country is ultimately a pragmatic place. it may take us a lot longer than any of us are accountable with. we cannot give up. we cannot come back to question about should you be here. you've got to be. i have been frustrated many times. i have wanted, 10 put me on the plane, got me out of town after community, some disillusion set of events that happened that day, but you just got to pick yourself up and just not stuff. we will get there. we really will. >> so that's our national challenge. now, you have your headquarters in this state, that's amongst three, four, five blue states

that have a massive financial challenge, particularly driven by pensions and medicaid. what are some of the reflections about that? we have manufacturers from europe planning to come to because of our energy, and they are facing state. you looked around at states yourself. how d.c. the state and? states can go bankrupt spent i know. listen, i think illinois is a problem. medicaid is the biggest part of the problem. but when you broaden your question to what do you learn from mistakes, i think, i tend to think that someone them because they have to face the issue and confronted because they can't print money, there are seven or eight governors out there, some on the republican side, some on the democratic side, but this moderate middle that i was talking about that at face into the tough issues but i

get those are the kind of people we need to get into this down. i think, i think state of local governments are going to be the source for people who will solve our political problems because they have done it. >> that leads me to my last question. you could characterize that as the leadership. you sketch the issue up on the hill saying we need leadership. i've been ending most of my speeches lately talking about the need for leadership. meaning the chamber, meaning it encompass, needing it in government communicate in the medical profession. on the middle east have over the history of this country driven change, improvement and correction. where do we get them? >> well, i think one source is state and local governments. i believe that. i am biased but i think there are some business leaders in this country that it had to face

and how this problems in their companies. that can be a source of leadership. but if you want to be inspired, read what i'm reading right now, which is george washington's biography. and you talk about a leader. you can draw inspiration from reading about him. and i think, and i have an abiding belief that this place will find some leaders and they would emerge, and we just got to keep the ball on the rim in the meantime. >> well, first of all, thank you for doing this. secondly, second, i would suggest, i think you should read that book. i would suggest that there is, there's a whole lot of leads sitting around right now and without and within a little bit and we got to support them. and my own conclusion, and the reason i really enjoy working with you is you sort of lead the pack in many ways. so thanks for what you do. thank you for doing this today.

thank you for your support for our conference, and god bless. >> thank you, tom applau. [applause] >> thank you, gentlemen. that was sensational. i think that is a discussion that definitely will go into the history books. this is a great way to start the morning, and when you have someone who is as well-known and respected as jim mcnerney, it does fill all of the seats first thing. so there will be some searching for in the seats, and i know that you hopefully will all find some. jim, thank you again. just great to have you. tom, thank you. ladies and gentlemen, of the ask the next panel to please come forward, i want to just remind everyone about the great recession were going to have this afternoon at 5:15 with all

the airline tickets and all of the ipads that will be drawn. now, that said, i want you to all remember during the day to put your business card in the bowl out at the registration desk. because we can't draw your cart if we don't have one. and you must be there to win. i hate it when i have to rip somebody's card up when they won, two seats, first business class to any destination in the world. and i know you would hate to know that you lost it. so that's going to be important. now, i have two comments that are very important. one with respect to the drawing. chamber staff and government employees are not eligible to draw for any of those gifts. so i'm sorry to have to remind you of that, but it's one of those things. you win a lot of things but you can when there.

now, i also want to point out that because of the time situation, no biographies will be read by me in the introductions. and there in your program. i think the programs are fabulous. and so you can read everything you want to know about all of our speakers. and with that said, our moderator for the first panel this morning is someone known to all of you, marion blakely. marion has a very distinguished background, and her panel on unmanned aerial systems is what one of the most exciting panels we have had. it is back by popular demand because mary and launched it last year at the end of the day, and that it's the first of the day. merion, it is all yours. they switch ring our moderator. that president and ceo of the aerospace industry association, she is really a pro at this.

marian. [applause] >> thank you, carol. and as usual, is somewhat is a gathering of the most influential thought leaders in aviation. so i can't tell you how exciting this is from my standpoint at her panel to be here with you this morning. because we are in an area of high energy when it comes to you we have. lively debate and i think that's a little have this morning. were looking forward to questions from you. and i've of the way we might take this off is just for a moment, it's take a look at the diversity of uas and application mix on going to ask that we wrote a quick one minute you of this. -- minute of this. ♪

♪ ♪ ♪ so they give you some idea of the amazing range of technology and the exciting developments

going on in the field. i thought it was very interesting that "time" magazine labeled unmanned aircraft systems as one of the transformative technologies. in fact, only one of three, along with smart phones and the 3-d printing arena. as we have a true transformation the last decade. but as transformative as they are, they also really are not you. go back to 1915 and nikola tesla predicting that they would be very influential in warfare. you look back as far as world war ii. and, in fact, the aircraft that john kennedy's brother, jack went down, was impartially unmanned aircraft way back then. and, of course, a really have a significant role in vietnam. but that is where we look at when they came into the modern age, you've got to look at the first stage, 12 years ago off the can touch the conflict of afghanistan, when the first

predator was used in that conflict. it really did kick off the ground or in afghanistan, and uas came of age. now the next step of course as far as all of us is concerned is the integration of uas, and what will that mean from a standpoint of faa's ability to complete a very ambitious rule-making new test flight, all around 2015. i think that is critical for all of us because we understand that this has tremendous economic benefits for our country. we are talking about something that really will be a game changer from the standpoint of exports, and transform the way our society works in many ways. the teal group has suggested that uavs, that spending will double in the next decade from 6.6 billion, that 11-point for. at the same time, i think it's

fair to say that society is very often slow to accept rapid technological change investment. and you know, i to say i think part of it is the public deep seeded chinese with robots. and, of course, political fear that was, but senator rand paul filibuster really i think day to some degree muggy public understanding of domestic uses of uas. so we don't do ourselves any favors either from an industry standpoint when we keep changing the name. i could go around this room and i put a coherent could come up with a different one. uas, uav, rtd, and i get this, the latest one, uninhabited aerial vehicle? come on. sexism? give me a break.

i think our speakers will shed light on some more important of the uas concerns, and i'm so delighted that from california, frank pace was willing and able to come in, the president and ceo of general atomics. and, of course, the developer of the predator among other very leading aircraft in is a. whenever think about and i think this is backed up by the air and space museum assessment, the predator was ranked as one of the 10 aircraft that changed the world from their vantage point. so we look to talk to you about the growth of the uas and its development. we'll is a visiting out and national security, law, at the brookings institution. he has written some very interesting piece but i have to recommend them to you all about privacy and safety issues. and faa's record for process.

he also gets into the interplay between state and local laws and federal law. and, finally, we are very honored to have with us allen tauscher. former congressman from the state of california and most recently undersecretary of state, responsible for the regulation of uas when we are talking of exports and the move from our own shores into other uses. she's really an expert on export control challenges in general, and she's keenly aware of the debate on capitol hill and what the ramifications may be for this technology. so with that, i would like to turn first to frank come and ask you to describe, if you tend -- what do you think in five to 10 years we are likely to see in terms of a national airspace and uas? >> well, i think the key thing

would be to separate uass out into different groups. as you saw from that video, they really have a wide range from 30,000 on airplanes right now down to airplanes that way approach for one pound. and i think in a medium they bunched all those together. but more recently with the faa we've been able to separate out and have a small class, they call them male class or getting out of his long endurance class and above high altitude. so what i see is progress on the two extremes and in the middle i think this is going to be problems and not much progress. so they to extend i played the smaller planes that really are not much of a threat to general aviation and almost like regular, rc plane some of us as kids the. those be allowed to fly pretty

much unencumbered, and maybe build a 300 d., may be below 1000 the, something like that. and i think their big issues will be privacy. and then on the large side, the large uavs like the global hawk, these are planes that can carry all the equipment needed to do really whatever the faa might demand of them in terms of sense and avoid and things like this, and we will get into that later. so i think the area in the middle like shadow uav, something like that, that's very effective in the theater for the army, for our war environment is too small an airplane to carry all the equipment that might be required by the faa, and it's too big of an airplane to really be thought of as a small thing that can just be kind of ignored below 300 or 1000 the. so i think those are planes, i'm

going to still see those as being only in restricted airspace. and the small ones and the large ones will be, i don't think it will be flying at this point anywhere, but i think the ruby routine operations for them spent and wells, when we think about the fact of general atomics or the large, whatever that we're talking about, faa still has a significant regulatory challenge in front of it. so what did you think about the way under both safety and privacy now that that is in the mix, faa? >> they have a lot of work in front of them and they don't have a lot of time to do it in. there's a 20 oval office is the bulk of the work has to be done by 2015. detail in the 2015. there's tons of issues that are already under the faa's traditional jurisdiction and now you're moving into a busy.

so i'm most interested in a recent test site that you mentioned, as a big note here that faa has asked for candidates where they will do to sites to gather the data to make certain safety calls as we reached the deadline. the private committee stepped in and save in as many words we want to get involved in this. the fa initially seem to balk at not being a traditionally privacy agency put interested, you have to take this into account and turned around and asked the public to inform what kind of privacy policy operators opt to use. in that regard the faa seems to have latched onto the privacy issue, at least in the short run, it's open to interpretation whether they want to be in the game for a while, but having taken it on i think it's typical for them not to be involved in privacy after the test site, simple integration deadline or when certification standards come around.

but yeah, that add another thing to the play ensemble. frank mentioned sense and avoid, lost link. what you do with air traffic control. so a ton of stuff. to put it gently. >> it is. and in the middle of sequestration, you know, furloughs, it doesn't make it easier. and i think it's fair to say that a great deal of the longer-term success on this, and maybe medium term, does go to the fact that the united states has had enormous technological edge in this area, and it has great export potential. so let me turn to you for a moment to hear what you think about, and i know this probably has a lot of standing but in pcr is not a household word. so you might want to explain what that is. >> thank you, and. i been out of government for a

year. i left as undersecretary, became special envoy during the transition of the russian election and our election, left in the fall. so i'm not speaking for the government, which is a nice thing. but as a recovering politician and someone that has been involved in public policy for six or 17 years, i would say that coming from california, many of you have operations in california to we are the cradle of economy and technology. with a tremendous amount of opportunity in the administration in very early in the administration of president, after hearing from secretary gates at a cabinet retreat when the president looked up and said, does anybody have any questions? political backing, hard to imagine all those dynamic people in the room. bob gates allegedly stood up and said, let me tell you, mr.

president, we've got to do something about export control. i was on and when us out of government, and with brent scowcroft called fortress america, and it talked about how our expert console system is broken. he went on for five or seven minutes, the rest of the cabinet pretty fixated on it. president said okay, you go ahead and do that. and i was going to become at the time it was one of the best things in the world for us because to talk about export controls and to talk about how we get a better system, how we deal with itar and the state department and er and all of the different silos, how we move things out, how we stop protecting things that are as old as i am, that you can buy on the internet and make sure that we, as bob gates said, protect the health of a small number of items without crushing our ability to innovate and export. ..

>> to kind of deal with these lists, and you have these munition control lists that are part of itar that are, you know, a treaty that we have, 34 countries saying that we're not going to have anything that can go 300 kilometers that weighs 500 kilograms that could be part of a bomb or some kind of chemical weapon. we're going to control those things, and we've got a treaty with 34 countries. and that is the basis of our agreement to kind of figure out how to make sure that things don't leave this country that are going to aid and abet proliferaters and bad guys.

that's the overarcking issue. this administration begins to protect a smaller firm of items much more aggressively, make it easier for us to export, have better rules, and we have what we call the rule of one; one agency, regulatory agency, one system and one kind of accounting for it, one kind of ability to make that right out of form and have it adjudicated. we don't have a willing partner in the congress to get a lot of these things done, so it's obvious that the president had to use executive orders. so last march 7th he put out this executive order, aircraft and, as i said, gas turbine engines and related parts were the first of the 21 silos we went after. and congress now through notification has 30 days to kind of look at it. they don't have any ability to really stop things, although they can organize. it looks like there's nobody doing that right now.

organizing, that is. and 180 days from now the results of this, government will be put out, and it will begin to remove a number of items out of itar control, out of the state department over to ear control at the commerce department. it's a big effort. it's not finished. it certainly could get undone by the congress, hopefully not. it's going to take people to say stop and no. but this is the kind of effort that this administration believes working with industry and working with policymakers is important. now, where does this come back to uas or whatever you want to call it? it's about innovation, and it's about disruptive technologies. and it's not just the federal government, obviously. we have a hot to say about where uas goes. it's like any municipality that's got a small airport. it's anybody that decides, you

know, like somebody -- berkeley, california, you know, has a nuclear-free zone. somebody could decide they're going to have a uav-free zone. so i think this is about industry, especially self-interested industry, policymakers and the federal government side leadership to say, look, you know, before we all decide that we're going to disrupt what is phenomenal disruptive technology, before the privacy people get their heads up too high, before we move to really thwart the b ability to move forward on this, let's get some idea of who's going to be the traffic cop, and let's get some idea of how we're going to step out in a reasonable way to make sure that we don't hurt ourselves. we all know those technologies that are no longer american, things like encryption, that were stifled both because of

government action and congressional action. and all of those technologies left the united states, and now you can, you can pie them on the -- buy them on the internet, but they're not american. and so we have to do, i think, a lot of organizing and a lot of leadership designations to make sure that we are stepping out in a way that doesn't cause this tremendous opportunity for technology and american leadership to be thwarted because we let too many people have too much to say. >> and i have to say, because so many people in this room thought very, very hard for this remarkable change in export control reform that is taking place, that there is a tremendous amount of appreciation for what the administration has done on this element and what you were or very much in front of. so this is a huge thing. so many people in this room, of course, at the heart of talking about uas drones would want to say let's talk about safety here

for a moment. frank, i'd like for you and wells, if you would, to talk about what you see as the issues, the nonissues there, etc., when we're looking at how do we get them out there with manned aircraft. >> okay. so i think to start that i think you'd want to focus in on the larger airplanes, as i said on my previous comment. so on a larger aircraft, i think generally now once we get above 18,000 feet, positively-controlled air space, we've been able to fly with preapproval. it's not i call routine ops, but as an example, we have a fire payload on a nasa airplane x nasa's worked with the faa, and two summers ago when we had all those bad fires, um, the plane actually launched from restricted air space at edwards and got above 18,000 feet, flew

all the way up to the canadian border, all the way out into the midwest and out of different flights and then -- and always came back and landed there. so the difficult part is the transition from wherever you take off to get above 18,000 feet. and so that's the part that's being studied, and there's several options for that. you could have airports that have control of that air space, you could have ground-based simpson and bowd, i'm not sure if anyone's familiar with that program, but that's a program where you have three radars set up, and they actually control air space to allow airplanes to get up to 18,000 feet. in a pure ri ifr -- pure ri ifr -- i mean, a vfr situation, the cameras on the airplane could actually provide enough safety to get up to 18,000 feet. and then if you go into

instrument conditions, you know, you could provide radars on the airplane or something like that in the future. we're actually developing one of those ourselves. once you decide, i think it's just a decision. i think the technology's there to allow the safe transition the to 18,000 feet. then the big difficulty would be emergencies. and the main emergencies would be loss of data link control. and i like to call the airplane one more new name for you, it's an rpa, remotely-piloted aircraft. and i think that would, that's a key phrase for the public because i think in these conditions in the national air space they'd like to know there's a pilot behind the controls. he may be on the ground and not in the air, but it's still a pilot there that is familiar with the national air space rules. so back to those emergency conditions. the two conditions really are a

loss of link to the aircraft. in those cases when the aircraft goes into a standard mission that aircraft -- atc could know about, and it'd be kind of like a loss of radio coms. they could almost think about it that way. and the other thing would be loss of mode of power. if you had an engine failure or some emergency where you had to make a quick landing. and once again, i think you would want to think about this as a regular airplane as well. so the pilot could be in control through sat-com in this case, and if he had to set the airplane down in a less inhabited place, he would be able to do that. if they're flying above 20,000 feet with a glide ratio of, say, at least 10 to 1, most of these airplanes have way more than that, but at 10 to 1 if you're four miles up, you can go about 0 miles to get -- 40 miles to

get to a location where you could set down the airplane where it wouldn't be harmful to people. so i think if we think of these things as rpas and think of them as real aircraft, the larger ones, i think we could come up with a way of safely operating these things without really affecting the rules that are already in place today. >> yeah. certainly don't want to jump, want to try to top the head of atomics in aviation standards for safety, so i have, i think all of that's quite correct. but i would only add that a lot of those challenges are compressed into a short timetable, at least as far as the civil side goes. and then in the meantime, at least, the public -- and i think this is quite unfortunate -- is preoccupied with some aspects of the technology that really don't bear on safety. you mentioned senator rand paul's filibuster, and he proposed legislation prohibiting the killing of an american who

doesn't pose an imminent threat. well, with the drone -- >> we're if favor of that. >> excuse me? >> i said we're in favor of that. [laughter] >> we don't want firing on americans. >> yeah. and that takes a great deal of focus away from safety. my own impression is all those things that frank mentioned are very much workable problems, and also the faa isn't painting on a blank slate in this regard. there are small and large aircraft that are manned aircraft. there's all, a long institutional memory there. it's just that it has to do it quite quickly. and while going through that process quickly, also manage what is, essentially, a public relations sort of issue involving the technology. i think anything that points the public toward the fact that there's a pilot, someone flying around this thing just like in a manned aircraft and like any other our craft is very, very helpful. i also think it's helpful, and i read something interesting

speaking of privacy last week, you know? in the last several months, i think the privacy tone, there's been a lot of, quite a lot of stuff. you see in state jurisdictions, for example, some have gone so far as to suggest the prohibition of the use of uas technology. senator udall mentioned this. the need for sensible privacy reform, but also to harness the economic benefits of the technology. so to my mind, that suggests maybe there's more of a chain -- hopefully, a change in tone that would allow the focus on being on the minutiae of making sure you have safe activities in the nas as opposed to getting the public comfortable with what is a very multifaceted technology. >> well, you know, i think it's fascinating, the schizophrenia we seem to have right now on this. you do have these pop-ups, and in charlottesville, for example, just declared themselves a drone-free zone. and yet at the same time you've

got applications from 50 different communities, 37 states around the country who want to be among the test sites. so how do those things comport? clearly, there is tremendous interest. and maybe we should talk for a minute about how you all see, i guess there are two aspects of this. i'd love to hear how we see the market developing. in other words, there are a lot of public interest applications that are really important. and at the same time, when and does the faa begin to assert privacy? in other words, this is the national air space, and there are issues -- unfortunately hurricanes and wildfires -- don't respect state and local borders in terms of regulatory authority. so how does that work? frank, you are looking at the market. what do you think the applications are going to be? >> well, i guess just to briefly address privacy, i think it is an issue for the smaller little

uavs. i mean, i wouldn't want a one-pound uav hovering outside my window looking in. i think our citizens and mousse included have a right to privacy, and, you know, maybe you have to put residential areas, treat them somehow with these small uavs. i don't know exactly the rules. but i do agree there's an issue there. however, if you're talking about a larger airplane up around 20,000 feet, there are so many other things up there that have the capability to take pictures of us. there's the news helicopter, right? you know, when we get these nice pictures of the car chases on the freeways, you know, i mean, that hasn't been done by uavs. so there's a lot of things up there already that are manned that are taking pictures, but they're at an altitude where they're just not really, i would say, impinging on our privacy.

and especially if you get about 20,000 feet. i don't see privacy as a big issue for that. but i do think that is for the small. and so the other issue is what do i see in terms of markets and things like that. so i think the markets are just not really thought about yet because of all these restrictions. and until the restrictions, until there's a path to get through the restrictions, um, the markets, i think, and the creativity hasn't been applied. but already, you know, we've had interest from the energy areas in terms of monitoring pipelines and things like that all the way up to alaska and down. there's been some fishing, fisheries, right now they go out with helicopters and look for fish and things like that which is quite dangerous for these

helicopter pilots being quite a ways away from land. and then for, as marion mentioned, all the emergencies, you know, flying over fires, flying whenever there's some disaster and you want long endouches. so the key thing -- endurance. so the key things, i think, for civilians where there's a safety issue, and then you'd want the long endurance. those aspects of it. but once again i would say it just really hasn't been opened up. once it does open up, i think the commercial players will get in. and the question will be in 30 years, you know, they'll be, you know, fedex will be arguing to be totally unmanned, and maybe even passenger airplanes will say, you know, we can do it all automatically, so let's just go down to one pilot. that might be the case if 30 years. -- in 30 years. i think the technology's really there right now, we just have to have the will to apply it.

>> you know, there are some simple rules of life that when you hear them, you hear them this your mother's voice. and they're true in life, especially in politics, but also true in the business world. um, the first one is tell it first, the second is tell yourself, and the third one is tell the truth. and unfortunately, i don't think uavs got out there first, and i think they're not telling it themselves. and if i was many charge of marketing -- in charge of marketing, i would say you've got to get out in front again, you've got to tell people what you are because right now they think you're something else. and if you want someone to think of you a certain way, it's best if you present it to them than have them make it up themselveses, because they're never going to get it right. they're never going to prioritize it right, use the words you want, and that's why it's important to be out there and call yourself what you want to be called. when somebody recognizes you as

that, make sure they get rewarded for it. if they're calling you something you don't want to be called, don't look at them. they'll learn eventually. so if you've got three or four names, you're in trouble. and if people think that you're one big camera that's right in front of the bathroom window, if they think that they don't know what's in that thing because it's not a man, because it's unmanned and what is it, so i think that this is one of those things where i we have to all step back just a second. this is just a phenomenally dynamic but disrupt iive technology that is right now moving out of a somewhat military, kind of quiet unknown space into a tremendous opportunity for commercialization. and it needs to be introduced to the american people and the world in a way that is sustainable, that is realistic and that is something that does

everybody a good thing because it meets the three tests, that we've said it ourselves because we've said it right, because we've done it ourselves and because we've told the truth. and, you know, i think that this is a time for everybody just to kind of step back a bit. and i think that as a group in aviation not just specific companies or specific silos, i think this needs to get a little, a little redo, makeover and done better. >> i think, you know, maybe a measure of what, you know, you mentioned, frank, and you also, ellen, is that a lot of the current privacy proposals are not tech neutral. >> right. >> they generally, as a matter of fact, fall on law enforcement use of uas. frank, you alluded to this, but all that really does is run up the cost of other kinds of surveillance technology that aren't used by uas. but doesn't even get at what i

think you're quite correct about the concerns of a lot of private citizens using small systems. those are what, i guess, you would call a private privacy problem. to my knowledge, almost none -- i don't want to say none, but very few of the current proposals for dealing with that really touch on private privacy. it's all about you have to have a -- law enforcement must have a warrant first, or if law enforcement does something, we're going to apply an exclusionary rule. this is broader than the fourth amendment rule or something along those lines. but so long as it's understood as like this thing that the police have, i think you're going to see things like that as opposed to something a little more common sense call that accounts for the different kinds of technologies you have, the people that are going to use it. as you said, it's not going to be the high altitude air tactic that's taking pictures as you overfly. and if you can keep up with the

tech-specific approach, there will be a manned craft technology that will take the pictures of you. so maybe changing -- so there's an opportunity to change the discussion to get it more towards tech neutrality and a little more towards the common sense approach to it. >> let me suggest we turn to the audience at this point, because there may be questions that you all have, or directions that you'd like for us to take this discussion. so if anyone does have a question, right over here, i think we have mics. this we go. >> good morning. to linda larson with math flight, something that always puzzled me with whatever they're called is why don't we have adsb on them? why aren't we tracking them? adsb is a small transponder, and then we would be able to do better tracking. so maybe you could answer that. >> um, i would just answer that by saying we have put those types of things on in theater, but in the u.s. when we get

away, we've usually been asked to have, like, a chase airplane, and they never want us transresponding at the same time -- transresponding the same tomb the chase airplane is. we're told not to turn them on. but adsb would be an easy thing to put on. i mean, for these larger airplanes, i'm telling you, you know, boeing, lockheed, us, our aurora, whatever they decide they want us to fly and use we will do. it's really just, you know, making the decisions, i think. >> other questions out here? well, while folks are thinking on that front, let me ask you all, it is a question with a decision, do you all think at this point, wells, from your observation, for example, can faa handle this regulatory burden? are they the right people to be looking at some of these issues like privacy? what do you think? >> well, if it were sort of the

first day at school and you said what's the leading arm of the executive branch in terms of privacy, i'm not sure, i'm not sure the faa -- you tell me. [laughter] you would know. dhs is pretty well steeped in these issues, biometric data, passenger data. the department of justice is one big fourth amendment organization and characterize it that way. in the intelligence world, the privacy and civil liberties oversight board advises the white house on some national security initiatives. so if you were just looking out there in the world and saying which one of you all do i want to have dodd this, you might not necessarily have said the faa. but that's not the way things went in 2012, and the faa is, for better or worse, the lead agency under the authorization act and in charge of bringing this all into being by 2015. and as i mentioned earlier, everybody knows from the test site experience there is an inkling on the faa's part of

getting involved in privacy matters, so in theory i suppose after test site designation the agency might say, well, you know, we did privacy, they comply with that, so now we're sort of out of it. so having glommed on to it and no one is jump into the fore saying, hang on, we want to do this, that's unlikely to happen. without congressional input, i know that there has been a some proposals to sort of either kind of, i suppose, to bring more sort of privacy responsibilities into the faa's world and say exactly what that's supposed to mean and limit the scope of its inquiry, but it wouldn't be the first one, i would say. not to put a fine point on it, but it isn't going to do all the work. you mentioned the charlottesville city council regulation, and there was a senate judiciary hearing about maybe a similar congressional ip punishment i looked at the map, you can see on faa's web site, you know, the map of test site

proposal jurisdictions, and that overlaps pretty good with some places that have privacy proposals too. so you may see more of a 50-state regulatory effort that would supplant whatever work the faa would have to do if they decided to move forward and get into chose places. so to the extent that it's not the ideal or even the more willing executive branch candidate to do it, they might see only of their work mitigated by the states as they regulate pryce for law enforcement and other things. question is whether those regulations are going to make sense. >> and for those of you out here who are aviation lawyers, i would really take note, because at some point along here there's going to be some head knocking establishing between state and localities' authority and the authority to regulate the nas, how this whole thing is going to go out. and i don't think there's case law out there. you all may know. >> there's, for my own part just one thing, it's pretty narrow. it's a lawyer's issue, so you care about these things. the faa is undies piewtedly a

safety agency. but a lot of people concerned about the technologies p developing, there's a lot of overlap between the privacy regulation and a safety regulation. if you want to talk about my mum/maximum hover times, altitudes, things that sound in safety but also affect the extent to which certain technologies could surveil you or get bio data about it, you're kind of doing privacy with safety and vice versa. so it's blurry, which is a wonderful lawyer's answer. >> i've been on the aviation subcommittee for 11 years when i was in congress, and i will tell you not only because of you, but my respect for faa is limitless. and i think that, you know, they've got many, many tough jobs. this is a new tough job, and i think it's like that game show, you know, you need to call a friend. now, certainly in the administration, in the interagency where everybody lives, um, there will be both doj and dhs at the table a.

table. but what we've got to do is pick sure that this is inculcated in the broader sense of how people are thinking of things. and i absolutely agree with wells, i think for -- i always think it's smart to take your core competency and leverage that into something new. and my advice to my friends at the faa would be safety is your core competency and leverage that and find where that seam, hopefully, transacts with something called privacy. and, you know, keep driving the safety issues, keep driving your core competencies, find some friends, bring them in with your respect to my aviation lawyer friends, you know, i think this is where the bar has to be able to work together and find people that understand how to protect the seam, the safety seam for faa, we don't want denigration of what they're doing, nor do we want denigration to the reputation while this is going on. and at the same time, we've got

to be sure that this privacy issue is right fast. this has gotten way too big and way too hot and way too confusing and way too controversial and too political. we have got to shrink it down, remember how important it is, but at the same time don't let it overtake safety, keep people understanding that safety is still the mandate, and that safety will deal with a lot of the issues that concern people about privacy. but then, obviously, there will be some other issues because we're not -- our imaginations right now cannot capture the ways people will understand how to use this technology nefariously. we're just not smart enough to think that. so we're going to have to be smart and move it out. >> we're out of time. >> well, i have one question for you and, and this may be a little unfair, but no one has asked you a question. and if you were back as the administrator of the faa, what would be the first thing you would do to help to facilitate the use of our unmanned aerial space systems that we are

talking about today? >> i think there are two things that come to mind, carol. one is you do have to set priorities. and this is an area that has to be resourced. the faa is strained, there are difficulties. but in terms of what is really coming at us in our domestic use and the benefits, because the benefits are enormous from a public safety, all of the kind of applications you saw earlier. second thing i would do is we keep talking about all the various parts of government that need to pull together. and right now, frankly, i don't think that is happening. so you do need to ask for that interagency group it is a going to make in this a priority, and one of the things that we touched on today. but for this industry and for all of us, we're a global industry whether you're an operator or a manufacturer, we

want to see the united states primacy in this area continue. and we're going to have to deal with the treaty barriers that are there with the missile technology and control regime at the state department, we're going to have to deal with the congressional cross-currents, and we're going to have to deal with these agencies that all have both security, safety and proves issues. it's got to be a bigger governmental effort. >> well, marion, thank you. this is just such a great panel. i might just make the comment that when people ask me where do i live, i always say charlottesville. we actually live in gordonsville, and i'm going to start saying when people ask me, i live in gordonsville, not charlottesville. [laughter] that's because i really believe in what you are doing, and thank you all so much. marion, you put this panel together, it was fantastic, and let's give them a huge round of applause. ms. . [applause]

>> thank you so much. now, before i release you for the first break of the morning, and it will be for 15 minutes, i want to remind you to, please, drop your business cards in the bowls. don't leave the building if you want to get back for the rest of the show. and i also would point out that this is so worthwhile, staying all day today, because never have we had such phenomenal speakers. and the first, the first between tom and jim and now what marion and her phenomenal team have done, we thank you all, and we'll see you back here, please, in your seats at 10:30. thank you very much. [inaudible conversations]

[inaudible conversations] >> so the u.s. chamber of commerce event here taking a break. this event on the aviation industry, we are told they should be about 15 minutes. when they return, a panel will look at manufacturing in aviation. later today we're going to have more from this event over on c-span with a discussion featuring industry ceos, among other panels. while we're in this break, let's take a look at some of the conversation from earlier. >> as you know, he, he's one of

these fellows in town that doesn't need an introduction. he has degrees from harvard and yale, and he paid, played baseball with george bush. he has a storied career. he was at mckenzie and procter & gamble, and then he went to ge and was a buddy with jack welsh. e became chairman and ceo at 3m, and in 2005 he took over boeing. he serves on the president's export council, all kinds of organizations that have been put together to look at everything from manufacturing to trade. he's an outstanding leader and a visionary, an innovator and an advocate for business. jim, we're glad to have you here. >> good to be here, tom. >> now, here's how we're going to do this. we're going to pick some questions, but not so targeted, but broad enough that jim in each question can cover a couple of subjects. so here we have a man that runs really two companies in one.

i mean, you've got a huge defense operation and a massive global aviation issue. so from that perspective and from the perspective of being chairman of the round table, tell me how you think the american economy is doing. what about the recovery? and how is your company doing? >> yeah, yeah. well, tom, first of all, thanks to you and carol and to your entire team for doing thisser year. this is a big -- this every year. this is a big deal in our industry. i know that everybody carol named, including boeing, are delighted to be able to support this. is thanks for that. um, now to your question. the economy is what it is. it's sort of bumping along, very slow growth in the united states. not growing fast enough to really generate job growth as you can see in the unemployment numbers. so it's not running, it's not outrunning yearly productivity in most industries.

the housing sector's beginning to kick in a little bit which could get can us over that 2% rate. a number of people think it will. but it's still a pretty anemic recovery. and the, there's lots of reasons for it. it's everybody's got their own favorite reason for it. identify heard your speech on the finish i've heard your speech on the subject. i tend to line up with you. i mean, i think a lot of the issues that our country faces on the fiscal side, regulatory side, tax, i think, is having an impact, is slowing some things down. certainty is a word that's thrown around, but it is a meaningful word when you look at long-term investment at stage in the recovery is significantly lower than long-term investment at analogous stages in other recoveries.

so that speaks to the people willing to put out 20-year money, yes or no many, willing to hire 4 or 5,000 people behind that, yes or no, less this time. i think europe is a challenge as they face really a banking and sovereign debt issue over there. but they will, they and we will recover, albeit slowly. developing markets are growing. they're where the real action is on a global basis. as i think everybody knows. boeing is doing probably somewhat better than that description would imply, and it's because, largely because we're in a business that innovates. and we're in an innovation replacement cycle many our industry. -- in our industry. so we're not bounded by the gnp growth that i described because people are replacing old technology with new technology, us and airbus and others.

much more fuel-efficient planes, much more responsive to the environment. and so i'd say more than half our growth, which is probably two or three times, about three times the gnp growth that we're seeing around the world, more than half of that is driven by a replacement cycle by innovation. so i think we're -- and the aerospace industry in and of itself, not just boeing. i mean, the aerospace industry really is by many measures the most globally competitive industry that the united states has. i mean, it's about $325 billion every year just the equipment, about a third of that is exported. far less than half of that is imported from other places which is a measure of competitiveness. so i think the -- i'm tempted to say that the country's lucky to have the aerospace industry

because of probably too much pride in the industry that a lot of us have. but it's, it does represent in many cases, i think, some of the best of our country. and i'm very proud to be a part of it. >> well, great. now, that was a softball, wake-up question. [laughter] now, not from a political point of view -- >> yeah. >> -- but from an operation point of view for your company and others, give us your quick view on sequestration. >> ah. [laughter] sequestration. um, look, i think we all know why we are where we are. i think the administration and the legislative process put in place something that we all assumed would be so scary it would never be implemented. that assumption was wrong.

that assumption underestimated the lack of bipartisan capability in this country. and so here we are. sequestration on its face is a silly -- excuse me -- is a silly way to go after -- >> take a minute. >> yeah. >> you've had a lot of -- >> you choked me up with that question. >> that's a good way to cover a question. [laughter] >> yeah. i am too sick to proceed, tom. [laughter] >> two weeks ago i couldn't talk at all, and there was great celebration in this building. but seriously, go ahead. [laughter] >> i'll go on, thank you. i think the, it's obviously a silly way to go after cutting the budget which is an otherwise laudable objective. and it's going to have a disproportionate impact in places that we're not going to be pleased with. i mean, take defense, take the

faa, aviation. these, the defense by the letter of the law, the defense cuts will be very debilitating and will impact readiness. this is one man's opinion. and that is not a good thing in a world that is more full of threats than not full of threats. the faa is struggling with how they deal with everything from airport powers to supportive programs, and these -- and then there are many, many other examples. i remain p hopeful. i'm an on on theist. i remain hopeful as we go through some of this silliness for a few months that sort of the blueprint that's put in place by the cr which is a more choiceful, more thoughtful way to go about it, i hope that that

will become force of law. i remain an optimist. >> good. so, now, building off your optimist you can position you just established, why don't you tell us what's the latest on the 787 dreamliner. >> the 787 -- you're referring to the battery issue, undoubtedly. i think the -- we are very close to -- we have a high degree of confidence in the technical solution that we are testing right now. and with the faa. and i think it will be sooner rather than later -- the tests will be completed in several days, and we'll all look at the data. and i have a high degree of confidence that that data will tell us and will tell the faa, who are the decision makers here, that the fix is what we need it to be, and we'll get this airplane back in service in

due time. but it's, you know, this has been a difficult time for us. i mean, we've got this fabulous airplane that can -- and none of the promise of this airplane really has been diminished by this. why do i say that? because there's nothing about a battery that needed to be fixed that impacted the other things that make this a potential plane. and -- a special plane. whether it's the 20-30% improvement in operating costs of the you were a or the range or passenger confident of the airplane, all those things. as a matter of fact, we've taken some of the this time to sort of tighten up some things and just make sure we're in good shape as we get this back into service. but it's been a frustrating experience. i must say that the faa, michael huerta, have been champs here. they've put us through our

paces. and they, they have america's best interests in mind. they have the safety of the flying public in mind as, i hope, we do. which, i think at this point, means let's get this thing back into service and get on with it. >> i think the interesting point you made was innovation. >> yeah. >> recently i was talking to some of your very good competitors, and they seriously and vigorously want that plane in the air. because they don't want this continued questioning of new -- i mean, you've had this problem with every new plane anybody's developed. >> yes. yes, yes, yes. >> whatever it happened to be. >> are yep. >> so there's a lot of people that want to get this thing going. so let me ask you a related question, you know? you heard the list of other people here that make airplanes. the chinese are talking about going into the business of making airplanes. what do you think about that? >> well, i think the chinese will be competitors in large

commercial airplanes. i think they, they have the technology, they have the money, they have the defense infrastructure that enables this kind of thing, and they have a market big enough to absorb, to absorb the products. now, how long will that take? who knows. but they will get there. and i i think that really, that really speaks to the global competitiveness issue. and i think we will, i think it's boeing's strategy to win by innovation. i don't think we're going to win by having the lowest cost airplane in every market segment over time, particularly when you have globally-competitive places with lower wage rates and different kinds of banking practices. but i think -- and so back to your point that we're cheering for each other, and this may

sound a little strange, boeing and air item bus cheering -- airbus cheering for each other, but our strategies are to innovate and through innovation win. and i think as competition globalizes in every industry you've ever seen, that feeds to be the strategy for -- that needs to be the strategy for technology. technologically-advanced countries. and particularly this industry. so -- >> speaking of -- >> you'll see more of that. >> those comments from earlier today at this u.s. chamber of commerce event on aviation. back live now at the chamber of commerce just across lafayette square from the white house where we expect a panel in just a moment talking about aviation manufacturing. later aviation company ceos talking about the future of the aviation industry. this is live coverage here on c-span2. [inaudible conversations]

>> ladies and gentlemen, please take your seats. we've, we're one minute behind right now. [inaudible conversations] >> please take your seats, ladies and gentlemen.

it has quieted down, and it's 10:30, and we're ready to start. i will tell you, i have been looking forward to our next panel, and not just because my dear friend the famous or should i say infamous bob crandall is the moderator -- bob, i'm just kidding about the infamous -- i really appreciate your being here. he's not smiling or laughing, but everyone else is. so it was a good try getting a little humor in, bob. i want you to know this is such a privilege to have bob come back to our aviation summit. his -- this is his third time here, and having served as chairman of american airlines, we should be asking him a few questions today too. it's great to have you here, bob. you have a terrific panel. this is a new panel. i think all of us are very interested in what is going on in manufacturing. after all, it is one of the most

crucial and important parts of our economy. and, certainly, it promises to be a very lively panel. and so, bob, we welcome you as our moderator, and we know that you're going to get a lot of good questions, and so thank you very much, bob crandall, it's all yours. >> thank you, carol, and good afternoon, everybody. [applause] thank you very much. we do have a very distinguished group of people up here. i'm just going to run down quickly from the other end, dave hess from pratt and whitney, clay jones from rockwell collins, gary -- let's see, whoop, don't want to do that, from bombardier and dave hess, correction, gary from embrey air. the, i'm going to pose some questions to these folks which have occurred to me and might have occurred to me if i was still in the airline business.

if any of you have got a question, if you'll kind of wave your hand, we'll interweave your questions along with mine and, hopefully, get at whatever the issues are that truly interest you and you want to talk about. so i'll begin by asking a question that's sort of a consumer question, and that is why do you guys, why are you always late and over budget? [laughter] you know, and i buy things, you know, i go down to the store and i buy something or order something, i expect it to come on time, and i expect it to cost what it says it's going to cost, and with respect to something like an engine, i sort of expect it to burn about the amount of fuel that it said it was going to burn. that isn't always true in aircraft manufacturing. so tell me what, what do you guys think will be done, should be done, can be done to improve the industry's performance in that area? and, guy, why don't we start with you.

>> okay. well, first of all, you know, not coming from this industry, i discovered a lot of things over the last five or six years. [laughter] and the first thing i'd say is aircraft manufacturing is a very complex business. these products are, you know, intrinsically extremely complex. but more importantly, i think with what we have to do in the industry in terms of the demands for fuel efficiency, environmental, noise control, etc., when you do develop a new aircraft, you're taking leaps of faith. a lot of innovation, a lot of creativity. if it was just more of an it rative process where you could minimize the risk, probably you'd see a lot less of these overspends and late programs. but if you take a program like ours on the c series, as an example, or the 787 or the 350 or some of the major programses, these aircraft are taking a major leap. there's inventions involved here whether it's in materials, whether it's in engines, new technology systems. so it's not an excuse, but the fact is that to get 20%, you

know, leaps in terms of fuel efficiencies or a footprint on noise that's four times smaller, you have to do something different than what's in place today. so a lot of our engineers and our researchers are really taking, you know, forward-looking stance in terms of what we're put anything the aircraft. of course, as the manufacturer, we have to make those trade-offs and look at the risks versus reward, and we try to do that through a very regulated and very dynamic process. you know, the kinds of things we have to do, and i'll ask dave and clay and gary to chime in here, but as an example, because the systems are so complex for this time, the first time on the c series, we've put in a very different approach in terms of testing the aircraft on the ground. we usually do a lot of is the integration of all these complex systems and then have a very sophisticated flight-testing program, and we debug in the air and sometimes at the customer, sometimes, okay? if we don't catch everything in the flight-testing program.

this time we've taken almost 18 months' worth of ground testing and invested tens of millions of dollars in a facility where we're actually flying the aircraft on the ground. and we're asking our suppliers like clay and others to do a lot of testing in their own shops, but when we put all these systems together on top of that, we're flying the aircraft, literally, with the weights and the loads that we will see in the air and trying to debug as much as possible so we my poise what's going on and ultimately at the customer. that's an example of things that we're doing differently. and if you take the c series, you know, right now i'll knock on wood, we are a little bit late but not very late in relative terms, and we feel that we'll be able to maintain that. so we're hoping to break this cycle, you know, of being years late. but we'll be careful before we state that. but right now from what we know, what we see, we believe we'll be almost on time for the cs-100 and actually on time for what we said. >> boy, a breakthrough.

gary? >> first of all, bob, thank you for hosting us here and for carol and the chamber for doing this again. just by the turnout here today and the remarkable panels that have been set up and speakers, it's a testament to the perseverance of her and the group. but, um, for just in reference to what guy says, we can certainly appreciate what you're saying and certainly understand the issues that you're facing now, but being in the industry, bob, for over 30 years that i have been now, it's a remarkable thing to see that we as an industrying with, oems as well as our suppliers, can tackle the issue of the development cycle where we are looking forward five to six years ahead trying to see where our customers will be five to six years ahead. the customer as a target is moving.

it's changing speeds. many, many factors outside of their control. fuel costs, volcano e eruptions, bird flu, all these things are happening and changing the dynamics of what makes the customer successful. when we develop products, we listen to our customers very carefully, as you know. and so by trying to predict where that customer will be five or six years down the road and trying to hit a bull's eye and also take the latest and the greatest technologies and incorporate them in the airplane such that we're not too early where we're missing technology opportunities, but we're also incorporating those that will be there and be needed by the customer five years or or six years out, that's the challenge. so i think as an industry, i think we have a remarkable track record in really getting to where, hitting that target in a very specific place. and to do that under the circumstances that were presented here today, you know, this is the challenge.

so what could we do as a manufacturer to streamline that process or to reduce the risk of that process? so one of the things that we do as guy has mentioned is incorporate technology into our manufacturing process with robotics and, also, some of the things that we're doing include lean philosophy. we're constantly streamlining our manufacturing process, our, you know, all of the different processes have cells. those cells are examined, they're always optimized, and then that trickles down into the end result to the customer not only in terms of pricing, but in on-time performance. so we do have an obligation and a solution to see how we can reduce the risks in terms of delivery and cost overruns. but as i mentioned in the beginning, the process itself is so dynamic and so complicated, i think we have as an industry a really good track record in that regard. >> oh, i think you've got an excellent track record, and i think everybody would kind of agree with that.

on the other hand -- and, granted that you're always stretched the boundaries of technology and you're trying to move ahead quickly. on the other hand, you are, over the years have sort of involved your customers as involuntary co-inventors. they all, they don't necessarily want to be involuntary co-inventors. so i guess the question i have is what do you think is going to happen in the years ahead? do you think that customers are going to be more demanding, are going to require more by way of compensation from manufacturers in terms of lateness and over budget? clay? >> these guys could answer that question a little bit better. if i could, i'd like to go back to your first question and give a supplier perspective. in the 17 years i've been with rockwell collins, about every two years we do in-depth lessons learned into root causes as to why we don't perform on time in

certain things. sometimes we get it right, sometimes we don't. and i think the technology issue that both gary and guy talked about is absolutely true. but we found there's four fundamental root causes as to why it doesn't work right. number one requirements, specification and stability. number two, staffing the program at the adequate skill set and when you need them. number three, the leadership of the program and, number four, your processes for developing the program and discipline following those processes. almost every problem that we see can be traced to one or more of those four elements there. now, you combine with that, i would say respectfully, for most of the oems that don't develop a brand new airplane every year, in fact, the gestation period is usually five to ten years between new airplanes, the ability to define requirements and stabilize those requirements through the development cycle is very difficult especially if you're pushing a state of the art technology. name me one program manager on any program that ended the

program that started the program. very few of them. and so the definition of that program manager. and then i would say some of the process alignment between let's say an oem and through the supply base and the communication of that process could always be something that's improved. the programs that i've been on that have worked best -- and these two gentlemen to the left have a couple of those as well as other oems we have been on -- are those where the communication within the company and with the company through its supply chain have been extraordinarily good, where the respect for people who do all the subsystems every day working with the systems integrators is working carefully, and one helps the other do that job well. and when that exists, when those communications exist, usually we do get it pretty close. when things break down with any of that supply chain is typically where we tip over to the other side. now, last thing i would say is the end customer, the airlines

of the supplier or user has the culpability of this, too, because i can take a system like in-flight entertainment which we're in. it's the worst business in the world to be in. because the marketing departments at every airline want something that works in your den to work at 30,000 feet the same year they see it in your den. and that can't be done in the environment and the certification we have. and so there is some driving element from the airline that drives us to try to do the impossible, and sometimes we fall short of it. so i think it's a big system, and we're all culpable for the -- >> i like your root cause analysis. but i would say from a customer perspective, i think it's the responsibility of the manufacturer to say i can't do that. >> and lose the business, right? >> well, that's fine. [laughter] but the fact is i'm not sure you would because, you know, there's a lot of sort of involuntary or co-inventors that don't want to do that anymore. >> right. >> so if they get told you can't do it, they might come up with a

different answer. >> good point. >> what's your perspective, dave? >> i do think we have the discipline. i mean, i assume your premise is referring to your other three guys, because brad is typically flawless. [laughter] we've had our share of disappointments in the past. we have had scheduled delays, performance shortfalls. probably the best and worst example of that was the last new large commercial engine we did more than a decade ago which was late, was commercially disappointing and technically didn't meet its requirements. but it was really a transformational event for pratt. after that disappointment we completely revamped our e and d process to make sure that we didn't repeat history. i mean, that left a lot of scars at the time. so we went through and established a very rigorous technology road map and technology readiness level

process, trl-level process to make sure that we had a very disciplined process for bringing new innovation and new technology forward with incremental both analytical tools as well as a lot of rigorous building hardware and testing before we ever commit to a customer that we're going to launch. a new engine. and i think it's proving itself to be valuable. i think the new process is working. we've got five new fans in development today. despite the fact it's probably, you know, in our view, the most revolutionary leap in new engine architecture in a while, the engine is working well. we're basically on schedule. we've certified the first gear turbo fan for mr. shay's airplane on february 22nd, and the other engines are right behind it. so we learned from the mistakes that we made. we put in a better process, and i think we do have more discipline now. where we know we can't do something, we're telling

customers, no, we can't. >> makes good sense. yeah, guy. >> you were asking about the customers. maybe i can talk a little bit about that. you said are the customers going to be more rigorous in their demands and their performance guarantees. i can -- >> even worse than now. >> the customers are. [laughter] i can tell you as an example for the c series, we have five different programs being developed, but i'll use the c series as a proxy. i can tell you that many of our customers are prospective customers have been burned with other programs where they're late, where they've had to rejuggle their plans, you know? their portfolio plans. and i can assure you in all the discussions we're having right now with our customers, there's a lot tougher requirement, penalties, guarantees, you know, for lateness, for performance than ever before in other programs that we've had to go market. so i think that the customers are getting smarter in that regard, they're getting more demanding and fairly -- i think

it's fair that that happens. >> i think to some extent you've made life harder for yourselves by outsourcing. there's been a lot of outsourcing. there's a big trade-off between jobs on the one happened, outsourcing on the other. why do you outsource as much as you do? are you doing less than you have done? >> want me to start? >> are -- unless you want me to. >> i'll start. first of all, outsourcing doesn't necessarily create less jobs. i think on a whole it doesn't create less jobs. but as bombardier, as an example, we're a relatively small company if you compare to airbus or boeing, maybe not so small if you compare to other manufacturers. but we don't have the financial wherewithal to be totally vertically integrated. so we figured that out a long time ago we needed to depend on

a supply base. where is it we add value, and we're the integrator, and we know how to put an aircraft together with all the great systems, engines that we get. so two things. we didn't have a capital structure and the depth to do all of ourselves. we do some, so we've had to go outside. so we've really developed the ability to manage supply base since the early '90s. and i think generally we do a pretty good job at that. some other manufacturers moved away. i think jim talked about that, and now they're coming back. in our case what we've looked at is what is important in the aircraft that we want to make sure that we have knowledge inside? and we, on some platforms, will do as an example the fuselage, on the other platform we'll outsource the fuselage. some platforms we'll coanother part of the aircraft, but we want to always have the knowledge inside so we keep in check what we're doing on the outside and then develop a very, very strong supply chain group that can integrate all of these experts that we hire on the

outside. >> although i would think if you go back to clay's sort of root cause analysis which i thought was absolutely on the mark, it is harder to apply that kind of root cause analysis to somebody else's business than your own. i would think. >> oh, i don't think so, bob. [laughter] for example, i think the premise of your question is wrong. i think it's been wiewdly reported that -- widely reported that outsourcing is the problem that's created these delays. i don't think that's true at all. we've been outsourcing components of aircraft for decades and done it successfully. i, again, i would cite two issues from my perspective. number one, supplier selection and program management. if you pick the right suppliers that you have confidence in that can do the work and if then if you manage those suppliers in that way i talked about with requirements, deaf us ins, stability and a cadencing to insure that problems are surfaced early -- and there will

always be problems -- that then can be worked ahead of time, then you can outsource everything. i think it make no sense for an oem to be vertically integrated because we'll do phi or six -- five or six air onnicks system -- avionics systems a year. i think those two issues have been the source of a lot of the problem in delays because we can't get the requirements defined specifically, and they don't stay the same. and a supplier's just going to do what you tell them to do. and then when problems arise, they're not cadenced to earlier. and i think that's the root cause again, not the fact that we did a bunch. of outsourcing. >> clay's kind of focusing on core competencies, so do what you do really well and do it good, and do it in the best regard for the customer as well as cost. but is supply, is the outsourcing as a subject, is it a necessity? or is it a strategy? and i think when you mix the two

together, and i think that's the, you know, the degree of separation between the two becomes, becomes, you know, a positive or a negative in the process. if it's a necessity, then i think you're taking what comes with it as a result. and then you see these cycles going back and forth where you expand and contract in terms of philosophy. but if it's a strategy, a true strategy and you say true to yourself in terms of core competency, as guy said, then i think it's a controllable component of the process and could become a very big strength of the process as well. >> and my contention would be or it should be both because i think any -- if it's not a necessity, that means the only alternative is to vertically integrate, and i think that's always a poor strategy. and then it should be a strategy if you're going to do it right x. that's why i get into supplier selection. you can't just spread things around and expect everybody's going to do their job. there are past performance matters, and selecting people who have the right competency, the proven track records and the

ability to perform against those track records, and they should be held can accountable to that. if they don't, they don't get the follow-on business. >> just as a quick follow up, one of the things we've done -- and i think guy even alluded to this -- especially in the last ten years, we have really kind of held, and you know this well, our suppliers to a certain standard. so we have follow-up meetings multiple times in the year where we have the a2s and all the sigma processes where the problems are identified, the solutions are determined, and then there's a follow-up and a strict adherence to what the agreement is, the partnership is going forward for the solution. and i think like i said in the last five, six, seven years for us that's made all the difference in the world in terms of controlling the process so that when we do do an outsourcing assignment, there's a more stricter and more fundamental, i would say, result that comes from it that is from the process itself. not nsse kind of, as --

necessarily, as you said, opening up and hoping for the best. >> i'd agree with clay in that i wouldn't necessarily accept your premise, bob. you know, in the example, you know, that a lot of people are talking about, now, obviously w the 787, i don't know for sure, but i'd be pretty certain that boeing didn't manufacture the battery for the 767 and the 777. some of the issues that they've had recently have nothing to do with their outsourcing strategy. i think clay mentioned a keyword when he was giving his response with respect to expertise. it's kind of where you put the talent. in the old days, when we weren't outsourcing to the extent that we are today and the outsourcing was more sitler parts, more commodity kind of parts, it was a different skill set. you had buyers that placed purchase orders. you now need to shift the talent into the supply chain that has the technical expertise to be able to manage the commodity or the part that you're purchasing.

so it requires a different skill set, so a lot of the tall element that we used to have in -- talent that we used too far in engineering or manufacturing is now working in supply chain and make sure that we apply the right skill sets so that we can successfully outsource. >> well, i take your point, and i think it's a good bun. a good one. to use clay's example, you've designed a whole series of in-flight entertainment systems on a frequent basis whereas an aircraft manufacturers' not going to do that. but how do you deal with the issue? take the 787 problem which has been a dreadful problem and an example of trying to mauve ahead -- move ahead from a technology point of view that just had a bad outcome. how does the primary manufacturer, boeing, deal with that failure on the part of the supplier? >> okay. um, if i -- i don't want to really talk about boeing -- >> no, no, no, i don't want to talk about boeing either. i'm interested in the phenomena

of how a primary deals with a supplier that delivers something that doesn't work the way it's supposed to. >> yep. i will maybe touch on that. principle, i absolutely agree with what clay and dave have said in terms of outsourcing. i think it's a question of core competency and what you're able to do inside the company and what you're able to the extended value stream to do. and i think in the, you know, gary mentioned strategic, i think you have to have a mindset where your key suppliers are are an extension of your company. and you have to behave in the way that you set the requirements, that you have a partnership approach, that there's transparency and that when there is a problem, like you mentioned -- and we have, certainly, a lot of problems on our programs where we can be very transparent and open and say, okay, mea culpa, let's fix that, let's move on or, no, wait a minute, the requirements are okay.

there's probably maturity of the software, whatever the issue is that we've got to deal with. so it's a mindset. and one of the problems we're faced with is, obviously, we have the cost pressures. so when we go and outsource, well, yeah, a strategic issues, you want to pick the right partners, but you also have to push on cost, so you want to compete. and when you have only one dimensional partnership, maybe one or two suppliers and you're worried about are you getting a good enough deal on your system, etc., so you have that pushing you to look at others that are maybe less qualified or enter more risk versus having key suppliers where you say, okay, i'm going to put my eggs with a primary guy, i'm going to trust that he's going to keep up with the competition, that he's going to keep me healthy economically, but at the same time i benefit because there's an extension of my enterprise with that. so how you deal with the problems is that partnership and that transparency between the companies. and that seems like a very simple concept, but it isn't.

it isn't. [laughter] okay? to have that kind of openness that you can discuss can the real issues. because the commercial issues always get into place, right? my fault, your fault, you're going to pay for this, all the things that come into play. >> life is about trade-offs. >> yeah. so i think that's the philosophy that we're trying to adopt more and more within our company. pick one key driver, one key suppliers that's going to be the lead and maybe one or two others to keep him honest, but basically, this is the driver, this is the partner for the long haul and trust that that's the right approach. >> partnership is a great word. it really is. it's a true partnership, especially in the core, in the core issues, you know, that as guy related to. but, again, i come back to the fact that it's the management of the process as a whole. and if it's a true partnership, which is a give and take on both sides, i think that will go a long way in helping solve the problems as they come up. >> well, i think that's right. and i think one of the great

problems you have in every partnership is true transparency. tell me about all your warts. and you don't want to tell me about your warts, so maybe i don't find out about one of them in time. >> but if you have a partnership, bob, i'll give you a very, very simple example. yesterday i was on the phone with dave, okay? and we have some issues schedule wise and so on, and, you know, at that level him and i were talking about those issues. the day before with clay. you know? and if you have that trust, then you can talk and say, okay, clay, i'm in trouble. you know, you're a month late, or we have this issue or this customer, whatever, and that's where you're tested. but if you can work through those issues, it's amazing how fast you can get through the problems. >> agree. >> i used to joke around with a very senior executive of an oem who will go unnamed, but we had an issue, and i'd call him up, and i'd say, okay, x, what am i today, a vendor, a supplier or partner?

[laughter] because the treatment is very different. and this issue of partnership is exactly right. what i like to tell him, listen, first of all, you don't want to woil -- boil this down to commercial terms where all i'm thinking about is getting well for myself. you want me in a position where i'm spending all of my time and money making sure i'm making you well. because i said before, in our industry there will always be problems. there is too much technology and complexity to expect anything to run problem-free. and it is the way we deal with those problems with each other and this sense of partnership truly as gary and guy have talked about that will make or break us as an industry. and where that exists, where that personal relationship exists of mutual respect and transparency, we usually come out of it very well. where it doesn't, we stumble and bumble along. ..

done, given higher costs for failing to bring down initiative what do you think and be done to further reducing? let me start with david. >> i guess number one i would say i'm not sure if anything changes. if you look at our track record since the beginning of the jet age, the early '60s, and early 60s to today jet aircraft are about 70% more fuel-efficient than they were then. without caps, without creating

other things, it's because of environmental pressures are perfectly aligned with the financial pressures, as you know, on an airline where 35% of the cost is fuel. the only way you can try to maximize profitability, or one of the ways, is by having more fuel-efficient aircraft. for every percent of fuel efficiency, you get 1% reduction in carbon emissions or emissions. so there's a huge incentives on the industry today to continuously improve environmental performance of our products, because we need that in order to have financial success. i don't see that trend changing. if you look at again from the engine perspective, there's kind of a history of a major leap in engine architecture, followed by a period of 10 to 15 years of incremental improvement. but over time that improvement

is averaging about 1.5% since the '60s. we went from propellers to jets and then jets the high value ration. turbofans, the next leap would be that. turbofans. but we have the technology roadmap laid out by continue to improve it by another 1.5% a year over the next decade. they will be the pressure on this industry to make aircraft more fuel-efficient, and we're doing the same thing with manufacturing footprint spiritual efficiency and emission reduction are essentially the same game. >> exactly. >> if you wrap your mind around the fact that, to say this is the right thing to do not want from environmental from a corporate social responsibility but it's the right thing to do from a business perspective as

well. you can orient all your efforts in that direction. i think our industry, and i may have the numbers wrong but i think with committed into 2020 a half percent improved and and and 2020 i think it's carbon neutral growth, and by 2050 like half reduction versus -- something like that. of course in our strategic plan where -- i think we're doing industry of a pool that make commitments for about we consume 2%, or only. and basically everything we doing from a product standpoint, from our facilities is geared towards that. because that's where the customers are going to be expecting us to be. so all the programs will be developed either with dave or other manufacturers are mindful of that. and we really designed for the environment, it is not only for fuel efficiency. we are looking at my. there's more and more airports

right now that event surrounded by cities that used to be out in a few but now the cities are around them. you can't land because mac. a lot of the regulations involve the we design an aircraft now that can land in this kind of environment. short field lines. >> [inaudible] >> no, but it's both. >> a very quiet engine. >> our footprint is smaller than the previous pixar can get to wrap your mind around it. this is the way it's going to be and this is the way, it's the right thing to do also as a corporation. then just focus your resources. >> the interesting the note about the numbers that he talked about, the emissions reductions, at the same time when rpms are supposed to grow, double roughly in the next 20 years, so even with rpms growing them they will be reducing emissions because of the performance. >> tremendously good record the

industry has, both manufacturers and operators. >> i don't think any of the industry has done what we have done. >> from our focus, propulsion, it's in aerodynamics. and i might say our focus is kind of radical. looking around outside the box design. it's the incorporation of certain other technologies like electric motors, you know, on taxi. but also i don't have anyone has mentioned the biofuels. that is the real focus. that's what a real go operation as an industry has happen. remarkable cooperation even between competitors. and that's what we'll have to go together as a group in order to make something that is meaningful going forward. elderly focuses that we have right now. >> talk about electric voter taxi systems. are you guys working on that sort of thing for your airplanes? >> we are.

the short answer, bob, it's on our radar. we are examining the technology, but i would say it's premature for us to even think about when we would introduce something like that. but certainly we're looking at it. >> we are evaluating it. and i guess we see some applications for it. however, when you look at the weight, the power consumption and also some of the size that may be required to put this technology, there's some trade off. so there may be some applications where our customers heavily use the airport continent, where there's long taxiing, where this trade off may make some sense. but it may not be true of all the applications. so we are trying to evaluate. we don't think from our standpoint that anything will happen before 2016 plus. based on the radar screen because it doe doesn't need to,s bring advantages for the trade off i mention before. we have to be careful because ultimately the customer would pay for the. we had to get return on

investment. >> bob, i would say i think those are the big hitters, where a nations are concerned but i would add one more thing, that a system oriented and that is nextgen. right now there are still too many delays in the system using up too much kerosene underground or in the air. i came in yesterday into dollars and my flight was extended somewhere between 10 or 15 minutes just for safety, and how much waste is that. so as we move to nextgen and get better spacing, when we had onboard systems which we're working on right now, brought to you by -- for deep flight management systems, you cannot have trajectory management that controls and airplanes use for more, required time of arrival. seek a basically take that time in the air many minutes out, have a continuous decline so you are a glider at that point. our estimate is you can save

about 1000 pounds of fuel per flight on some of the large aircraft just by getting those more preferential routings. so i think this is a multifaceted answer to a question, to be important for this industry to do so. >> i think the absolute right, including get nextgen in place, we get consistent funding and consistent application, began to use the technologies that is there today. >> that shouldn't be a problem the way congress is working right now. i think we can count on that happening. >> feel pretty good about it. >> well, congressional efficiency is not something i'm very familiar with. [laughter] you know, we talk about fuel efficiency. we've talked about weight. we've talked about manufacturing processes. what happened we talked about that's important in your

activities? what are you doing that i haven't asked you about? are there new materials we haven't heard about? what lies five years out speak with new materials, absolutely. we didn't touch on that, but we are certainly evaluating common you know, carbon composites in our newer aircraft. right now we're manufacturing want right here in the u.s. in wichita that will be an all composite business jet. it's growing pains force. a lot of invention going on, but our new leader 85 will be basically an all composite aircraft. it's amazing when i go and visit with the aircraft looks like and what the possible is our down the future if were able to crack the code on doing this right. but if you can visualize a fuselage being one part -- i'm how me partners went and/or other fuselage, metal, okay,

thousand. this particular aircraft, one part metal. one piece. but that is an amazing feat, okay, of engineering. and it is hard to repeat. that's the thing we're going to right now. absolutely, material, you know, gary talked about biofuels. that's another area that's very important. we are quartering with some of our competitors, with some of our customers and government agencies and we make sure our aircraft are ready for that, you come with the engines. anything we designed now will be compatible and be able. we know the issues, the infrastructure and cause. certainly those are areas that are very important. >> where are we going with biofuels? >> well, from an engine perspective, biofuels are somewhat trivial. we basically demonstrated that are engines work with biofuels today and have certified are engines both military, business engine, commercial just. is really trivial from a

technology standpoint to the engine perspective. what need to be developed is commercial supply chain of biofuels and getting the prices to the point where they will be competitive with jet fuel prices today, and that's where the challenge is i think, trying to find a way to bring those things the market that would be economically acceptable for the end-user, the airline of. but from an engine perspective it's really trivial. >> this will be a huge challenge. >> yes, i suppose so. and consistency. anybody out there that has a question we haven't asked? can't see anything from the lights. nope, i don't see anybody. tell me about, tell me about the interaction governments in aircraft procurement.

to what extent is the choice of airplanes or the choice of outsourcing partners a function of government actions outside the normal commercial interactions of suppliers and so one. do you get pushed? do you find yourself pushed to select particular suppliers? because that government or the government of an airline that you find at the time to sell something to want you to do that? is that an important part of your business? is not that not something you worry about? >> maybe i will start, and gary -- absolutely the are some interactions in relationship. i would say these are generalities, not exactly for every specific case. if your day with transaction in a developed country mostly, it

boils down to more of the normal competitive issues, having the best value proposition, the best product technology, performance guarantees. and usually the other governmental issues don't come into play so much. but in some parts of the world their sometimes unwritten things where there's trade-offs between get a big order but some and industrial counterpart, trade off. we would like to do and just tries a little bit in our country and give us a package, do something from that standpoint. so that a certain something where faced with on some parts of the world, in some of the campaigns that we are dealing with. another, obviously these transactions are huge, and more and more are when you're getting sometimes it's not just the manufacture or the customer but the government is also involved because a bigger trade issues between the country. so as part of big business, you know, the president of a country, the other present and there's announcements made that

drive certain decisions. so some of those things come and go as well occasionally. but at the end of the day, even though that exists, you have to on the products. rarely would airline take on aircraft or product that won't meet the needs of long-term. most of the time you have the right product, the right cost and the right value, and for that customer for the application, for their mission. >> what do you see happening in terms of a trade off between, how has in flight entertainment change with increasing emphasis on in flight communication? >> i wouldn't say in flight entertainment. what i would say is big technology push to your previous question we see is in conductivity. often refer to aviation as the final frontier of conductivity. sabato place you can go to in the world today and not be immediately connected to your home or office. and that would include whether you are a passenger or a crew

member. that our connectivity devices that are very low rate, very tightly controlled, not a lot of bandwidth, and whether it's air traffic control announcement it's usually done by voice and data. that's what nextgen is going to get out. >> but i think it's aircraft become more elected, his people demand to stay in touch they will demand that connectivity, and using some of the newest equipment now come with servers and connectivity built in to our new proliant fusion we are building for business aviation and for some regional jet have connectivity built into the system to enable us to have built in separate equipment so as they become more ubiquitous, you can connect to that. i guess the second they want to talk about the business idf governments involved. we see a lot more of what you just described, bob, our military program and we do our commercial programs, commercial aviation industry in general especially in the developed

countries is pretty much best of breed. they have to be competitive by picking that. in the emerging countries, russia, china, specifically, we see a much more controlled environment where you are asked to partner up and joint ventures with local entities to allow them to develop the knowledge and expertise, to allow some of the wealth to flow into them. and that's what we're beginning to see a little of that. but that's the exception, not the rule. >> just as an offshoot to that, the one thing that i've seen over the last 10 years especially come in particular the last five or six years when it comes to the challenges on, with a financial crisis come is the emergence again in a kind of cycle but emergency of the credit agency. i think that oecd has done a remarkable job of applying

consistency, but the short answer here is, can we assure that global it, especially some of the new entrants that are emerging and coming in now. i think that's another challenge for us going forward, and something we need to keep our eye on and be careful of. >> there's been an increasing amount of discussion here in recent weeks particularly about, of a very broad free trade agreement between europe and the united states. we've already got mutual recognition and certification. what do you perceive might be added to that if we get a very broad, essentially absolute free trade agreement between the eu and the u.s.? >> that sounds really good, bob, but anytime you plug a component for broad free trade agreement it scares me to death. so i would be worried about that

actually slowing the process down, not speaking at a picnic to get it and it's in there, that's great. i think the government should push to include that, but i don't think that not to be done in live of the harmonization of obama and we already have going, especially between europe and the united states, to really largest certification bodies in the world. for years and years we've had mutual certification. that's going well. have different approaches and different keys related to it that is troublesome. i think those can be worked on a bilateral basis, one off, specifically with the aviation agency, probably much faster, more comprehensively than putting it into some broad transatlantic agreement. i would fear for the delay and the subjugation to a minor role, but that might place it again that would be a caution i would have. >> that's right, there is a much more developed framework for aviation cooperation. nonetheless, you wonder what might happen if such a trade

agreement comes to pass. in any event, i've about run out of questions. does anybody else want to ask one of these distinguished gentlemen something? ica handwaving in the back. someone with a microphone over there. we will take that question. >> i have a question. some companies are talking about engine was taxing, on paper it seems to make sense from a fuel consumption fraud -- emissions and pollution. is that anywhere on your guys radar screen? >> a terrible idea. [laughter] well we touched i think both he and kerry touched on that a minute ago and perhaps i asked the question a different way, which have to do with engineless taxi system and there has been some conversation about it.

i think you guys both said yeah, we're thinking about it but so far we can't find a set of trade-offs to make any sense. >> we did answer the question. >> as divisive as i understand them, electric motors are designed to run off the apu, et cetera. that's the general idea. >> any of the question out there? yes, right there. how are you, my friend? >> [inaudible] >> terrific. yes, mary and. >> [inaudible] >> let me just repeat the question for those of you who couldn't hear in the back. mary ann's question for the

panel is, are you having any difficulty recruiting talent? are their workplace, or the skill deficits et cetera, what's the state of play? >> i would say we see that. i mean, if you look around the room, and probably the panel here, and bob maybe you, a lot of us were inspired to join this industry because the u.s. space program in the '60s, go to the moon speech from president kennedy, and so forth. it really kind of inspired a generation of scientists and engineers to come and work in this industry. i think we're starting to see some of the intellectual property start to retire, leaving industry. it's hard to see sometimes how you inspire the next wave. we want people to come work in this industry that can work for pratt whitney or collins or bombardier, now go work at google or wherever. we need something to inspire

them. the development of new aircraft over the next generation fighter aircraft, or whatever it it's getting harder and harder i think to get them engaged and excited about the growth prospects of industry because the pressures we've been under and the challenges. >> i agree. our company is about 50% military and 50% commercial. you can imagine the trajectory of those two businesses right now given what's happened in the market. we are not having any trouble recruiting the kind of talent we need just because we're not recruiting that much talent because we are moving most of the military over to the commercial, and we have the luxury because of the skill set similarities to do that. what we run into the problem is retention. we're seeing a much higher than normal attrition rate out of our military business because of a fear of no future. if you look at this country, laid on what dave said, so much of the intellectual capital and the cutting-edge of technology

that comes out of defense, research and development, and to a certain extent procurement, is derived in the aerospace industry from the military business. i worry deeply about the country's ability to retain people in this industry, doing that kind of marvelous things you have done for decades if the trajectory continues as it is right now. that's our biggest challenge. fortunately, we have some very exciting things going on in the commercial business which would draw people into the company. but there many companies in this country who don't have that advantage, and i think we should be concerned. >> we have maybe a little different perspective because we are heavily based in candidate, although we have significant operations in the u.s. we have over 6000 people in the u.s., the bulk of them being in wichita. ironically the recession was a good thing from that standpoint, because we happened to launch a lot of programs just before and during the recession, which a lot of people think was drunk

and disorderly or really crazy, but just happen to be that way in the cycle that we had to do. and because of the recession happening there was a lot of people available globally. we are hiring at some point for almost two years, 100 engineers a month. so we've recruited from all over, not just a montréal, toronto or canada but ever in the world because there was a recession going on and we plucked up as many people as we could in the company. the other thing that we've done because you do run out of people at some point, particularly if you're in canada which is a smaller country and so long, we globalized our tactical footprint. so now we have a significant footprint in india. we're developing in mexico. will have one in china. we have one in europe as welcome the u.s. and canada but we are also decentralizing more of our tactical footprint overtime. they can be all in montréal or around the corporate headquarters. so that's two ways to skin the

cat. during the down times women out and pulled a lot of people. retention is an issue. as things get better we are concerned about losing people, but globalizing also helps. there's tremendous amount of graduates coming out of china and they are very, very good with i.t. issues and all the things i know are ready for people's minds. but india is another great place and so when. so this challenges. >> you are funny them around the world. >> yes, we have to. >> through the efforts of aia, marion, and character of the chamber, those of us sitting here know that our days are limited here, at the next generation needs to come forward and we need, we have a strong obligation as being in the industry to ensure the industry's future. so after saying that, you know, one of the great examples that i could use in a great introduction is emperor has a

transpacific in two ways. number one, we made the decision to bring the executive jet system closer to her customers. we're just like about this before. so we establish ourselves in florida which is on the space coast. we have found an abundance of talent. as you would expect, but for example, one-third of the workforce that we have the comes from nasa or nasa contractors. they are driving that process. so in a very slowly we are preserving intellectual property there. which is so precious to our country. a second example is we decided to expand our engineering presents out of brazil. with 4000 engineers in brazil but that didn't stop embraer from thinking globally. we decided to establish an indie descent into united states. we did a lot of research and we found th at the home we have in melbourne is a perfect place, an operation like that specifically for the same reasons that we, as the success we had with other facilities. one example, bob, i was at the

facility the other day. i think we hired our 18th employee going up to 200, go into a large facility with a $28 million investment. and we are going on in many some of the new employees, and one gentleman that i met was head of environmental engineering for the space shuttle discovery who is now working on our system. so i think it's a win for the community it's a win for embraer but it's a win for that element as well. being a part of the intellectual presence there spent i must say -- [inaudible] >> i think it is. i would have just a footnote to marion. marion i think would be a whole lot better off if we had more growth and these guys are having a lot trouble finding fatalities needed. thank you all for your attention. we appreciate it. >> absolutely. [applause]

>> i'm going to put a plug-in for the chamber, because one of the issues that we are of very aggressively involved in is the immigration legislation and the need to pass that. one of the key reasons is related to getting some of this talent from other parts of the world if we don't have them ourselves. and until we are able to expand those visas, this simply is not going to happen. what he mentioned and certainly what all the talk about, this is something that will be of great benefit going forward. i told you this would be a lively panel. it was a pakistan. we thank all five of you, and bob as usual, you did a great job as our moderator. thank you so much. and to all the gentlemen. this was a terrific panel. and now, thank you again. [applause] >> all right, please listen up.

because there a lot of you to move in a very short amount of time. we are going to start a 20 minute break, and they need you to take your personal belongings off of the table and neither put them on your chair, or take them with you. if you put them on your chair, pusher chair under the table and i'm going to beg you, please do not visit with one another in here. clear out, because catering is coming in to put the food on the tables. and so there are exits all around come at please help me make it happen. and be in your seat at 11:50. thank you. [inaudible conversations]

>> [inaudible conversations] >> [inaudible conversations] >> that wraps up the morning portion of this year is chamber of commerce forum on the aviation industry. we will have more on this delay today starting at 12:45 p.m. on

the companion network c-span. you hear from a panel of aviation industry ceos. that is live at 12:45 p.m. eastern on c-span. back your c-span2 we're live again and about half an hour or so with any that look at racial justice, civil rights and voting rights. that is expected to get underway at noon eastern. later a discussion on how the public perceives climate change and climate change issues. that's been put on by the environmental and energy study institute and we have that live for you at 3 p.m. eastern on c-span2. tonight on c-span will take look at the intersection of so-called -- political journalism. we'll blog about nonfiction outlets like tmz, "the daily show with jon stewart" and access hollywood as well as scripted programs like the newsroom. you can watch a discussion featuring the executive editor of tmz, the new york times

hollywood correspondent, and former cnn and abc news anchor aaron brown. live at 9:15 p.m. we'll take your phone calls, tweets and facebook comments as we're joined by two guests who have been following this topic. here's a brief look at that 8:00 program. >> single worst day i've had on television, the actor robert blake is arrested. and he's arrested up in the san fernando valley somewhere for popping his wife. that's about what the story is worth. what i just gave you. the actor, robert blake, who has done one very good performance and a tv series, is arrested for killing his wife. we spent four hours on a. not like a figurative four hours. literal four hours. we were asking extra

correspondence we booked for no reason that i could figure out, other than keep this sucker going. how do you think this will impact his career? he has no career. [laughter] there's an upside for being arrested for your wife's murder. >> i think i was gone by then, i do remember. four hours, okay. so i go home. i get home at 2:30 a.m. and my wife it was a reporter looks at me half asleep and says, why? [laughter] okay, honest to go god i don't d this right now, okay? you know, i don't need it. the next i come to work and there are 15,000 e-mails. on an average day we get about 4000 in is that there are 15,000. i look through a few hundred. not one, not once said dammit,

you promised as you going to do serious news. not one said you didn't do enough robert blake. spent nobody was complaining. >> this is the dallas city hall and that's a scuffle on the basement floor. >> november 24, 196 d. three, dallas nightclub operator jack ruby shot and killed lee harvey oswald. the man arrested for the assassination of president john f. kennedy. hear firsthand about the ruby trial from juror j. rose they kept a diary of the proceedings. >> i felt very sorry for jack ruby. he looked alone. he looked forlorn. ages really looked pitiful. he never said anything. he never smiled. i made eye to eye contact with him. his eyes were affixed at had a

vacant stare, i guess you would say. and it was like he was feeling his way through the world and i really felt sorry for him. >> this saturday, part of american history tv this weekend on c-span3. >> next, former cia chief david petraeus and his remarks at the university of southern california in los angeles. in his first public speech since resigning as cia director last november, general petraeus apologized for the extra marital affair he said hurt his family, friends and supporters. he focus on the importance of supporting the families of deceased military personnel, caring for wounded service members and honoring military veterans. during his no trade were, he served as u.s. center command head and as afghanistan were commander before retiring from the u.s. army in 2011. this is about 25 minutes.

>> thank you very much. thank you very much your thank you, good evening to you will. thanks for that very warm welcome, and thanks, mr. president, for your kind introduction. more importantly, max, thanks for your visionary, and inspirational leadership of this great institution, a true national asset. and thanks to you and your team for your wonderful efforts to demonstrate such sincere appreciation, and impresses support for those who have served our country in uniform. we are all grateful to you for that. [applause] i am very pleased to be here

tonight with trojan nation, and i think it's a nation, not just a family as all due respect. because you stand out as the leader in the effort to support our countries families, veterans, active duty, and to support those who currently serve our nation in uniform, and will serve in the future as well. in the past and have i been able to get a coin with a number of your programs. speaking of that by the way, where are those and shepard rotc cadets who did dts with me this morning? please stand up. [cheers and applause] well, it was a privilege to run with them, and as you can see, they and i are still standing, despite personally

experiencexperienc ing the stairs in the coliseum. i never knew how many there were. want you to know we did four sets, and also want you to know if i look forward to spending time with all of the cadets tomorrow. in any event from your and oppressive rotc program your world-class military social work initiatives, and your recent serving those who served and ever, to your office of veterans affairs and student veterans of america chapter usc's programs are truly exemplary, and i know that all here appreciate that deeply. well done on that as well. again, it truly is a privilege to be here with you this evening. all the more so given my personal journey over the past five months. i join you kenya where that i'm regard and a different light now than it was a year ago. when president make use and jane harman kindly invited me to speak at this event.

i'm also keenly aware that the reason for my recent journey was my own doing. so please allow me to begin my remarks this evening by reiterating how deeply i regret, and apologize for. the circumstances that led to my resignation from the cia, and cause such pain for my family, friends, and supporters. but tonight is not about me. it is about your veterans, your active duty military and your rotc cadets come and usc's impresses efforts to recognize and support them and their families, particularly those who have sacrificed so much in the difficult campaigns of the past decade. as one who was truly privileged to serve with many in this room, in cold war europe, haiti, the balkans, and above on -- above all, iraq and the afghanistan of

those berries other places in the middle east, i am very grateful for the opportunity to say a few words this evening. but before continuing i should note that a southern california native briefed me before coming out here on the usc-ucla rivalry. hey, i used to do intelligence. [laughter] and it appears, it appears that this is as emotional relationship as that between army and navy each football season. [laughter] in fact discussion of the usc-ucla rivalry might of the sort i heard this afternoon. apparently there was nearly call at a party downtown attended by some usc students a few weeks ago. the way i heard it, one of the usc students leaned over to a guy next to him at the party and asked, want to a ucla joke?

given the usc student hard look, the guy next to him replied, before you tell that joke you should know something. i am 6'5", and i weigh 230 pounds, and i go to ucla. the guy right here next to me is six to and he is a bruin, too. and the guy next to him is 6'3", ways to 30, and you guessed it, he goes to ucla as well. do you still want to tell that joke? no, i guess not, the usc students it. not that i'm going to have to explain it three times. [laughter] [applause] well, thanks for laughing but, you know, what they say in this town. i'm only as good as the material they give me.

[laughter] now, of course, the ucla students still could be smarting from your seat beating ucla of the men's waterpark championsh championship. [cheers and applause] the women's volleyball championship, or men's tennis, or perhaps all those all in did metals at london. [cheers and applause] -- olympic medals at london. those bruins are so sensitive. but let me turn out if i could do the focus of my remarks this evening, our veterans, especially our newest veterans. with them in mind i should begin by noting that the post-9/11 generation of veterans has deservedly come to be known as america's new greatest generation. like their grandparents who endured the depression and won a world war, the members of the post-9/11 war have expanded --

respond with valor, purpose, skill and courage to the defining conflicts of their day. in so doing they have earned their place in the long line of patriot soldiers on whom our country has always depended. we should also note that america has never had a group of men and women who on average have served so long in combat, or have spent so many tours downrange. this is of course the result of our country shift from a draft force that fought our past wars to the professional force that has prosecuted our post vietnam, and in particular, our lengthy post 9/11 engagements. that's a policy with which i strongly agree but one that obviously means that the burdens of military service are borne disproportionately by those who volunteered. well over 2 million servicemen and women have served in iraq and afghanistan, and other

places in the post-9/11 era. many have left the military. hundreds of thousands more will take off again a form in the years ahead. in view of that the focus of my remarks this evening is vision veterans have done so much for our country. in particular i want to offer my view that while our country continues to improve its support for and recognition of these and all our veterans and their families, we can't and must do more, particularly in certain respects. it is, in fact, appropriate at an event such as this to ask what our nation owes our veterans can what are our obligations to those who have raised everything in the service of our united states. i believe that our responsibilities are fourfold. we must look after the families of our fallen heroes. we must take care of our wounded servicemen and women. we must help our veterans

transition successfully to the civilian sector, and we must recognize and honor our veterans service. first, it goes without saying -- [applause] it goes without saying first that we must do all that is humanly possible to look after our gold star families. our fallen, our fallen in the words of abraham lincoln gave the last full measure of devotion in the service of our country, and we must see to the needs of the loved ones they have left behind. second, our nation has to take care of those who return for more with wounds, seen and unseen. war changes everyone who has experienced it firsthand. in some cases the changes are positive. many veterans return home with greater resilience, a firmer

sense of purpose, and a keener awareness of the blessings of life. others, however, come home scarred and wounded. this group includes of course those with physical scars and wounds to lends insight, and increasingly to the brain. it also includes those with the so-called unseen wounds, in particular post-traumatic stress and other mental health challenges that have left unchecked can lead -- can leave some of our veterans in a spiral of hopelessness that country which to a suicide rate that remains far too high. regardless of the injury we must provide assistance that is needed by those who have been wounded waging our country's wars. third, but our country must help our veterans transition successfully to the civilian world. doing so will help enable those who have served to continue to

be all that they can be in the next chapter of their life's journey. such efforts will not only strengthen our veterans, they will also strengthen our country. some veterans make the transition relatively seamlessly. they begin applying their skills straightaway in school and other form of government service or private sector. others, however, struggle with the transition. we see this most starkly in the post-9/11 veterans unemployment rate. which is typically several percentage points above the national average. we also see transition challenges in some veterans who enter school or find new employment, but so difficulty developing new skills, relating to new peers, are finding the meaning and their new pursuits that they experienced while in uniform. let me elaborate. there's often a view that because an individual is a great soldier, he or she will

naturally do well in the civilian world. in this view, military expenses are seen as so exceptional that they assuredly will carry veterans on to further success. in reality, the transition from military service to civilian pursuits often is quite challenging. as many here know, hang at the uniform and leaving one's comrades are very difficult. and neither going back to school nor entering the civilian workforce is as easy as it might seem. in light of this reality we need to insure that the right transition programs are in place. whether improve military transition assistance program now being offered at the conclusion of active duty service, or other initiatives such as a college refresher course, better jobs go can come transition mentoring, or more in depth assistance program for veterans struggling with persistent unemployment, or even

homelessness. but it is not enough just to have all these programs but we must also work hard to connect our veterans to them. there are two reasons what is important to help veterans realize their goals in civilian life. first come helping those have given so much as simply the right thing to do. second, it makes good business sense. veterans to bring distinctive the builders and valuable leadership experiences that often are exactly what businesses are seeking in today's marketplace. i might add that it recently agreed to support several nonprofit organizations. commission continues, american corporate partners, team rubicon and team red, white and blue. and i likely will assist others as well. i'm doing so because of imports of programs that help our veterans identify and then make

the most of the opportunities available to them. in fact that our representatives from these organizations, and other veteran outfits use deceiving him and i would like to ask all of them to stand up and be recognized so we can thank them for what they are doing. [applause] while i matter i should also note that there are three representatives of the great u.s. military academy class of 1974 this evening as well. they are a small but wonderful bunch of guys. we clearly should recogniz recom also were i one of a the end of it from my west point classmates. please stand up prior to the corporate good to see you are still sober. [applause]

well, as i mentioned there is one additional commitment our country has to its veterans, the need to continue to recognize their service and their sacrifice. this is important not just for our veterans but for our country. much has been made of the fact that a very small portion of the population is carrying out this generation's wars. honoring our veterans service is one small part of a larger effort we must continue to ensure that the so-called civil military gap is that small as is possible. this is i believe a moral imperative. with those for responsibility in mind, taking care of our gold star fans, supporting our wounded veterans, helping our veterans transition successfully to civilian pursuits, and recognizing our veterans service, i think it's fair to

ask how we believe our country is doing in meeting them. as we do so we should recall george washington's timeless admonition, that the willingness with which our young people are likely to serve in any war shall be directly proportional to how they perceive veterans of earlier wars retreated -- were treated and appreciated by our nation. as an overall assessment i think it is fair to say that the united states has done reasonably well meeting its obligations to those who have fought to help keep us safe. even so as with any endeavor there clearly is room for improvement. now over the last decade, the veterans administration has received significant budget increases. some 40% in the past four years alone. it's an established such programs as the post-9/11 g.i. bill, which some you're using.

and enhancements to that that not only pay for college and also for technical and non-degree producing training and apprenticeships. there's also other initiatives like a new automated veterans benefits management system, and the integrated electronic health record that is so important. commendably, the president and congress are ensuring that va funding is sustained even in the face of the tough fiscal realities facing our country. this is hugely important as the va works in particular to reduce the time required to say to our newest veterans needs, and to process their claims in a timely manner, that all involved recognize are absolutely imperative. they're generally has been heartening support as well for the programs overseen by the department of defense, to care for our wounded warriors and the families of our fallen. and these and other national

state and local programs are supplemented considerably by a variety of nonprofit organizations devoted to providing additional support to our veterans, and the families of our fallen and wounded heroes. beyond that, in stark contrast to the shameful way we treated those who return from vietnam, americans have worked hard to on of those who have served, even when the policies our men and women have been executing have been questioned by some of our citizens. i remember, for example, driving from cambridge, massachusetts, to the airport in boston in 2006 after having spending time with her son at mit where he was in rotc by the way, and seen on a bridge over the road a large sign that read, hate the war, love the troops. no, i said to my wife 50% ain't bad, adding that the sign makers at least made the right choice

if they had to choose between the two. all of this notwithstanding, there is no question that we need in some areas to do more for the families of our fallen, our wounded warriors and their loved ones, and those who returned unharmed but as i mentioned earlier, the veterans unemployment rate consistently exceeds the national average. the our post-9/11 veterans who do not have place to sleep or call home. and some veterans are still struggling to get the care they require in a timely manner, and to have their claims resolved expeditiously as well. we must continue to devote the time and energy to address these issues in particular, and it was very important i think to see veterans administration secretary shinseki emphasize on sunday his commitment to doing just that, a commitment he reiterated to me yesterday when i talked to him about coming to

this event. as i noted, we must also focus on improving the transition veterans go through as they become civilians. this has to include ensuring that all veterans are able to take advantage of the programs available to them, tell them be all they can be as civilians. these actions in support of our veterans are in true sake responsibilities. this event and usc's many other initiatives to support veterans demonstrate that the leadership of trojan nation understands and is intent on meeting its share of these responsibilities. and india that come and for all that yes, he does, i once again want to say thank you and well done to president nikias, chairman rusty, and to all of you. and thank you again for that.

[applause] >> as i closed, i want to take this opportunity to say thank you as well to those who provided words of encouragement to my family and me in recent months there that support meant a great deal as we sought to look forward rather than backward. this is obviously been a very difficult episode for us. but perhaps my experience can be instructive to others to stumble, or indeed fall as far as i did. one learns after all that life doesn't stop with such a mistake. it can and must go on. and the effort to move forward over the rocky path of one's own making is vital, inescapable, and ultimately worth it. i know that i can never fully assuage the pain that inflicted on those closest to me, and on a

number of others. i can, however, try to move forward in a manner that is consistent to the values with which i subscribed before slipping my morals, and is thus possible to make amends to those i've heard and let down, and that is what i will strive to do. in the past when i received an award, i would note that it did so only in as much as i was able to accept it on behalf of the men and women in uniform, and in the intelligence and diplomatic services with whom i was privileged to serve in the bowels of the post-9/11 period. in the applause for me was, therefore, applause for them. tonight is an opportunity once again for me and for all of us to say thank you to those selfless americans who put it all on the line downrange, day after difficult day under the toughest of conditions, gets the

most challenging of enemies to help safeguard our fellow citizens, and preserve our interests around the world. this room is full of such individuals, and it was the greatest of privileges to serve with them, and countless others like them, during my time in uniform, and at the cia. it has been a true honor to be here this evening to help you recognize your current and future veterans service, as well as to scott our nation's obligations to our veterans and their families. in so doing it has been a privilege to applaud usc's very impressive initiatives to help the many veterans come active duty service members and rotc cadets who are part of trojan nation, and to applaud the leadership of a great institution that shows its appreciation to those in its ranks who have served and who do serve. ..