for the near term are expected to be in three areas. first, the conversion from normal television formats to high definition tv. we talked or fred talked earlier not being able to find the channel he wanted on the 500 channels currently available. the satellite that he referred to that we're launching in a couple of months for a uk-based operator that's going to provide services throughout subsahara africa, will carry in total the equivalent of about 2500 high deftv channels. if fred travels in that part of the world we'll be able to follow him. so that's the first one. broadband services from satellites, particularly in those parts of the world where

terrestrial systems are not available and probably won't be for the foreseeable future is the second largest area. and then ubiquitous data communications, primarily to connect machines with other machines instead of people with other people would be the third area. then finally, increasingly we see the u.s. military and the militaries of many of our allies, relying on commercial satellites to connect our deployed forces around the world back home, those 375,000 or so troops that fred referred to earlier today, receive about 80% of their communications through commercial satellite networks. so that's a fourth area that looks like it should continue to support growth in a variety of regions around the world.

>> you both mentioned south america as promising developing markets for your products. when you think about the u.s. trade agenda south america has fallen off. took forever to get the colombia deal flew the congress. the partnership in asia. is the united states doing enough as a government, apart from what you're doing as companies, is the u.s. doing enough to make sure that american companies are able to take full advantage of the market opportunities in south america for any one on the panel or all of you. >> it's interesting that the chamber hosted a session between brazilian government and us. >> was just here. >> and bet president obama and talked about areas of cooperation, and i think from what i heard from it, i participated in part of it, it was a recommitment to really -- we are the two big countries in

this hemisphere and there should be a lot of opportunities there. also the council on competitiveness has a sister organization that works with a number of other countries and in particular brazilian government on innovation and ways that we could spur innovation to the good for all. not just for one country pitted against another country. so, i think the short answer is that there are some things now under way that are starting to gain traction, i think as those of us that have been involved it's clear there's a lot of opportunities, a lot of potential areas of cooperation. and while we talked about south america, i think not to single out countries but clearly, for that cooperation to reach its full potential, it will have to be led by brazil from that side and us on this side. and i think there are a number of people that are trying to

work towards that aim. >> do we need an active trade agenda in south america? need to revive the free trade of the americas or other bilateral negotiations or are we with the current structure reasonably well placed? you go back five or ten years and the question of where the next trade negotiation was going to be was a big question. it doesn't seem to be as front and center as it used to be. >> i would say whether you're going to south america, whether you're going to the pacific area, we need every free trade agreement we can come up with. just to put a plug in the one we've got sitting in front of us right now with permanent normal trade relations with russia, we've been dealing with this for almost 15 years, and finally have a deal that from all respects relative to the ability to trade, provide advantages for companies in the u.s., it's a great deal. and now we're like actually with

what's going on here with the bank being held hostage. and the reality is all that's going to do is a lot of other countries and companies in those countries are going to have that competitive advantage that we aren't going to have. and we're a good example of that. we've got a 15% import duty on all product we bring therein that overnight goes down as part of the wto to less than 5%. and if we don't give them permanent normal trade relations, then we'll stay at 15 and our competitors in germany or italy or wherever else will be at 5%. >> hal, i wanted to talk to you about the government role when it comes to manufacturing. there has been a debate in this government over should we be doing special things for manufacturing. christie romer wrote a piece in "the new york times" that got a lot of attention saying no, there is no case to do special things for manufacturing. gene sperling made a strong argument. from your research looking at the sources of comparative

advantage in manufacturing how much does government action matter? >> it's going to matter in a more transitional phase. i think it's going to be important to help bridge a gap between changing economics of china today and the changing economics of the u.s. and government can play an important role to sort of in essence make up that difference. in ways that i think are you know, good for society beyond just manufacturing. so i think jobs training is clearly something that new manufacturers are worried about. it's a very substantial start-up cost. people have forgotten you have to train people how to do things. we see states like georgia doing a very good job, that's allowing them to attract a lot of economic development so i think jobs training is an important part. related to that is creating a series of what i would call vocational colleges. part of the american zreem not just the house but also sending your children to college but we

define college almost as a liberal arts degree than a different kind of degree. obviously there's engineering but we also need to be training workers and we should think about sort of 4-year colleges that are what i did at the business school. half of my time getting a liberal arts degree and half of my time learning a trade. that was business but i think the trade forthers could be welding or computer technology for manufacturering and other things because we have not encouraged our children to go into those fields. there's lots of opportunity. when i think about it if i think about experiences with service job you're going to work at a pharmaceutical place or a retail shop, you're going to get a job that's in the service business that's going to pay entry level around $10 an hour. if you're going to work in manufacturing those page wages as everybody who weshs in manufacturing knows are far more than $10 an hour. those are good jobs and that's

the basis of the middle class of the country and the basis of a lot of our competitiveness. those are looking at entry levels of 15 to $18 an hour kind of job. there's lots of opportunity and there's a good role for government to play in this. i'm not much of an interventionalist from that standpoint but like the bank and other things there are things that the government can do that will keep us at least on a relatively level playing field with everybody else. i think that's something that we have to recognize and say that is an important role for government. >> i want to come back to the skills question 18 minute. i want to make sure we're bringing in the experts. you talked about the competitive challenges you face in export markets t issues of financing, government support for r & d. give us the landscape there. as a u.s. company with the level of government support you get, competing with french company, chinese, how does it stack up? what are the major challenges

that we face there? and are there things that the government's not doing what it should be doing that would make a big difference. >> let me cite two challenges we face in our business and put them in perspective of what has allowed u.s. satellite builders to command more than a 50% market share despite the growth of foreign competition over the last couple of decades. the fundamental competitive advantage that orbital and our companion u.s. satellite manufacturers have is that we have been able through incremental improvements, pretty frequently on an annual or twice a year cycle in some cases, to make small technology advances on a steady basis over many decades. and looking back now and the

time we've been in business, which is about 30 years we've seen about an 11% to 12% improvement in the fundamental economic figure of merit of commercial satellites since the early 1980s. that's essentially the capital cost required to build a satellite for a certain amount of communications capacity. if you integrate 11 or 12% per year improvement turns out what you get are products today that are about 25 times more effective than products of 30 years ago were in this fundamental figure of merit. we've been able to do that to date by virtue of fairly vigorous investment in product research and development, applied to some really bright engineers and scientists. and it's in the two latter areas

that we increasingly face the toughest outlook in our export business. first of all, with regard to research and development incentives, as i mentioned earlier, state-funded r & z pretty common in europe and very common in china. but generally not so today in the united states. it was true that in decades past, u.s. government investment in space technology driven by the need for national security and other public sector functions, often resulted in spin-off benefits to commercial satellite builders. that was true in the 70s as the city was getting started and through the 80s. but sometime in the 90s and certainly in the last decade, the flow of technology reversed. on a net basis today, we see

more technology being created in the commercial sector that's then being adaopted for use in government programs as budgets have gotten tighter, and as the level of performance of commercial technology has, because of shorter cycle times, has advanced more. before to stimulate continued private r & d investment by u.s. companies i feel that the congress should adopt a more -- a longer term approach to r & d investment incentives, for those that follow it you may know that the r & d tax credits that help in this regard have been somewhat problematic in recent years. and so looking ahead instead of relying on one year in some cases one year retroactive

restatements of the credit, it would be highly desirable to see a five or even a 10-year extension of that mechanism and that it be simplified and strengthened to put it more on par with the economic incentives many of our european and asian competitors enjoy. the second area has to do with the technology work force that we rely on. in our company and i think this is true in other u.s. satellite builders, about half of our employees are engineers and scientists. and we rely on the young kids coming out of school to a pretty significant extent. the average age of our engineering staff is in the 30s. today u.s. universities are doing a great job of training

students in the fundamental engineering disciplines that go into building a satellite. mechanical, electrical engineering and so on. and they do this not only for kids that grow up in the u.s. but for bright young people that come to our country from all around the world to obtain the best technical education they can get in high technology areas. unfortunately, our immigration limits on foreign born but u.s. educated engineers and scientists i think are increasingly out of touch with the global competitive realities we face. today across all of the engineering schools in the united states, a little over 50% of ph.d. candidates in engineering and about 40% of masters degree candidates in

engineering, are foreign nationals. many of these young people want to stay in the united states and make their homes here, raise their families here, build their careers here. but we prevent some of them from doing so because of the restrictions we place both on temporary work visas and also the fairly hengy process that's involved in converting a temporary work permit into permanent citizenship for these highly skilled technology workers. i would hope to see that improvements in that area being part of our country's immigration reforms in the near term. >> it's interesting to note there is a growing bipartisan consensus on moving on some of these high skilled immigration issues. there are always things that block the steps. i mean the house in the fall posed overwhelmingly that at

least part of the problems but was blocked in the senate. we keep coming back, i'm going to get back to experts in a second. we come back to a skilled work force. i'm going to ask, what's the corporate responsibility here? we often talk about government isn't training workers. we're not seeing the -- a lot of them had big apprentice programs that disappeared. do they have to be more active. in making sure that they have the works for they need in the united states. >> certainly. i think in our case we do work and especially in support of our dealers with trained technicians and with community colleges to set up praning programs to develop those skilled technicians. you can only do that at the local level. most of the bases it's somebody that's going to be born in that area.

at that level we can. i think what dave's talking about, though, and we have the exact same example, most people think a company that is ag equipment doesn't need that. you take our large row crop tractors, we had more lines of code, software code on that, than the space shuttle has in one tractor. we have seven computers on board, there's processing, all kinds of information real time. so we have a tremendous need for embedded software engineers. you can't find them, can't get them. can't keep them here. we have a technical center in india that we put in place about 10 years ago now up to 3,000 people. the cost of embedded soft mayor engineer operating in india is no keeper than embedded software engineer operating in waterloo, iowa.

we're there. that's where we can get talent and keep it. here we cannot get, first of all you don't have enough u.s. born embedded software engineers being educated. that's where companies like this, working on a stem project, but that take as long period of time before they go through the system. in the meantime you've got to be able to take the ones that are being educated here. what i fear is there is going to be a day when so much of the nook you lus is going to be someplace else like yand that you're going to wake up and if two thirds of our r & d staff is there why not move the center there. >> i find it a frustrating part of the debate. there are a lot of things, india is growing faster, obviously businesses want to be near those opportunities. but to lose because of lack of a ski

skilled work force. >> i would just add that apart from a variety of initiatives that both carried out in the private sector and led by governments to improve the supply of technology workers, that i think many industries are also addressing in a sense the demand side of that equation. number of studies have been done in recent years, looking within air space and defense as kind of our home industry sector. at the efficiency with which companies use their engineering and scientific brain power and these studies have pointed to areas where we can make improvements, where we could bring on board a little

different mix in our work force to free up our r & d engineers so they can spend 95% of their time doing the things they are good at doing and love to do, and in research and development. and minimize the amount of their time that's being consumed by work that could probably be done by somewhat lower skilled level individuals. so we've got to work on both sides of that equation. i think there's a lot of room for productivity improvement on the demand side as well as pipeline improvement on the supply side. >> thank you. i want to bring the conversation back to the topic for which we're all assembled which is export finance. at the risk of inviting criticisms of our host, how does the u.s. do on that front? you look at what the u.s. offers in exports, what are the things

we do well, what are the things we could do better. how does the u.s. measure up in this part of the equation? anybody want to start us off here? >> go ahead. >> let me first say we are thankful we have it. and i think what fred said earlier today, it doesn't provide an advantage, it eliminates a competitive disadvantage. without it there are definitely deals we would not be able to do. i think the risk tolerance profile that the bank has certainly is not as high as a number of other countries, banks or similar institutions but have. what we're talking about is going to areas where there is risk. that's where there is advantage with this. it's not about doing it in

stable markets. certainly in an environment like today where there is even a question on whether the bank ought to survive, the risk profile goes down. people become less willing to do a deal. i think the other thing that clearly what we see, many of our competitors, they are able to from the start of trying to develop a deal to the point when the transaction is finally approved, that that cycle time is much shorter and a business like ours where when you get the order the person needs the product right away to get in the field you need very, very short cycle time. so that's an opportunity for improvement. i think if, to be fair f the bank officials were here they would number one, all say yup, we recognize it and two, if we're an environment where we're supported, continuous improvement can happen and we can work on those.

i think part of what we're seeing today and some of the less competitive aspects deal with some of the head winds that the bank is facing. >> you want to add anything? >> i would agree with what sam said. our experience with export import-based, export financing has more limited. i think the first major transaction that orbital did was about five years ago. so, our direct experience is more limited. i would say, though, that over the last couple of years in several new business pursuits that fortunately had happy endings for us, export-import was a terrific partner. from what i heard about cycle time and so on, from years past,

seemed like the improvements have been significant. those are very much appreciated in our business and i heard comments by some of the other u.s. satellite company skoo executives. >> we're winding down our time so i want to ask a big summary question because behind all of these debates over competitiveness, over export finance there is a debate on the appropriate role of government and the government ris relationship. i go back to this harvard business school study that i mentioned at the outset. it was interesting when they were asked what are your chief recommendations for improving u.s. competitiveness? and the top ones were sort of

government get out of the way recommendations. include sim my fi the tax cod or reduce regulatory burdens. a number of the others also touched on the things we're discussing here. invest in education, in work place training, proper incentives for research and development. is there any way to kind of you know, summarize in a way that maybe cuts through some of these debates, what the appropriate role for government ought to be and how much it's a government get out of the way and a government actively assist. maybe i'll start with you because of the council and the hat that you wear. >> certainly there is a role for government. there a role for government to help stimulate. i also think as fred i think eloquently said early on, we can't wait for this perfect world. i think when we all of us that

talk about -- just as soon have less government. talking about a perfect world where everybody gets to compete. that's not the case. >> you need a carrot and a stick. i think government can help in providing both. when the playing feel's not level. i think the apartment role is the playing field level. if you try to drive competitive advantage then i think you are two-faced talking to these other areas. i would argue that you know, leveling the playing field is the tax code. if i could just say two other things the government would do f. they would have -- i'd focus on r & d tax credits because you don't have innovation without it. in long term that will be a driver for job creation. and the other one is 100%

accelerated depreciation when you're in an environment like that people but in capital projects. those would be the fim pell three. >> hal. >> i would say the most legitimate role for government going forward, the first one s to provide the school goods. whether it's k-12 t infrastructure of the company, some of which are tunnels, some are education and i think we have fallen down on doing that. in supporting the basic infrastructure in its broadest, not just the bijs and tunnels. i think we need to move fort on that. because we are falling behind. i don't hold china up as an example of everything going right but there is a lot more effort made in that area. for our children the playing

field will be tilted against us. in today's environment that's more difficult to deal w. i think there are roles for government to rethink how we go about things including regulation. there's a lot of reaganlations that are important. i want clean that safe, there are a lot of things there but also a rod of regulation that comes from a different time that are still on the books and there is a role for government to go back and periodically do some pruning. i don't think any business person in the u.s. would say that they don't want to h.i.v. in that world. but we're living with a lot of regulations that come from a different era, that are not achieving what they were intended to be doing. it would be a helpful thing if we went ahead and did a pruning. that may mean taking out 5% of the regulation. it's the ones that aren't affecting the quality of life

but are affecting the quality of life in the sense they are dioping it. i think there is a lot of government can play in that. overall it's the social good, a deer karnt do for themselves. you can't fund k-12 education. it is something that we need to do as a nation and need to come back at these issues, recognizing the funding issues that exist in the balancing of the budget and all of the things and all of the buildings near here. but we do need to come back and start to make hard choices and i hope that environment where we can make those choices comes sooner than later because the reality is our children going to be depending on it. >> a nice way to think about it. on the flip side i have a brother who has worked as a small farmer and small