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Tanker decision provokes shock and anger

Post by John Gillie / The News Tribune on Feb. 29, 2008 at 5:51 pm with No Comments »
February 29, 2008 5:51 pm

In both Washington, D.C. and here in Washington State, Boeing’s supporters reacted with shock and even anger to the Pentagon’s announcement today that a consortium of the European Aeronautic Defence and Space Co. and Northrop Grumman had beaten Boeing for a $40 billion Air Force tanker contract.

In Everett, where the 767 tanker would have been assembled, union members who had gathered at the Machinists Union Hall intending to celebrate the tanker contract award to Boeing, instead found themselves hastily arranging a protest rally.

"I would have to say the mood here is angry," said International Association of Machinists District Local 751 spokeswoman Connie Kelliher.

"I don’t think that anyone who has worked on this 767 tanker project can believe that the deal went to a plane manufactured overseas."

The Machinists represent among others workers who build 767s in Boeing’s huge Everett wide-body plant.

At the Society of Professional Engineering Employees in Aerospace, which represents Boeing engineers and technical employees, shock described the reaction.

"I am very disappointed for our members and all employees at The Boeing Co.," said Cynthia Cole, SPEEA’s president. "I’m surprised the Air Force chose an unproven technology and and inferior product for this important program that supports the men and women in our armed forces," she said.

Throughout the weeks building up to Friday afternoon’s announcement, aerospace analysts, politicians and pundits had been predicting Boeing had the inside track in the selection race.

Boeing had carried an ambitious roadshow campaign to several dozen states where 767 tanker components would be built to emphasize how many jobs were at stack. Boeing claimed that the tanker contract would support 44,000 U.S. jobs, 9,000 of them in Washington.

EADS and Northrop Grumman had conducted a similar political hearts and minds campaign. They claimed an award to them would create 25,000 new American jobs.

So sure were the predictors of Boeing’s victory that Texas Sen. Kay Bailey Hutchison’s office reportedly issued a press release prior to the announcement enumerated the benefits to Texas because of the award to Boeing.

If the Air Force awards the tanker contract to Northrop Grumman and Europe’s EADS inspite of almost inevitable investigations and protests, Boeing won’t suffer a mortal wound, but rather an opportunity lost to further plump up its profits and jobs.

The surprise announcement’s most immediate effect will be a psychological one to Boeing, which lost its last major Pentagon competition to build the Air Roce’s Joint Strike Fighter to Lockheed Martin.

Aerospace blogger John Ostrower, who attended the Pentagon announcement press conference, said the news was greeted as the aerospace equivalent of the New York Giants beating the undefeated New England Patriots in the Superbowl.

"There was a palpable shock in the room," he said on a podcast at an aerospace Web site.

U.S. Rep. Norm Dicks of Bremerton, known in some circles as the "congressman from Boeing" for his vigorous advocacy of the company was stunned by the news.

"I’m extremely disappointed ," Dicks told the Associated Press. "It’s just one of the worst things in my whole life."

That shock was not so much that the Northrop Grumman EADS KC30 was deemed superior technically to Boeing’s KC-767AT, but that the Air Force apparently paid little if any attention to the likely political fallout over its selecting a European-designed and partially built plane over an American one.

At the press conference, the Air Force pointedly mentioned that the issue of American job creation was not considered in making the decision.

Issaquah-based aerospace analyst Scott Hamilton said the KC30 was the more capable aircraft.

It is larger than the Boeing product, it ‘s basic airframe is a decade newer than the 767’s and it has the capability of carrying more cargo and more troops when its not performing its tanker job.

Boeing had acknowledged the KC30s advantages, but argued the 767 better fit the Air Force’s stated requirements. The smaller plane, the company said, would be capable of operating from more bases and would put more refueling booms in the air from which planes could refuel for a given quantity of fuel. The company argued that cargo and troop-carrying capability was not something the Air Force had said was crucial.

For Boeing and its workers, the contract loss will mean an end to the 767 assembly.

But that moment will likely be a significant time in the future. Boeing’s backlog of unfilled 767 orders is now 51. At Boeing’s present production rate of one a month, the last one will emerge from the Everett plant in a little more than four years.

Hamilton said he doubts anyone working on the 767 line or the tanker project will lose a job because of the failure to win the new contract.

In fact, Boeing officials Friday told SPEEA that none of the engineering or technical workers associated with the project will be laid off, SPEEA spokesman Bill Dugovich said.

"The engineers will go to work on the 787 or the 777 upgrade or new 737 project," Hamilton predicted.

The two assembly bays at the Everett plant where 767 is built could be converted to another 787 production line, Hamilton said. The 787 has now garnered 860 orders.

Boeing’s total airliner backlog now stands at 3,458 orders. At today’s production rates, Boeing production lines could be working at full steam for more than seven years to reduce that to zero even if the company received no new orders during those seven years.

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