Monday, March 10, 2008

Fallout From AF Tanker Contract, European Job Loss

As U.S. Politicians express their outrage and Boeing Corporation announces they will protest their loss of the $35 Billion contract, Europe seems more concerned if this contract will accelerate Airbus’s exodus out of Europe.

As announced last week, EADS/Northrop trumped Boeing in Air Force tanker competition and was awarded the lucrative contract over Boeing Corporation.

The award sparked a series of fireworks from both s ides of the aisle as lawmakers expressed their outrage and voiced concern of jobs being shipped to Europe for the manufacture of this tanker, based on the highly successful Airbus 330 aircraft.

Little or no consideration has been given to European Workers, who are less than euphoric over the contract since EADs has been talking about “increasing its production capacity in the dollar zone,” while they have been implementing “far-reaching cost cutting measures.”

A two part article appearing in Germany’s Der Spiegel today brings up the questions, Could the Air Force Contract Cost European Jobs? And, Will the Airbus Deal Cost European Jobs?

At a time when unemployment hovers around 9%, compared to the United States’ half that, just under 5%, European workers express concern as they see this contract reducing the once near 97% European Workers at EADs shrinking to about one fifth as manufacturing is shifted away from Europe, mostly to the United States and Asia.

EADs began this shift in earnest a year ago as their subsidiary, Eurocopter, in Donauw√∂rth, Germany was told, “[EADs] plans to shift significant portions of its production to the dollar zone.”

Workers were told that EADs “plans to procure both parts and complete subassemblies outside Europe in the future, thereby protecting itself against further decline of the dollar,” still the principal currency used in Aviation Business dealings today.

Indications of the move are the EADs Research and Development Center in Mobile, Alabama where 90 US engineers are already engaged in research for the European manufacturer. EADs will assemble the tankers in a yet to be built factory in Mobile, then the aircraft will be shipped to Northrop Grumman for final assemble and installation of electronics.

Airbus also intends to build Cargo versions of the Airbus 330 in Mobile sometime in the future

Speculation is that once production has gotten successfully underway in Mobile, the city could become Airbus' fourth-largest assembly site for passenger aircraft, next to Hamburg, Toulouse and Tianjin, China, although company executives currently say, “There are no such plans at present.”

In related news, Boeing today announced they will formally protest the contracts being given to EADs/Northrop Grumman citing, “serious flaws in the process that we believe warrant appeal.”

Northrop Grumman said the tanker competition was “the most rigorous, fair and transparent acquisition process in Defense Department history.”

In another article in today’s Der Spiegel, Boeing's Audacious Allies, the point is made,

“Ever since the Air Force announced its decision on Feb. 29, Americans from Seattle to Capitol Hill have railed about lost jobs and the risks of foreign-made military assets.”

“But what about when Boeing wins a big contract? You don't hear many complaints then, despite the fact that large portions of the parts and labor in its commercial planes come from overseas --70 per cent of Boeing's new 787 Dreamliner and 60 per cent of other models are made outside the US. Even many of Boeing's military planes have many foreign parts in them. Key portions of the fuselage and tail on the airborne-refueling plane Boeing wanted to build for the Air Force would have involved non-US companies.”

As Corporate Executives, Lawyers and Politicians maneuver this contract through hearings, investigations and courts, this writer is left wondering if European workers, already besieged with high unemployment, aren’t secretly pulling for the contract to be returned to Boeing!


Rightwingwacko said...

Apparently not much interest in this topic. However, I am looking forward to your piece on the resignation of Admiral Fallon

LewWaters said...

Sorry to disappoint, wacky, but sitemeter lists hits to my blog more than doubling once I posted about the contract.

As far as the admiral, I think he said it best.

“Recent press reports suggesting a disconnect between my views and the president’s policy objectives have become a distraction at a critical time and hamper efforts in the Centcom region,” Fallon said.

“And although I don’t believe there have ever been any differences about the objectives of our policy in the Central Command area of responsibility, the simple perception that there is makes it difficult for me to effectively serve America’s interests there,” Fallon said.