Robert E. Scott, Senior International Economist, Economic Policy Institute
The U.S. Air Force today announced that it will award a $35 billion contract to U.S.-based Boeing Company to supply 179 air refueling tankers. Construction of these tankers will support tens of thousands of U.S. jobs. This contract is the first installment on a plan to replace the aging fleet of 500 KC-135 tankers, which first entered service in the 1950s. The Air Force expects to replace its entire fleet of tankers with 400 new tankers, at an estimated cost of up to $100 billion, making it the Air Force’s third largest contract ever.
The Air Force has awarded the contract to Boeing, an American company that won the contract, fair and square. The Air Force decision ensures that tens of thousands of high-quality aerospace jobs will be created in the United States. The World Trade Organization recently found that the European firm Airbus, and its parent company EADS, the major competitor for this contract, had received $178 billion in illegal subsidies, including $5 billion for the Airbus A330 airframe, which was used to offer their competing tanker to the Air Force at a below-market price.
Airbus is a European company, and most of the components for their tankers would have been made in Europe. Thus, the Air Force’s selection of Boeing also represents an important recognition that maintaining a domestic manufacturing base is critical not just for job creation, but also for national security. This decision follows the recent announcement, reported in the Feb. 2 issue of Manufacturing & Technology News, that the Director of National Intelligence is undertaking a National Intelligence Estimate review of the security implications of the decline of U.S. manufacturing.
Additionally, the Boeing “NewGen” tanker is the best plane for the job. It can offload significantly more fuel, cargo, and passengers than the Air Force’s current tanker (KC-135)—but with a similar footprint, allowing it to land at existing airbases. The Airbus A330 is too large: Because it takes up 53% more ramp space and is 30 tons heavier, it can land only in large airfields, limiting military flexibility. The Boeing tanker would be 20–25% less expensive to own and operate over a 40-year lifecycle than the Airbus A330, saving taxpayers up to $36 billion. Finally, Boeing has more than 50 years of experience designing and building tankers. In contrast, Airbus has little experience building tankers and encountered significant problems with its first attempts at building refueling booms, the most vital component of the tanker.
(For more information on the National Intelligence Estimate review, see the Feb. 2, 2011 issue of Manufacturing & Technology News.)
