Page 1 of 2 Why Boeing lost the $40bn tanker deal
By Julian Delasantellis
Here in my adopted hometown of Seattle, Washington, much civic pride is taken
in the community's reputation for friendliness, amiability, Pacific Northwest
mellowness, and very good manners.
The town's unofficial motto, "Seattle Nice", returns over 14,000 hits on
Google. When my wife and I first moved here many years ago, we were amazed to
learn that, much in contrast to the US Northeast where we came from, people
actually expected you to, like, follow the traffic laws, as I learned from the
traffic ticket I got driving away from the airport on our arrival.
Not these days. Lately, the place has fallen into a distinctly ornery, crabby,
cantankerous funk; I wouldn't be at all surprised if
you start hearing previously meek and mild Seattleites screaming, in Howard
Beale ( Peter Finch) style from the 1976 classic Network , "I'm mad as
hell, and I'm not going to take it anymore!" from the decks of the ferries or
the top of the Space Needle.
On Friday, February 29, the US Air Force rejected a tradition that had stood
since the dawn of the jet age, and choose a supplier other than Boeing,
specifically a partnership of Northrup-Grumman and the European EADS aerospace
consortium, to receive the US$40 billion government contract to build the new
KC-45 aerial refueling tanker jet.
Aerial refueling tankers extend the operating range of most modern warplanes
(bombers, fighters, even troop and cargo transports) by allowing them to be
refueled in mid-air, through the extension of a long refueling boom from one
plane to another. Stanley Kubrick's classic 1964 black comedy, Dr Strangelove
or: How I Learned to Stop Worrying and Love the Bomb opens with a scene
of US B-52 nuclear bombers being refueled in flight; the accompanying
languorously romantic music almost implies that the procedure is a form of
airborne coitus between one plane and the other
Somehow, over the past few years, Seattle has obtained a sort of reputation as
the type of place where scruffy-looking unkempt (including the young women;
when I look at some of my students, especially the young women) and unshaven
slackers spend all day in coffeehouses furiously blogging about the color and
texture of their navel lint.
Part of this reputation, of course, was the influence of Microsoft; out there
in Redmond, about 24 kilometers east of Downtown. In the late 1980s and early
1990s, the company imported legions of people like this, people so socially
maladjusted they could barely hold a knife and a fork at the same time; but
their ability to write software code (or, as they would say 1,280 kilometers
down the road in Silicon Valley, their ability to steal someone else's code)
has now made them so rich that they don't anymore have to buy a latte early in
the morning and nurse it until sundown.
Part of Seattle's current reputation developed from the grunge music ethos of
the early 1990s. Up until recently, the city was a fairly inexpensive place in
which to live (Seattle's real estate is now just about as pricey as San
Francisco's; the local property market was still rallying up to only a few
months ago, long after the subprime mortgage crisis was well into its mission
of chewing up home values in southern Florida and California) so, from all over
the country, the city attracted those who, well, just couldn't handle "you
know, that getting up every day and going to work drag, man".
But before the city was known as the epicenter of code and caffeine, it was
known for something else.
It was known for being the home of Boeing, the avatar of flight, the engine of
the limitless dream of the future's promise. Founded in Seattle by William E
Boeing in 1916, daylight raids by the Boeing B-17 burnt German factories, along
with the cities that contained them, to the ground during World War II, and the
Boeing B-29 carried the atom bombs to Hiroshima and Nagasaki in Japan.
Following the war it became the wings of the new jet age, the company that, as
its fast passenger jets replaced slower propeller-powered planes in the 1950s,
made all the previously unreachable places on Earth available to anyone who
could afford a plane ticket.
Tourists brought American and Western culture to the newly independent Third
World; in that newly independent Third World, its freshly elected despots sent
their sons to Harvard and their mistresses to Tiffany's, all mostly on Boeing
jets. The glory of the promise of the future was the theme of the 1962 World's
Fair in Seattle, with the big attractions then being the Space Needle (the
landmark that, with the advances in computer-generated imagery, now regularly
gets blown up or knocked down in sci-fi movies) and the Monorail, which still
works - every once in a while.
In 1967, the new National Basketball Association team was named the
Supersonics, after the supersonic transport (SST) Boeing was going to build for
the US government. In 1971, the government cut the funding and killed the SST -
now, 37 years later, the basketball team is most likely on the way to Oklahoma
City, not at all known as a place devoted to either the future or things moving
all that fast.
In 2001, Boeing moved its corporate headquarters, but not its construction
facilities, to Chicago, saying it wanted to be closer to the media and finance
power centers of the East; when US Air Force acquisition official Darleen
Druyun was found to have criminally favored the company in return for the
promise of a job, wags said that the Chicago move was so that Boeing officials
wouldn't have to travel such long distances weighed down with all that bribe
money.
Boeing employment at its Seattle area construction plants fell sharply with the
September 11, 2001, terrorist attacks, as airlines couldn't fill the planes
they had and the company faced formidable competition from a new rival, EADS,
the German-French-Spanish consortium responsible for the Airbus line of
passenger jets.
Still, recently the company's fortunes were picking up; it did well with
President George W Bush's bulging Pentagon aerospace budgets, and new orders
from the rapidly developing Asian economies kept the order books filled. With
about 75,000 employees just in Washington state, the company has more than
double the local employment of Microsoft.
Since 1982, Boeing has built and delivered about 1,000 of its 767 passenger
jets, and it was counting on the air force KC-45, to have been based on the 767
airframe, contract to keep the assembly line open. At the 767 factory in
Everett, Washington, the party hats and noisemakers were out, and the champagne
was chilled. The air force had always bought Boeing tankers before, and it was
unthinkable that they wouldn't again.
The announcement was scheduled for one hour after Boeing's stock stopped
trading for the day in New York. That should have told them.
At the Pentagon press conference awarding the contract to Northrup-Grumman and
EADS, air force General Arthur Lichte tried to be cute; he conveniently forgot
to mention the EADS presence in the winning bid, just saying that the deal was
going to Northrup, and that the plane, based on the Airbus A-330 airframe,
would be built at a factory the company would build in Mobile, Alabama.
Critics saw quickly through the ruse. Final assembly of the plane is what will
happen at Mobile; most of the plane will actually be built at the EADS assembly
line in Toulouse, France - where most of the jobs will go as well. No new jobs
for Seattle; most likely, the 767 production line will be closed as a result of
this decision.
Seattle Nice was nowhere to be found following the announcement. For years the
world came to America for its aerospace and defense technology purchases - how
dare the dynamic be reversed!
"This contract is a $40 billion subsidy to Europe to invest in Airbus and its
foreign work force," cried Washington Senator Patty Murray. "We need to be
investing in the American aerospace industry and the high-wage, high-skill jobs
it supports. The Airbus contract is a European stimulus plan subsidized by the
American taxpayer."
Part of Boeing's plan for the KC-45 was to do the conversion of the 767s into
aerial tankers, including the installation of the actual refueling booms, at
its plant in Wichita, Kansas, leading the local Congressman from the area, Todd
Tiahart, to declare after the announcement, "We should have an American tanker
built by an American company with American workers."
On the reader-comment blogs of the Seattle Post-Intelligencer, the observations
were a lot more colorful (spelling contortions included in the excerpts below).
A poster who identified himself as "boing" suggested that since America was
buying from France, it might as well go full-court treason and buy from the
Russian design bureaus that supplied the former Soviet air force as well.
"Wait, they should rebid because Tupolev and Mikoyan and Antonov didn't get to
bid!"
Commenter "peacelover" somehow fit the Boeing events through the lens of his
apparently favorite neverending grievance, the alleged "oppression" of white
men in America.
"If the white male worker was treated with the repect deserves there in the
once great USA, instead of being treated like a second class bufoon, people
like me might be actually living in the once great country and trying to make
it great once again. That I am afraid is a lost battle. Thanks again Boeing,
your loss is our gain."
Poster "unregistered user" went for the red meat. "The French are nearly
communist. They resent the USA despite the fact that US soldiers saved them in
WW II. The French sell advanced weapons to terrorists on easy credit terms. Why
should US tax dollars flow to France? Air force bureaucrats, NOT air force
warfighters, made this blunder."
Another "unregistered user" was equally outraged. Bet there's no French
dressing in his fridge. "Disgusting that my tax money is going to Europe.
Didn't we give them enough with the Marshal Plan? Besides, with the radical
anti-Americanism coming out of Europe these days, how can we trust they will
not make a tanker with designed flaws built in to sabotage American military
might. European governments - EADS is government-run - have already made it
clear what they think of the US military. And now we are allowing them to build
our tanks? And with billions of tax payers' money? Why don't we just give
al-quada $40 billion to build our military equipment."
My favorite is that of "Wolfshead". He's really mad as hell, and sure isn't
going to take it anymore. "I think the US Air Force was trying to be
politically correct to give a French company the contract. Or maybe this is the
result of NAFTA. The stupid trade agreement made by Bill and supported by
Hillary [Clinton]. I beleive a defense contract should stay within the US.
Especially when the Boeing deal was going to save them 30% in fuel costs and
had three times the cargo capacity. One must wonder how they overlooked this
detail and still went ahead with the inferior deal from EADS. Whoever gave away
the defense of the United States to the slimy French (who have harbored every
known criminal and terrorist in the world), should be tried for treason."
Even after eight years, wherever evil and perfidy may lurk, surely, a Clinton
is always behind it all.
Besides the fact that the 1993 North American Free Trade Agreement (NAFTA)
treaty between the US, Canada and Mexico obviously has no relation to this
matter, I love "Wolfhead's" conception of the US Air Force as an institution
just absolutely saturated with political correctness. During the 1980s, I
earned my daily bread working for a defense consultancy, and I made regular
visits to air force offices at the Pentagon. I can't tell you how many peace
signs, "War is not good for children and other living things" posters and
tie-dyed shirts I saw in the cubicles of those long-haired officers tasked with
targeting the Strategic Air Command's big city-busting hydrogen bombs onto
high-value Soviet military and industrial assets.
More than a few bloggers and posters wiped the foam from their mouths, and went
for a bit more reasoned argument - that US domestic politics had made the
decision. Poster "Bob in Everett" summed up this argument. "If Washington state
had two Republican senators and was likely to vote for [John ] McCain, the
contract would have gone here ... this could be an attempt to get Alabama (and
surrounding states) to vote Republican this November."
On the surface, this argument does carry some logic. Alabama, along with the
rest of the Deep South, had its majority white population go from bloc voting
of the Democrats to bloc voting of the Republicans following the Democrats'
endorsing of the civil rights movement in the mid-1960s. Washington state, part
of the libertarian West Coast that has rebelled against the Republican party's
recent alliance with religious fundamentalism, will almost certainly vote for
the Democratic candidate in this November's presidential election. Alabama has
a Republican governor and two Republican US Senators - Washington, just the
opposite.
In this administration, and under former Bush political advisor Karl Rove's
all-powerful influence, politics has trumped all other considerations in public
policy decision-making; just look at the ignorant, unqualified but politically
loyal buffoons the administration sent to Iraq to screw up the occupation and
plant
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