So much for the Boeing 767 Tanker deal

[70charginglizard]

Everett could feel impact of lost tanker contract

05:49 PM PST on Friday, February 29, 2008

By GARY CHITTIM / KING 5 News



Video: Lost tanker deal impacts businesses
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   EVERETT, Wash. -- Businesses across this city may feel the impact of the decision by The Pentagon on Friday not to award a $40 billion air refueling tanker contract to Boeing.

Those 179 planes would have been built at Boeing's 767 plant in Everett, but now it goes to Los Angeles-based Northrop Grumman and its European-based partner, European Aeronautic Defence and Space Co.

At Jimmy Jack's restaurant in Everett, one out of every five meals served is purchased by Boeing employees.

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"We've been crossing our fingers just hoping for it, and all because, as goes Boeing, so goes us," said Eddie Leek, Jimmy Jack kitchen manager.

In every business on every corner, you'll find somebody connected to Boeing.

Vendor Ron Moran stands to lose business, and in his opinion, national security.

"It's built in America. Build it in the U.S.  I don't go for this Airbus- Grumman thing," said Moran.

The outsourcing of a major national defense contract is expected to cause outrage across the country and especially here.  There is a lot of pride around here in how local people build the planes that power our military and the local economy.

"I come up here every day to work and support this company, which in turn supports this economy, and now you're going to take and give away? You're gonna give away America?" said one worker.

[Troy]

Sad to see but it's not all about jobs or even "Buy American". This is the ugly side of politics and business.

"The deal, which puts a critical United States military contract into the hands of foreigners, at least in part, calls for spending up to $40 billion on the first phase of a multidecade program to replace the nation's aging aerial tanker fleet, which dates back to the Kennedy and Eisenhower era. The fleet, which now numbers about 535 refitted Boeing 707's and DC-10's is one of the largest but oldest fleets of jets in the world. Yet the tanker planes are essential to keeping Air Force and allied fighter jets, bombers, cargo planes and other military aircraft in the air when on critical missions far from airports where they can land to refuel.

And replacing these tankers — essentially flying gas stations that offload their fuel in mid-air — has been the Air Force's top priority since 1996, when the government first proposed acquiring new planes. Eventually, the contract is expected to be valued at $100 billion, as the Air Force spends the next several decades acquiring new tankers at a rate of about 15 a year. It is expected that nearly 400 new refueling planes will be needed.

Yet for more than a decade the Air Force's effort to modernize the fleet has been thwarted by global politics, Washington scandals and an aggressive attack by Senator John McCain, now the presumptive Republican nominee for president.

In the end, the scandal lead to the departure of Phil Condit, the chief executive of Boeing, the resignation of James G. Roche, the secretary of the Air Force, and the imprisonment of two Boeing executives, one of whom was the former Pentagon acquisition official that had worked on the program. Another Air Force acquisition officer who was working on the program later committed suicide.

The Air Force, short on cash and wanting to acquire the planes as fast as possible, proposed an arrangement to Congress in late 2001 under which the Pentagon would lease the Boeing 767s in a multiyear sole-source contract that would keep Boeing's aging 767 production line alive.

But just as the Air Force was about to sign that deal, it came under sharp attack from Senator McCain, a former pilot and a member of the Senate Armed Services Committee. Mr. McCain denounced the deal as a sweetheart arrangement between Boeing and the Air Force that would shortchange the taxpayer and that was arranged with insufficient scrutiny and oversight.

In the ensuring firestorm, embarrassing e-mail messages were made public in which the Air Force secretary, Mr. Roche, said "Go Boeing!" and called opponents of the deal "animals." Soon afterward, it was reported that the Air Force's No. 2 weapons buyer, Darleen A. Druyun, had been promised jobs for herself, her daughter and son-in-law in return for steering the tanker contract and billions of dollars of other Air Force business to Boeing. Soon after joining Boeing at a $250,000-a-year post, Ms. Druyun and Michael Sears, Boeing's former chief financial officer, pleaded guilty in the scandal and received prison terms.

The weight of the scandal caused the Boeing deal to collapse in 2004 and opened the door to competition from the arch-rival European Aeronautic Defense and Space Company, which teamed up with Northrop to promote use of Airbus planes as Air Force tankers.

The Northrop-EADS bid was a bold one that mixed business and Washington lobbying with trans-Atlantic politics. EADS lined up a politically powerful group of senators from Alabama and Mississippi with promises that much of the tanker would be built in their states.

In Paris, at the annual air shows, Airbus officials and Southern politicians proudly displayed the proposed European tanker offering and made the argument that if the United States wants to sell its weapons to European countries, it should also open its doors to foreign suppliers. Politicking reached the highest levels — even Chancellor Angela Merkel of Germany brought up the tanker bid in a White House meeting with President Bush.

Each side spent millions of dollars to sharpen its proposal, hire lobbyists and former generals to argue their case and wage extensive advertising efforts in Washington and at military gatherings in advance the announcement."
http://biz.yahoo.com/nytimes/080229/1194751294555.html?.v=4

Troy

[Shakey]

Thanks for the rest of the story Paul, er I mean Troy!

[hemihead]

What I get from that other than your typical politics is that Americans again get sold out over the Europeans . This time by our own government . 

[Troy]

Thanks for the rest of the story Paul, er I mean Troy!

You know, there was a good point made by ol' Paul today but I don't want to hijack the thread. Listen for a comment on global warming if you hear a rebroadcast or find it on the web.

What I get from that other than your typical politics is that Americans again get sold out over the Europeans . This time by our own government . 

But if Boeing got the contract (and they still might) you'd complain about "big business" buying the government and getting away with it. Neither solution is appealing.

Troy

[70charginglizard]

and the all important phrase at the bottom Troy-

"Politicking reached the highest levels — even Chancellor Angela Merkel of Germany brought up the tanker bid in a White House meeting with President Bush."

and isn't it ironic how the mis behavings of a couple of corporate level people could cause such pain to so many below them?

[Troy]

and the all important phrase at the bottom Troy-

"Politicking reached the highest levels — even Chancellor Angela Merkel of Germany brought up the tanker bid in a White House meeting with President Bush."

and isn't it ironic how the mis behavings of a couple of corporate level people could cause such pain to so many below them?

Yep, but how many times did something similar happen that no one found out about? Praise would flow for Boeing because of their "hard work". I'm sure there were a lot more people involved but someone has to take the fall right? It's not inconceivable that another company (or some outside interest) put the pressure on the government over the first deal. After the contract was put back out for bidding, millions were spent on PR from both sides and you know they were only targeting the decision makers (and people who could pressure them). $100 billion can make people do all sorts of things.

Troy

[daytonalo]

I thought you told me that Aerospace Ind do not have Lobbyist ?

[Troy]

I thought you told me that Aerospace Ind do not have Lobbyist ?

Huh? I know what you're talking about but I have no idea how you came up with that conclusion. Maybe it's better that way.

Troy

[hemihead]

 Between an American company or a Euro Company I would prefer the lesser of the 2 evils . You know they both were up to unethical practices to get the contract . I guess it is not PC to be an American today . Even in your own country.

[70charginglizard]

As a Boeing worker...It's just sad. A lot of us were very hopeful to see this deal happen for us. It would have been a good boost to moral and the local economy and now were back at square one.

It stuff like this that cause the roller coaster affect Boeing

By roller coaster I mean layoffs.

That won't be pretty.

[Brock Samson]

 Wow, that's an eye opener.. 
  thanks for the research..

[Troy]

Between an American company or a Euro Company I would prefer the lesser of the 2 evils . You know they both were up to unethical practices to get the contract . I guess it is not PC to be an American today . Even in your own country.

Well, I'd bet with enough lobbying and public outcry that Boeing will get the deal after all. Airbus did what most people thought was impossible - challenged the American dominance in commercial aviation. In my opinion, too many industries in this country got fat and lazy and forgot how to build competitive products because they had limited competition and practically guaranteed sales.

Here's something I bet you guys didn't know:
The European Aeronautic Defence and Space Company EADS N.V. (EADS) is a large European aerospace corporation, formed by the merger on July 10, 2000 of DaimlerChrysler Aerospace AG (DASA) of Germany, Aérospatiale-Matra of France, and Construcciones Aeronáuticas SA (CASA) of Spain.
http://en.wikipedia.org/wiki/EADS

Troy

[70charginglizard]

Between an American company or a Euro Company I would prefer the lesser of the 2 evils . You know they both were up to unethical practices to get the contract . I guess it is not PC to be an American today . Even in your own country.

Well, I'd bet with enough lobbying and public outcry that Boeing will get the deal after all. Airbus did what most people thought was impossible - challenged the American dominance in commercial aviation. In my opinion, too many industries in this country got fat and lazy and forgot how to build competitive products because they had limited competition and practically guaranteed sales.

Here's something I bet you guys didn't know:
The European Aeronautic Defence and Space Company EADS N.V. (EADS) is a large European aerospace corporation, formed by the merger on July 10, 2000 of DaimlerChrysler Aerospace AG (DASA) of Germany, Aérospatiale-Matra of France, and Construcciones Aeronáuticas SA (CASA) of Spain.
http://en.wikipedia.org/wiki/EADS

Troy

Troy,

The 767 is a very much so competitive and even dare I say a proven product as we have already been building them for the Italians and the Japanese and they both have been very happy with them so far-

The KC-767 Tanker is the right solution for air-refueling and transport needs for military services around the globe. The KC-767 tanker is "right-sized" for optimum fuel offload and range, takes off and lands at more locations than its potential competitor, the A330, and provides enhanced mission capability, whether in support of force projection, humanitarian missions or worldwide deployments.
Equipped with the new Boeing-designed aerial refueling boom and a new Smiths Aerospace-designed hose-and-drogue aerial refueling system, the
KC-767 Tanker offers maximum operational flexibility along with full European Union and NATO interoperability.
Quiet, efficient, and commercially proven engines make the KC-767 Tanker compliant with the strictest 21st century noise and environmental standards. That means this new tanker aircraft is welcome at all the places it needs to be.

As for the laziness comment. We have been working our butts off on this deal from all sides of the company and firmly got handed the shaft from our own govenment. I firmly believe the powers in charge and there own agenda's had a lot to do with that. Not the product or the tenacity of the the Boeing people.

[Dans 68]

Being a Saturday morning, I really don't have the time (little league baseball is starting up) to read all the postings here, or the links regarding the awarding of the contract. My only comment is that my wife works at Northrup (Deputy Program Manager) and she was very happy this morning.  ; it looks like I'll get some time later to work on the Charger. The circle of life.... 

Dan

[Troy]

That was a general comment about laziness in the American Manufacturing industry (moreso from management and not the workers). This includes market trends and future product planning as well. Notice how the American auto industry nearly collapses every time the price of gas rises? Yet we blame the Japanese - even though quality and reliability are proven to be better and they know their target market. When Airbus started in 1970(?) no one thought they'd ever be able to even come close to the American dominance. They seem to take a lot of pride in listening to their customers (crazy isn't it?). Granted, the way this whole thing works is that the two manufacturers try not to compete directly - most products are lightly smaller or larger to fill a need that isn't being addressed. Product overlap is minimal yet, as with any business, part of the challenge is convincing customers that your product is the one they need. It is very hard to choose between two outstanding products which both nearly meet everything you're looking for. It's much easier when one is a clear winner.

The original deal for the 767s was a lease. I don't think the deal was killed because of the plane's capabilities so much as the way it was structured.

Interesting to note:
The winner was based on five factors: mission capability, proposal risk, past performance, cost-price and aerial refueling abilities, Payton said.

She declined to say where Boeing fell short until after Air Force officials meet with Boeing officials in a debriefing sometime around March 12.

The Northrop Grumman/EADS team offered the KC-30, an aircraft based on the Airbus A330 commercial airliner. It is larger than Boeing's KC-767 tanker, a modified Boeing 767-200 commercial airliner.

"I am extremely surprised at this outcome," said Lexington Institute defense analyst Loren Thompson.

With the larger plane, "it means the Air Force was willing to completely rethink the way in which it did the mission in order to accommodate the potential of using a much bigger plane."
http://www.kansascity.com/news/breaking_news/story/512429.html

From the same article, here's a part that bothers me:
Gov. Kathleen Sebelius said Boeing's tanker was the better choice. She said it provided a combination of military capabilities and economic benefit to 40 states.

Who cares who it benefits? Buy the best tool for the job! When I design something for work it is based off of the functionality requirements for the application. Cost and suppliers only enter the picture once I'm sure we can meet these goals. For example, if you require a 50' parachute to support the weight of any soldier in the army you don't purchase 48' chutes just because it will benefit more people. The big guy who breaks both his legs upon landing is more important.

Here's a rebuttal:
Creation of U.S. jobs was not a factor influencing the decision, Payton said. Instead, it was based on what is best for the taxpayer and on performance, she said.

Crazy! That doesn't sound like a politician. Who is this person any way? (Ah, I see: "the Air Force's assistant secretary for acquisition in Washington".) Congress will find a way to bully the Air Force into accepting a (supposedly) inferior product just to appease a bunch of people who don't know the first thing about planes or military missions.

Northrop Grumman is still an American company. Boeing was projecting 44,000 jobs nationwide (including suppliers) and Northrop Grumman projects just under 30,000. Most of the impact from Boeing would be felt in Wichita but Mobile will be the big winner otherwise. The people in Mobile are very happy I'm sure.

Troy

[70charginglizard]

Well if size had anything to do with this, then I guess we at Boeing will have to consider making a 777 tanker in the future to deal with this.

I'm up for the challenge. 

Our first 777 Freighter hit's the skies real soon here and tanker is usually the natural next step in the derivative line after that.

http://seattletimes.nwsource.com/html/businesstechnology/2003275629_777tanker26.html

Watch out boys. We will be back.

[triple_green]

They are still punishing us for the dishonest McDonald Douglas execs five years ago....when will this end.

[hemihead]

They are still punishing us for the dishonest McDonald Douglas execs five years ago....when will this end.

When the only ones left with a good job are the white collar people .

[bull]

Thanks for the rest of the story Paul, er I mean Troy!

You know, there was a good point made by ol' Paul today but I don't want to hijack the thread. Listen for a comment on global warming if you hear a rebroadcast or find it on the web.

I can't find it. Can you give us a hint?

[Troy]

Thanks for the rest of the story Paul, er I mean Troy!

You know, there was a good point made by ol' Paul today but I don't want to hijack the thread. Listen for a comment on global warming if you hear a rebroadcast or find it on the web.

I can't find it. Can you give us a hint?

Sorry Thursday morning. The audio file links are right there on his home page. The next section is good too.

Troy

[rare69]

I could give a shit less, or care what happens to most of the people and economy of the tree huggers of Seattle, but i don't like to see my hard earned tax dollars going to some other country like France. It's just wrong. I don't care if there planes are better or not.

[Brock Samson]

well said... 

[bull]

I could give a shit less, or care what happens to most of the people and economy of the tree huggers of Seattle, but i don't like to see my hard earned tax dollars going to some other country like France. It's just wrong. I don't care if there planes are better or not.

I don't think there are too many tree-huggers working at Boeing. But we'll remember you made this crack when/if you ever whine about your own pocketbook getting hit.

[hemihead]

I just read on Yahoo news that Congress isn't real happy either .