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Editorial: Boeing tanker contract assures state’s role in aerospace industry

Sun., Feb. 27, 2011

Despite the creeping pessimism leading up to the announcement, Boeing won the U.S. Air Force contract to supply the next generation of airborne refueling planes. That’s one hairy landing under extremely stressful conditions.

It’s been a decade since Boeing and the Air Force began working on a lease for 100 planes to replace the aging KC-135 tankers, and the process has been buffeted by gut-wrenching turbulence ever since.

To recap:

An Air Force officer working on the lease procures a job with Boeing instead. The officer and a Boeing executive are subsequently fired and both end up doing jail time. Boeing’s CEO Phil Condit resigns. The refueling tanker job is put out for a competitive bid, which is won by Northrop Grumman Corp. and European Aeronautic Defence and Space Co. (EADS). A government audit determines there were errors in the process, and the bidding begins anew. Boeing pursues the contract. Northrop Grumman drops out. At the last minute, EADS enters the contest.

On Thursday, Boeing was awarded the contract valued at more than $30 billion. Barring a successful appeal by EADS, this saga will finally draw to a close. Though messy, it did yield a better competitive bidding process for Defense Department contracts.

This is a huge victory for Washington and Kansas, which stand to get the lion’s share of the assembly work.

As it turns out, escalating fuel prices might have made the difference, because the Boeing 767 is smaller than the EADS plane. U.S. Rep. Norm Dicks, D-Wash., successfully lobbied to have fuel costs priced over a longer time frame. The entire delegation worked hard to put the best case forward for Boeing. For one thing, politicians clamored for the probe that led to the restart of the bidding process.

The effects on Washington state should be far-reaching. Boeing workers on the 767 line in Everett feared layoffs when the final 49 commercial planes were delivered. This contract gives them at least 10 more years of work. Boeing estimates that the project could generate 11,000 jobs directly and more than 50,000 indirectly.

Aside from the benefits of an overall rosier state economy, the impacts for Eastern Washington won’t be known until Boeing makes decisions on subcontracts. But many companies in the Inland Northwest Aerospace Consortium could profit by supplying parts.

One positive sign is that Boeing has publicly admitted to making poor outsourcing decisions on its 787 Dreamliner project, which caused expensive delays when far-flung suppliers couldn’t meet their commitments. Company executive Jim Albaugh has conceded that this wouldn’t have happened had the jobs stayed closer to home.

It will be important for the state to preserve the technical training programs at community colleges, which help maintain a ready supply of workers.

After Boeing moved its corporate headquarters to Illinois and then decided to build a 787 factory in South Carolina, many people began to wonder about the future of aerospace in Washington state.

With this announcement, it is definitely looking up.