Skilled workers give Boeing the edge for tanker

EADS may be in the bidding for the U.S. Air Force tanker contract, but the Europeans have a huge disadvantage to overcome, analysts say – they don’t have skilled and experienced aerospace workers to assemble their plane in Alabama.

“Boeing’s advantages are a mature industrial site in Everett, with a tremendously experienced work force. And they have the smaller airplane with lower operating costs,” said Scott Hamilton, an Issaquah-based aviation analyst with Leeham Co. “I don’t know how EADS overcomes that.”

Hamilton’s comments echoed those of District 751 President Tom Wroblewski,.

“The EADS proposal will lack a crucial component: skilled and experienced American workers like our Machinists Union members,” Wroblewski said. “It doesn’t matter who bids or doesn’t bid, the clear fact is that the Boeing KC-767 tanker built by our District 751 members here in Puget Sound is simply the best option.”

Even Boeing CEO Jim McNerney sees the advantage his experienced workforce brings to the tanker battle.

“We’ve got a work force in Everett that has lived through many, many configurations and design changes on the 767. They understand the airplane,” McNerney told Wall Street analysts on April 21. “I like betting on our guys in that environment.”

EADS executives say they’ll submit a bid to provide 179 KC-45 tankers to the Air Force by July 9, taking full advantage of a Pentagon decision to give the Europeans an extra 60 days to enter the tanker bidding, after their long-time partner – U.S. defense contractor Northrop Grummanbacked out in March, declaring that the KC-45 couldn’t beat Boeing’s proposed 767-based tanker in terms of meeting the Pentagon’s bid specifications.

EADS flipped-flopped on whether it would enter a solo bid, and spent weeks trying unsuccessfully to find a new American partner before finally making its announcement on April 20.

The Europeans’ decision to go it alone caught some observers by surprise.

U.S. Rep. Norm Dicks was one. Speaking at an April 9 fundraising breakfast in Seattle, which was attended by Wroblewski and a delegation from District 751, Dicks said that EADS should make a smart business decision and not place a bid.

The oversized, French-built tanker would be too expensive to buy and too costly to operate, said Dicks. Given that, it would be a waste of EADS’ money and the Pentagon’s time for the Europeans to keep pursuing the contract.

“I hope EADS comes to its senses,” he said. “Northrop got out for a reason.”

EADS executives – and pro-European congressmen like Sen. Richard Shelby of Alabama – like to tout the KC-45’s greater size and carrying capacity compared to the proposed Boeing plane.

But bigger doesn’t translate into better, said retired Air Force Brig. Gen. Thomas Pickney.

“The larger size of the Airbus tanker was a disadvantage in the real world, not an advantage,” he wrote in an essay published on the Web last month. “Its larger size meant it will not land on many of the runways our current tankers use. That would mean the larger plane was less available than the medium-sized Boeing tanker.

“A larger plane with more fuel will do our airmen no good whatsoever if it is not available exactly when and where combat pilots need it to be,” he concluded.

A larger airplane also will be more expensive to operate, noted Dicks. “It’s just physics, it burns more fuel.”

And over the planes’ lifetime, that additional fuel cost would add up to about $35 billion — which is the expected cost to buy the planes in the first place, he said.

EADS also plans to continue with the scheme it hatched with Northrop Grumman to assemble the tankers in an as-yet-unbuilt factory in Mobile, Ala., from parts manufactured in France and shipped across the Atlantic Ocean.

That will add to EADS’ costs, and make it that much harder for it to enter a competitive bid, Teal Group analyst Richard Aboulafia told The Seattle Times.

“There are a lot of costs in this tanker bid that EADS cannot control,” Aboulafia said. “They won’t be able to reduce the A330’s operating costs. And moving production to the U.S. is also fundamentally high cost.”

In fact, analysts say the only chance EADS has to compete with Boeing on price is to either accept massive cash subsidies from European governments, or to enter a deliberately money-losing bid on tankers, in hopes it will lead to more-profitable U.S. military contracts in the future.

And none of that addresses the increased risk the Air Force would face in relying on a foreign company to supply components to an untrained and untested American workforce, as EADS proposes.

“The Boeing tanker is the only realistic option,” said Wroblewski. “Our members are the ones who can build it, should build it and will build it.”

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