Sidney Hill, Jr.: Boeing's tanker contract protest raises questions about globalization
By Sidney Hill, Jr., executive editor -- Manufacturing Business Technology, 4/1/2008 12:00:00 AM MDT
When Boeing filed its formal protest of the U.S. Air Force's decision to award a $40 billion contract to build refueling tankers to a competing bidder, the Chicago-based aircraft maker also raised a profound question: Do U.S.-based corporations want to compete in a global marketplace, or do they merely want to reap the spoils of globalization?
This question arose because the winning bidder is a team comprised of California-based Northrop Grumman and European Aeronautic Defence & Space Co. (EADS), the parent company of Airbus—Boeing's biggest rival in the commercial aircraft sector.
Numerous Boeing supporters—including several members of Congress and both Democratic candidates for the presidency—have suggested it was wrong for the Air Force to award this contract to a foreign entity.
It's hard to argue that EADS, an English company, represents a national security risk. So the primary rallying cry has been the potential loss of American jobs. There's a fallacy in that argument as well, since Northrop Grumman is the lead contractor on the EADS team, and the team plans to build a plant in Alabama that will serve as the final assembly facility for the tankers.
In total, Northrop Grumman claims this contract could generate 48,000 jobs in 49 states. There would be roughly 1,500 workers at the Alabama assembly plant.
On March 11, Boeing asked the Government Accountability Office (GAO) to review the Air Force's decision; the GAO says it will issue a ruling by June 19. Although the evidence Boeing presented to the GAO includes a claim that the Northrop Grumman-EADS team was able to compile a slightly less costly bid because EADS benefits from EU subsidies, Boeing has framed its argument primarily around issues related to how the Air Force worded its bid, and whether the Air Force strayed from the stated requirements in ways that gave the Northrop Grumman-EADS team an unfair advantage.
Boeing argues, for instance, that the Air Force changed the initial requirement for how much space a single tanker could occupy on an airfield to accommodate the larger Northrop Grumman-EADS aircraft, which would be a modified version of an Airbus A330 jetliner. Boeing's proposal called for modifying its 767 jetliner.
There are two reasons why it makes sense for Boeing to voice objections about the technicalities of the bidding process rather than a “foreign” company's presence on the winning team:
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There are enough lawmakers chanting that mantra; and
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Such an argument might boomerang on Boeing in future pursuits of business in Europe or elsewhere around the globe.
Quite frankly, arguing against a global corporate partnership would just sound silly coming from a company that touts the international nature of the supply chain it forged to produce its latest flagship product—the 787 Dreamliner. Just last fall, a Boeing production executive spoke to MBT with pride about infrastructure Boeing created to coordinate the efforts of 132 partners from Japan, Australia, and Italy. These partners are now shipping parts to a plant in Everett, Wash., where the 787 is assembled.
That's exactly the plan Northrop-Grumman and EADS laid out for building the Air Force tankers. So here's a question for anyone arguing against EADS' participation in the Air Force tanker contract: If Boeing somehow manages to prevail in its protest, would it be barred from working with any of its “foreign” partners on this project? And does that make for good business in today's economy?
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And while Boeing is increasingly becoming more of a globalized company, at least they are still an American company. With Boeing, scientists and engineers still have a chance to keep sensitive design and manufacturing work right here within the USA.
While the corporate world may thing globalization is being practiced on a level playing field, those of us in manufacturing know better.
