Irony or farce: Boeing ships US defense jobs to South Korea?




a10fighter.jpg

The story sounded almost too perfect to be true, and it started with a tip from a visitor to this blog. Here’s how the tip was presented to me:

Only months before the controversial tanker contract award, Boeing had defeated Northrop Grumman for a different US Air Force contract and promptly shipped the work — and the jobs — overseas to South Korea. If Northrop had won the contract, all the jobs would have remained in the United States.

Against the backdrop of Boeing’s protectionist-themed tanker campaign, that kind of story would be at least a study in irony, if not a potentially great scoop. But was it true?

I explained the details on Friday to Boeing’s PR staff.

In June 2007, Boeing won the $2 billion A-10 wing replacement program, scoring a coup against a Lockheed Martin/Northrop Grumman team.  It was a coup because Northrop is the original equipment manufacturer (OEM) for the A-10, since Grumman acquired Fairchild Republic about 20 years ago.


A10 wing work.jpg

Six months after contract award, several reports in the Korea press and a 29-word brief in Aviation Week & Space Technology announced that Boeing had transfered manufacturing for the outer-wing panels to Korea Aerospace Industries (KAI).

None of the reports cited a source for the information, and, strangely, I could find no announcement made by either Boeing or KAI.

Boeing’s PR people promised to look into it and get back to me.

Meanwhile, I contacted Northrop’s PR staff. Instead of calling the team handling the tanker contract, I phoned the team in St. Augustine, Florida. This is not only where Northrop builds the E-2D Hawkeye and continues to produce major structures for the EA-6B Prowler. It was also Northrop’s hub for the A-10 competition.

The PR staff told me they were not aware that Boeing may have transferred the outer-wing panels to KAI, but they immediately pounced on the (unconfirmed) information.

Boeing won the A-10 wing replacement competition mainly because they offered a slightly better price, Northrop’s spokesperson said. So Boeing’s apparent decision to ship the outer-wing panels to a lower-cost factory in South Korea could have clinched the deal, Northrop added.

The irony of the situation was not lost on Northrop’s PR professionals. The Lockheed/Northrop team had proposed basing all A-10 wing manufacturing work in St. Augustine. Even as Boeing and its tanker allies complain about Northrop’s choice of a European tanker aircraft, Northrop’s spokesperson said, they took jobs away from American workers to win another contract.

That was a pretty story, but the question still remained: was it true?

Boeing’s PR staff got back to me yesterday, but their first response surprised me. Here’s the email I received from Boeing:


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“Our plans have not changed from the day that we announced our bid or the contract win: we are leveraging world-class suppliers as we do on all Boeing programs; the engineering work is being performed in St. Louis; the manufacturing operation will be at Boeing in Macon, Ga.; and the wings will be installed by the Air Force at Hill Air Force Base in Utah.”

That’s as close as you can get to a categorical denial. I was still prepared to believe that the story wasn’t true, but Boeing’s response still left a few questions unanswered. So I replied to Boeing in an email:




“I still need to understand why there were reports in the Nov/Dec timeframe in the Korean press and AvWeek that KAI was building the outer wing panels.

First, can you say specifically where the outer-wing panels will be manufactured? Will the manufacturing actually occur in Macon?

Does KAI have any manufacturing role in the A-10 wing replacement program?

Finally, is the AvWeek report in any way inaccurate?”

A couple of hours later, Boeing’s PR team surprised me again with an email and an apology. It seems the first reply they sent me was incorrect and the result of “confusion”. I’ve worked with these members of Boeing’s PR staff for many years, and I have no reason to believe the error was caused by anything inappropriate.

Here is Boeing’s second reply to my questions, and it should finally set the record straight:


“KIA is a supplier to Boeing and is providing the outer wing panels for the A-10 wing replacement program.  The panels are a component of the wing assembly that Boeing is manufacturing at our Macon, GA plant.  We have a lot of suppliers for the various parts that go into making the wing, KIA is just one of them.  The completed wing assembly then goes to the USAF at Ogden AFB for installation on the A-10.”

So, as you can see, the original tip was true, and the story is accurate.


tankerjobs.jpg

If you’re looking for black-and-white conclusions to this story (shipping US jobs overseas/bad, keeping jobs here/good), I’m afraid you’ve come to the wrong place.

There are many shades of the gray in the international defense business, especially when it comes to jobs.

Keep in mind the A-10 wing replacement work was first reported around the same time that South Korea ordered a second batch Boeing F-15s, giving that production line a desperately needed life extension.

Could it be that fewer jobs in St. Augustine resulted in more jobs in St. Louis, where the F-15 is assembled?

It’s also important that Northrop admits Boeing offered the USAF a lower price for the A-10 work, possibly freeing more money for the USAF to spend on other things that required US jobs.

On the other hand, the story should make Boeing’s tanker supporters a little more reluctant to play the protectionism card.

The next time you hear politicians or defense contractors scream about the threat of foreign competition, ask them about KAI’s role in the A-10 wing replacement program.



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15 Responses to Irony or farce: Boeing ships US defense jobs to South Korea?

  1. Nicolas 22 July, 2008 at 3:25 pm #

    This is delicious.

  2. JJohn Penta 23 July, 2008 at 5:11 pm #

    One more reason why I so love reading this blog: those little stories nobody else would think to look at.

  3. Jim in Atlanta 23 July, 2008 at 6:46 pm #

    Boeing PR Dept, related to CBS News?

    Fake but accurate

  4. Gary Hills 23 July, 2008 at 6:49 pm #

    Keep in mind that even Northrop outsources globally, as does Boeing and EADS. To draw the comparison of wing outer panels with the tanker deal is a bit of a stretch. The fundamental A-10 is an american product built predominantly in america. Sure some parts are outsourced as this is a global economy. However, for funamental defense issues, having a foriegn platform as the basis for a critical military asset is troubling. I am not a protectionist and am all for global trade. It is the lifeblood of today’s industry. . .However ther are limits to when global trading is appropriate. Wing panels do not constitute the entire vehicle – they are only a part, just as there are foreign made parts on the 767, 330 and virtually everything made today. A predominant french based platform to represent the US military interms of airpower just seems a bit off base when paid for by american tax dollars. I have confidence that Northrop can build a great refueling system, I have less confidence in the platform it will be attached too and the support it will receive from EADS.

  5. Stephen Trimble 23 July, 2008 at 7:01 pm #

    Hi Gary, good point.

    I certainly do not mean to equate outer-wing panels for the A-10 to the entire KC-X program.

    Your concerns about where to put limits on global trading in the defense business are right right on the mark.

    I think this will be one of the biggest and most hotly debated questions for the next several years, particularly in the military and civil space market, naval ships, transports and even Air Force One.

    There was a brief flare up a few years ago when the presidential helicopter went to a European aircraft.

    But almost every single major defense contract awarded since that time has gone to a team with a huge international component, and this is only going to get bigger.

    The US defense contractors have not been investing in platforms like the Europeans. Rather, they have aspired to be integrators. That’s left the US defense market wide open to attack from Europe’s increasingly competitive platform market.

  6. SMSgt Mac 24 July, 2008 at 4:33 am #

    RE: “A predominant french [sic] based platform to represent the US military interms of airpower just seems a bit off base when paid for by american tax dollars”

    ???????

    First, the overwhelming majority of the dollars involved in developing and creating the A330 airframe is long-ago sunk cost and all essentially paid for by airline customers.

    Second, Boeing’s proposed tanker includes parts manufactured in Japan, United Kingdom, Canada and Italy. China is even a supplier.

    Northrop Grumman’s tanker includes parts built in the United Kingdom, Germany, Spain and France — all these countries are exempt under the Buy America Law. France makes about 13% of the A330 (by $ cost)

    EADS is NG’s partner. According to Wikipedia, EADS is owned:
    “As of 3 July 2007 41.63% of EADS stock is publicly traded on six European stock exchanges, while the remaining 58.37% is owned by a “Contractural Partnership”.The latter is owned by SOGEADE (27.38%), Daimler AG (22.41%), SEPI (5.46%) and Dubai Holding (3.12%).SOGEADE is owned by the French State and Lagardère, while SEPI is a Spanish state holding company. France also owns 0.06% of publicly traded stock.”

    “Predominant French” platform? Only in Boeing’s PR brochures.

  7. Bill Lonergan 4 August, 2008 at 9:05 am #

    SMSgt Mac…. NOT ONLY in Boeings PR brocures…But in the minds of any SOUND thinking, TAXPAYING american!!!!!!!!!!!! The Platform (A330) IS BUILT in foreign land with foreign workers and BENEFITING the foreign economies, this foreign plane will then (finally) be flown to Alabama where American workers will Then perform a small (and it is small) ammount of work on the stinger and hose/reel and associated equipment …slap an american flag on it and call it good, WHEREAS The Boeing derivative 767 IS built HERE in the USA assembled and tested…They (Boeing) do have several componants of the 767 built in foreign countries BUT no wheres near the level of what the A330 involves….I do not want MY tax $$ going overseas, (and dont kid yourself- thats where 85% of the $$$$ will go), I want American families getting the 85%, and damned it…ITS MY MONEY!!!!!!!!!
    Of course I do want to get these K767′s to the American men and women who need them ASAP.

  8. Hugh Zhorgan 28 December, 2008 at 12:11 am #

    If we don’t want foreign defense contractors building our gear we just need to get rid of competitive bidding and mandate US makers for all of it.

    It is more important to preserve US jobs than get the best equipment for our hired guns (the draft is over), and we can afford inflated prices brought on by the absence of foreign competition. If we can suck up paying for expensive toys, the least Washington can do is build them here. The Cold War is over and neither the Chinese or Soviets are worth fighting. Let them bear the expense of Empire before we are worn out by it.

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    Back in the night I used to write Rupert Grint all . the. time. And I got responses! They were probably from assistants but they were personal and perfect .

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