KC-X – so what does Boeing do now?

Mount the all-guns-blazing, protest-to-end-all-protests obviously. Well it’s obvious to plenty of residents of Kansas and Washington state – but I doubt if it is to anyone in the Boeing boardroom. Still less obvious after the publication of this paper by Loren Thompson of the Lexington Institute. This material is clearly blessed by the Air Force and carries a straightforward message: Northrop Grumman/EADS won comfortably on the merits of the proposal. Please don’t argue. Well, they would say that wouldn’t they, but ignoring heavy hints from big customers is a perilous strategy.I think you can see how this affair is now shaping up. For anyone in politics or whose aerospace job is at stake then the whole thing is an inexplicable outrage (and even if privately you don’t think that, you’re most certainly not going to say so.) For anyone who understands aviation, tanking and building aircraft – it’s hard to see why you’d dispute the USAF’s findings in the absence of any persuasive argument.

As Dominic Gates reports in the Seattle Times, not only are Boeing’s local pols queuing up to beat up the Pentagon, but Obama and Clinton have also joined in. Fine presidential candidates as they are, tanker-procurement does not feature prominently on their resumes/CVs. Obama’s thoughts on the subject are actually sufficiently nuanced that they’re not likely to come back to haunt him. But Clinton takes the opportunity to link it all up with the WTO Europe/Airbus vs US/Boeing case. McCain, who was the major driver in the investigation six years ago that scuppered the original award to Boeing, is smart enough to stay above it all. The changed outcome once a proper contest was run speaks for itself, and he’s not going to change anyone’s mind about whether he was right or wrong on the issue.

But having all those folks on your side isn’t necessarily very useful to Boeing. The company has only just rehabilitated itself with the military in the wake of the Druyan and EELV scandals – being a bad loser here might not be smart. And furthermore, as Scott Hamilton at Leeham noted a while back, there is more tanker business to come. Another reason not to pick a fight.

I’m going to predict that the only thing that will provoke Boeing into a protest will be the emergence of a cast-iron argument that the Air Force ran the contest unfairly or was technically wrong. But the Pentagon turned back-somersaults to ensure its process was not just clean, but seen to be clean. On balance I think Boeing will let its tame pols do its fighting for it in Congress and see what happens. And it won’t sign-up for the battle unless it thinks it’s got a better than 50/50 chance.

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4 Responses to KC-X – so what does Boeing do now?

  1. Ken March 4, 2008 at 1:21 pm #

    I think there are many arguments that Boeing could use to counter NG’s proposal, and I agree with your position that they should not protest to much, but the fact remains Airbus will be building these planes not NG who are basically rubber stamping their name so as to appear as an American supplier.

    No one has explained exactly what will be built or assembled, or any combination of the above in the U.S., the airframes are built in France, the wings in Great Britain, the tail section in Spain.

    How are all the pieces getting to the U.S. or are they assembled in France and flown over and final conversion is done in Alabama. As soon as the announcement was made NG’s name seemed to disappear off the radar and it was all EADS making the announcements and how it will mean so many jobs for European workers, and little if no mention made of U.S. workers.

    It sounds to me like the specifications required by the Air Force were tailored to fit Airbus’ bid and eliminate Boeing’s submission, if they wanted a bigger plane why didn’t they specify something along the 777′s size which is far superior to the A330.

    And finally the point that so many have raised, the matter of Government grants, Airbus freely admits it get’s ” Launch Aid ” from Various European Governments in the form of repayable “Tax Free : loans to start new Aircraft. The A380 is one prime example. One should be aware that if an aircraft is not a ” Commercial Success” the grants are forgiven.

    So taken in that context Boeing will never win another Government contract for Aircraft because the EU will subsidize Airbus to protect their employees not America’s.

    Sound too good to be true?

    Something smells like a rat to me.

  2. John Price March 4, 2008 at 3:28 pm #

    “Ken” (above) clearly didn’t see reports that in the last weeks of the contest, some criteria were altered so as to favour Boeing – and even they, they lost …
    2) Clearly, Boeing could have offered a 777 conversion, but would have had to start from scratch, while most of the work on the 767 was already done.
    3) Boeing design offices are still heavily loaded with the 787, so they were left with the “KC-767″, which they probably felt was “good enough”. Perhaps they’ll offer a “KC-777″ for the next rounds, in spite of the USAF’s natural dislike of having different types in their fleet – the contest was for a replacement for the KC-135 (early models) and the KC-10s, wasn’t it?
    4) The Mobile plant will, as I understand it, be a Final Assembly Line, just like the current one at Toulouse, though it is an interesting question whether the Beluga has the legs to get the various sections there without several stops en route.
    5) As a purely private comment, after many years of seeing European Air Forces importing US-made equipment (“faute de mieux”, as they say in Toulouse)to the detriment of their own industries, isn’t it nice to see the boot on the other foot ?

  3. John S. March 4, 2008 at 4:35 pm #

    The “altered” criteria turned out to be forcing Boeing to accept a longer development timeline for the KC-767, at increased costs. This lowered the risk factor of Boeing’s proposal to equal the Northrup Grumman proposal.

    Boeing had the chance to offer the 777 as a tanker, but since they’re still selling very well, and no work has been done to make a “KC-777,” the lead time for airplane #1 was much longer than the KC-30.

    Boeing hoped that the KC-767, with it’s smaller KC-135 sized footprint, was “good enough” but Northrup Grumman offered a larger aircraft for almost the same money.

    Boeing will now return their talents to getting the 787 out the door, getting the 747-8 ready for first flight (which in itself may make a good KC-Y contender) and focus on selling more P-8 Poseidons to the world.

    The real losers here are the Japanese and the Italians.

  4. Kieran Daly March 4, 2008 at 4:49 pm #

    Very good points from everyone. I would just say to Ken that you can’t have it both ways. If EADS really is ‘subsidized’ then the EU is effectively creating jobs in Mobile (and in Evendale – it could have been Rolls-powered after all). How many jobs in Mobile? Who knows – not so many now, anybody’s guess how many a decade from now.

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