Takes Flight

06 May 2008
Defense Daily: Overturn of Northrop Grumman Contract Would Be a Disaster
Defense Daily is reporting that European defense experts believe overturning Northrop Grumman's contract to build America's next generation of aerial refueling tankers would be a disaster for U.S-European relations, as the CEO of losing tanker bidder Boeing - whose backers have complained that foreign companies should have no part of the tanker contract - is defending outsourcing work for Boeing's commercial airline fleet.

Defense Daily reports that Giles Merritt of the Security and Defence Agenda, a Brussels-based security and defense think tank, said that taking the contract away from Northrop Grumman would mean "that European suspicions of American protectionism in the defense field would be strengthened as never before."

"If the tanker deal were to be torpedoed by Boeing, the response here, was that would be a disaster," Merritt told Defense Daily in summarizing the views of experts at a recent conference of defense analysts.

Any escalation of trade tensions would hurt the entire American defense industry - including Boeing - because for every defense dollar American firms spend abroad, America's foreign allies spend more than four dollars buying American defense products.

Among the false claims being circulated is that the tanker contract went to a foreign company; Los Angeles-based Northrop Grumman won the contract. EADS North America, whose parent company is based in Europe, is a key subcontractor.

Meanwhile, the Press Association, the national news agency of the United Kingdom and Ireland, reports that Jim McNerney, Boeing's CEO, "said that outsourcing production of parts for the 787 jetliner to manufacturers worldwide remains a good plan."

According to McNerney, "The supply chain was a very aggressive move by us," the Press Association reported.

The Press Association reports that Boeing remains committed to its outsourcing plan, and notes that in one instance, Boeing actually purchased a foreign company manufacturing for the aircraft in the hopes of speeding up production.

"If we have to do something like that somewhere else, we'll consider it," the Press Association quotes McNerney as saying.

And, according to The Press Association, "the outsourcing will also be an issue when contract negotiations between Boeing and the International Association of Machinists and Aerospace Workers begin on May 9."

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Read the entire Press Association story

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