Tanker Truths

09 May 2008
Northrop Grumman Win Will Support 48,000 American Jobs
Gannett News Service is reporting that Senator Hillary Rodham Clinton's concerns over Northrop Grumman's contract to build America's next generation of aerial refueling tankers are based in part over a belief that the contract will have a negative impact on American jobs.

Gannett quotes Brian Deese, Clinton's senior economic adviser, as saying, "We...don't know the job impact and what the economic impact is, and whether there was any analysis done to look at whether this deal will drive any critical defense manufacturing capacity away from the U.S. Economy over the long term given the scale of the agreement."

Supporters of the losing bidder and its protest of the contract award have falsely charged that Northrop Grumman will export American jobs and military technology.

But in fact, Northrop Grumman's win will support 48,000 American jobs, with work going to 230 suppliers in 49 states. No jobs or military technology are exported.

Deese told Gannett that Clinton's prior support of a plan to allow construction of some elements of the new presidential helicopter fleet to take place in Italy isn't inconsistent with her position on the tanker deal because Lockheed Martin's helicopter contract would actually create more American jobs than Sikorsky, the losing bidder, would have.

If that's the case, logic dictates that she would support the Northrop Grumman contract, because its jobs number is based on information provided by each supplier, combined with the use of a commonly-accepted government formula for the calculation of indirect job creation. By contrast, Boeing says its contract will support 44,000 jobs which is fewer than Northrop Grumman and the company has publicly stated that it won't reveal the source of that figure.

As for sending defense manufacturing overseas, Northrop Grumman has partnered with EADS North America, whose parent company, EADS, is based in Europe. While some of the initial aircraft frames will be constructed in Europe, final assembly - including the installation of sensitive military technology - will take place in Mobile, Alabama. What's more, Northrop Grumman will build a new assembly facility in Mobile, a move that will support 4,800 jobs in Alabama alone.

Deese told Gannett that Clinton's concerns also focus on a World Trade Organization case targeting alleged subsidies received by EADS subsidiary Airbus. Northrop Grumman's opponents have falsely charged that EADS received government subsidies for the tanker contract, improperly making Northrop Grumman's bid cheaper than Boeing's.

The Air Force recognized early in the process that the subsidies dispute could not be adjudicated within this defense procurement program and ruled it irrelevant. Further, the fact is that EADS received no subsidies for the tanker contract, only loans, and those loans were repaid in full, with interest, last year. What's more, the loans were always fully disclosed on EADS' publicly-available financial records.

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