"I hope for nothing. I fear nothing. I am free."

"Δεν ελπίζω τίποτε. Δεν φοβʊμαι τίποτε. Είμαι λεύτερος."
Epitaph, Nikos Kazantzakis

Tuesday, March 4, 2008

USAF buying Airbus is a shift that Europe must not leave unnoticed

The U.S. Air Force decision to recommend that Boeing’s arch-rival Airbus be selected to build a fleet of airborne tankers came as a shock to many. Whether the deal for 179 KC-45 aircraft (the USAF designation for the chosen air tankers), worth nearly $40 billion dollars over a 15 year period stays unchanged or not, remains to be seen. Some believe that Boeing will fight this hard, as will Congressmen bent on capitalizing over this ‘violation’ of the ‘Buy American’ motto. Given the thousands of jobs this project will create in the U.S, the fact that 60% of the aircraft will be made in the U.S. and with American components, and that the local partner in this venture is the venerable Northrop-Grumman, the third largest defense contractor in the U.S., it will be very difficult for the patriots to ground this deal. In any case, however one looks at it, this was the right decision and its implications are much more than economic.

From the start this was Boeing’s battle to lose – and it did. Five years ago the USAF was ready to sign a deal for tanker aircraft based on the 767, but cancelled as a result of a scandal that brought down Boeing’s CEO. This only exacerbated the already long overdue replacement of the ageing fleet of nearly 500 aerial tankers in service with the USAF, some dating back to the 1950s. Moreover, the chosen package is better: the A330, on which the KC-45 will be based, is a more modern, efficient, and larger aircraft, which offers greater flexibility in air refueling but is also capable of ferrying materials and personnel without compromising its main role as an airborne gas station.

No less important is what this deal does for Northrop-Grumman and by extension the ability of the U.S. defense industry to meet both qualitatively and quantitatively, the needs of the U.S. armed forces. Created in a merger of two Cold War mainstays of the U.S. aerospace industry in 1994, the company managed to survive further consolidation in the industry when the government did not authorize a Lockheed offer to buy it. The likelihood that the KC-45 contract will grow to as much as a $100 billion deal over the coming years is a major boost for Northrop-Grumman. The reduction of the bloated Cold War defense industry to two behemoths – Boeing and Lockheed – seemed like a natural evolution of a changing security environment. But there is a limit to the kind of streamlining that the defense industry can be allowed to undergo – certainly in light of the security challenges the U.S. is likely to face in the future.

But this deal is most of all a watershed in what it symbolizes for the western alliance. This is the first time in more than six decades that the U.S. has opted for a major, strategic system produced by its allies. Prior to this, rarely and for very specific reasons did the U.S. buy foreign systems, always in limited quantities. Without overstating the matter, there are signs of a new trend – motivated by a new understanding that the U.S. cannot go it alone, whether in Afghanistan or in future challenges. The recognition that its allies can provide the cutting edge technology for a system that is crucially important to American power projection and the ability of the western alliance to safeguard shared interests globally is a change in Washington that should not go unnoticed in European capitals.
Michalis Firillas
4 March, 2008


Shoshana Kordova said...

What an incisive analysis! Can't wait to read more on this new and exciting blog!

conefor4200 said...

You can show the rest of the flaky bloggers what integrity and decency are.
Good luck!

conefor4200 said...

Now to the subject. Referencing to the NPR piece this morning.
1. Boeing experts view the KC-45 as an inferior product.
2. The Air Force positively found it superior to the Boeing one.
3. Boeing will appeal and lose.
4. The US Northrop-Grumman plant will employ 24,000 workers for the final assembly of the planes
5. Boeing would employ 44,000 to build it.

It is sad that a project of 179 planes should cost 40 billion dollars. Insanely expensive.

Muhammad al-Dub said...

Great analysis. Shame, tho, that Boeing will never let it happen.

Joe M