Filed under: Boeing Co (BA), Politics
Boeing Co. (NYSE: BA) filed a formal protest this week against the U.S. Air Force’s decision to award its $35 billion contract for refueling tankers to EADS, the parent of Europe’s Airbus. The value of the contract could grow to $100 billion over the life of the program, and Boeing is not going to let that money slip away easily.
The decision has generated a lot of political heat in the U.S., as politicians decry the loss of American jobs and American profits. The problem is, though, that the United States loses no matter which firm gets the contract.
If Boeing is given the contract, the U.S. gets lower quality planes in smaller numbers. By all accounts, the Boeing tanker, based on the 767, is smaller and older than the EADS tanker, based on the larger and newer Airbus A330. And EADS promised to deliver more of the planes at an earlier date. As BloggingStocks’ Peter Cohan wrote when the decision was made, the choice between the two planes wasn’t close on the merits.
On the other hand, if EADS gets the contract, the U.S. loses tens of thousands of high-paying, high-tech defense jobs. Boeing claims the contract would provide over 40,000 jobs. Although EADS claims that it would assemble its planes in the U.S. and provide roughly 20,000 American jobs, it’s pretty clear that most of the tanker-related jobs would be in Europe, where most Airbus parts are made.
So it’s a lose-lose situation. Either you get jobs, exorbitant corporate profits and inferior planes, or fewer jobs, no (American) profits and superior planes. Usually, our lion-hearted men and women of the U.S. Congress chooses the former course. We’ll see if their preference for the latter will survive the growing political storm.
Read | Permalink | Email this | Comments
