Boeing, Military Caught in C-17 Numbers Game: Thousands to Lose Jobs If Air Force Kills Plane
By Ameet Sachdev, Chicago Tribune
Feb. 5–ST. LOUIS — On a recent morning, the cavernous factory here that makes the cockpit and other key parts for the C-17 military cargo plane looks the same as it has every day for the three years it has been operating, except for white banners carrying a simple message: “Keep it sold.”
The not-so-subtle plea for Congress to buy more planes was targeted at Rep. Jo Ann Emerson (R-Mo.), who was scheduled for a tour as part of a large-scale effort by Boeing Co. to cement political support for the plane, one of the company’s largest military contracts.
The program is in danger of shutting down, imperiling thousands of jobs across the country.
The Air Force ordered 180 planes and says it does not need any more. Boeing is almost done fulfilling its contract and is pushing for more orders in the next defense budget that President Bush will submit Monday to Congress, which oversees Pentagon spending.
Chicago-based Boeing has been through this drill before with the C-17. But this time around its success in saving the plane depends on its ability to conduct a delicate dance with Congress and military officials, who are wrestling with ways to cut the defense budget while fighting the war in Iraq.
Boeing’s appeal for more C-17s has gotten caught up in the larger debate over the military’s transportation needs. More orders for C-17s, which cost about $180 million each, could undercut another program that Boeing considers vital: aerial refueling tankers. Top Air Force officials have indicated their preference for new tankers, which also can haul cargo, rather than more C-17s.
The link between the two military planes raises more thorny issues for Boeing. It must deal with the fallout from a previous tanker deal that became one of the biggest military contracting abuses in several decades.
A $23.5 billion proposal in 2002 to lease 100 tankers from Boeing blew up when a former top Air Force official admitted giving Boeing a higher price in exchange for jobs at the Chicago-based company for herself and her family.
“The scandal is sort of gone but certainly not forgotten on Capitol Hill,” said Winslow Wheeler, a former defense analyst for the Senate Budget Committee.
Boeing did not expect to be put in this awkward position.
Until last fall, all signs pointed to the Pentagon buying more C-17s. Air Force Gen. John Handy, who oversaw the military’s transportation fleet, repeatedly had said he needed at least 222 of the massive planes, with their distinctive high wing and T-tail, to deliver cargo, troops and equipment.
His forecasts were based on a new terrorism threat in the wake of Sept. 11 that called on the military to respond quickly to hot spots around the world. The C-17 proved invaluable in Afghanistan, able to navigate harsh terrain to land on short, dirt airfields and deliver troops and equipment. It has delivered 70 percent of the cargo airlifted into Iraq.
Its mission has expanded beyond warfare since the first plane was introduced in 1995. The C-17 has brought food and supplies to earthquake-devastated regions in Pakistan as well as the hurricane-ravaged Gulf Coast.
It even has carried one of the biggest celebrities in the world. Keiko, a killer whale who starred in the “Free Willy” films, was shipped back to Iceland on a C-17.
Gen. Handy’s conclusions were backed up by a report in September by the Pentagon’s Defense Science Board, which said the Air Force should keep its options open to buy more than 180 C-17s, considering that the other airlift planes in the fleet are aging.
But a few months later, the Pentagon flip-flopped. In a Nov. 15 news briefing, the vice chairman of the Joint Chiefs of Staff, Adm. Edmund Giambastiani Jr., offered a preview of a forthcoming mobility study that concluded that the existing airlift fleet, which includes large C-5s and C-130s, is adequate.
Two weeks later, Air Force Gen. Norton Schwartz, who replaced Handy as head of U.S. Transportation Command in October, echoed Giambastiani’s remarks when he said, “Overall, we have about the right capacity” of airlift aircraft.
An Air Force spokesman, in response to written questions, said the change in the direction is based on more current data on the airlift requirements of the military. But a Missouri senator said the Pentagon’s decision not to buy more C-17s is budget driven rather than based on sound analysis of the military’s transportation needs.
“You have to be able to move things quickly around the world, so you need airlift,” said Sen. James Talent (R-Mo.), a member of the Senate Armed Services Committee. “The key to that is the C-17.”
Roller-coaster demand
The plane has had a checkered history after initial development problems. In 1990, Defense Secretary Dick Cheney cut the number of planes the Pentagon planned to buy to 120 from 210.
But sympathetic lawmakers kept the program alive. In 2001, Congress supported the purchase of 60 additional C-17s to bring the total to 180.
A number of legislators again are rallying around the plane, which is typical when so many jobs are at stake. Boeing employs more than 7,000 in C-17 production, most of those in Long Beach, Calif., where a majority of the plane is assembled. In St. Louis, about 950 employees are associated with the C-17.
The impact of terminating the contract extends well beyond the aerospace giant to a roster of more than 700 suppliers in 42 states. In Missouri alone, about 950 jobs at 35 suppliers are connected to the C-17, according to Boeing.
Some suppliers have finished work on parts for the 180th plane, which is scheduled for delivery in 2008. Without a promise of more work, Boeing soon will have to start shuttering those parts of the production line with the longest lead times, said Ron Marcotte, Boeing’s vice president of airlift and tanker programs.
Critics say Congress’ support of the C-17 is just another gift to one of the nation’s largest defense contractors.
“Congress is looking out for the defense industry but not the needs of our military,” said Beth Daley, director of communications for the Project on Government Oversight.
The Department of Defense is under pressure to cut weapons spending because of Iraq war costs and the rising federal deficit. Top Air Force officials have indicated that they would rather spend limited dollars on new tanker planes to replace its fleet of 600 tankers, some more than 40 years old.
The leading contenders to win the coming competition are a military version of the Boeing 767 and a converted A330 from European rival Airbus SAS, who has teamed up with Northrop Grumman Corp. With several hundred planes in need of replacement, the contract would be worth billions of dollars.
Dual capabilities
Air Force officials have talked about expanding the requirements of a new tanker to include more cargo-carrying capabilities, eliminating the need for more C-17s. Marcotte does not think that’s a good idea.
“There’s no question you can put cargo on a tanker, but it’s not the same type of cargo,” he said. “A tanker [based on a commercial jetliner] can’t carry tanks, helicopters and large vehicles.”
Whatever the requirements of the new tanker, the Air Force has to tread carefully. Congress will scrutinize the program after the last deal became embroiled in scandal.
The deal initially was structured with Boeing officials by Darleen Druyun, a top Air Force procurement official who later took a job with Boeing. Druyun served a 9-month federal prison sentence for her role in steering the contract to Boeing and failing to properly disclose her job discussions with the company. Boeing fired Druyun and Chief Financial Officer Michael Sears, who arranged for her job, in November 2003. Sears pleaded guilty to violating a federal conflict-of-interest law and was sentenced last year to 4 months in prison.
The bad feelings left over, combined with budget constraints, make the C-17 a tough sell for Boeing, said Loren Thompson, a military industry analyst with the Lexington Institute, a Washington-area think tank.
“The interesting part of this will be the politics to see if Boeing can mount a successful campaign to build more planes,” he said.
asachdev@tribune.com
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