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EADS Fires Across Boeing’s Bow

By Colin Clark Thursday, July 8th, 2010 5:21 pm
Posted in Air, International, Policy

Demonstrably proud of their bid on the KC-X tanker, EADS NA officials turned it in one day early and the company’s chairman slammed Boeing for “wasting a lot of time trying to derail” the competition “because someone thinks their plane is inferior.” Boeing’s attacks amounted, said company chairman Ralph Crosby, to a lot of “crap.”

EADS flew five paper (and one CD) copies of its 8.800-page bid to Wright-Patterson Air Force Base on a chartered prop plane, expecting them to arrive at 2:40 p.m. The company filmed the copies being loaded aboard and the takeoff for employees to watch later. One copy traveled by land just in case.

Crosby opened this afternoon’s press conference with a none-too subtle dig at Boeing. As a video played of the Australian tanker built by parent EADS executing a refueling, Crosby said: “I’m transfixed by the video. I love watching real tankers doing real tanking.”

Crosby offered a staunch defense of the company’s bid, which many observers feel faces an uphill struggle given that the Air Force’s RFP basically calls for a replacement of KC-135s, a much smaller plane than the modified Airbus 330 which EADS will offer. “I feel good about the intersection of value and price,” in the KC-X bid, Crosby told reporters. He dismissed the idea that EADS may not have a good shot, saying they bid “for one single reason — to win.”

Crosby cast the competition as the last great defense procurement of the twenty-first century, placing the value of the first tranche of 179 planes at roughly $40 billion, and estimating the total value of the tanker program over time at some $120 billion.

The governor of Alabama will open the EADS facility in Mobile on Monday, and company officials went to some lengths to praise the state’s business climate. CEO Sean O’Keefe said building the planes in Mobile would help lower costs. The company touted the jobs impact of the program, which will employ an estimated 48,000 Americans and help sustain a supplier base of more than 200 U.S. companies.

Crosby noted that, should EADS win the tanker deal, it will also build A330 freighter aircraft in Mobile

Once the bids are in, the Air Force and the Defense Contract Management Agency will send people to Mobile and to Europe (where the first set of planes will largely be built) for a pre-award review. The government folk will tour facilities and interview some of the 200 core members of the EADS tanker team to assess the company’s ability to design and produce the aircraft in line with its bid.

On top of their usual rejection of claims that the World Trade Organization has ruled that the A330 received illegal trade subsidies during development, one EADS official went so far as to accuse the WTO of shenanigans for deciding to postpone release until September of its preliminary ruling on a European Union complaint that the U.S. provided illegal public subsidies to Boeing. The European Union’s commission said today that the delay between the WTO ruling on Airbus and the one on Boeing “creates the wrong impression that Airbus has received some WTO-incompatible support, whereas Boeing has not.”

Allan McArtor, chairman of Airbue Americas, told reporters the decision to delay was “unprecedented.” Coming just 10 days before the opening of the Farnborough Air Show and when the KC-X bid was due, he hinted darkly that something was afoot, saying it “smells like a fish.”

Boeing will hold a celebration of its tanker bid tomorrow morning in Everett, Wash. with Sen. Patty Murray, Reps. Norm Dicks, Rick Larsen, Jim McDermott, Jay Inslee and a host of Boeing workers attending.

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	Gray Eagle July 8th, 2010 at 9:58 pm To any pilot who has to refuel in order to carry out his mission, there is a primary consideration for tanker support: “Maximum fuel at maximum range.“This is especially relevant when the tanker has to refuel several aircraft at the downrange point.
	William C. July 9th, 2010 at 12:02 am At this point I no longer care which tanker we get, just whatever is cheaper, gets delivered on time, and does the job.
	Oblat July 9th, 2010 at 4:02 am The tanker process is a shameful example of corruption and special interests in the military industries perverting what is best for the nation. The fact that it is a relaitively simple deal has just made the corruption all the more obvious. If Obama could use it to put a shot across their bow that the good old days are over, by buying the better deal and telling Boeing to come back with a bid in 3 years for the second tranche.
	Taxpayer July 9th, 2010 at 2:31 pm Finally, some relevant commentary (compared to all the chattering about attacking Iran).
	DensityDuck July 9th, 2010 at 5:55 pm That’s what they did back in 2006, and you see how well THAT worked out…
	pfcem July 9th, 2010 at 7:03 pm What a turnaround! When the RFP came out EADS droped out because it ‘could not win’, now EADS is ‘confident it will win’. *** Gray Eagle, You have clearly not spoken with any pilots (combat aircraft or tanker). If you were even remotely close to correct, this would not be KC-767 vs KC-30 (BOTH of wich are larger & more capable than the KC-135 to be replaced) but KC-747X vs KC-380.
	CT_Woods July 9th, 2010 at 7:10 pm I agree with William C.: Let’s just buy the one that’s cheaper over the lifecycle — and gets the job done. And it’s likely that taken over the full range of tanker needs, the newer Airbus design will way out perform that late 1970s design of an all heavy metal Boeing. But the deck is stacked by the RFP, to favor the smaller footprint of the 767. Which might be lower cost to build, just because it is (a bit) smaller. I think Airbus is on a two part strategy here: 1) Bid low on this round (KC-X) to make it as painful as possible for Boeing. If they ain’t gonna win, they make the other guy feel the pain. Boeing is stuck with very high cost union labor, Airbus can hire an all new, non-union workforce. Worked great for Honda and Toyota, who damn near destroyed GM and Chrysler. 2) Set themselves up for the KC-Y round, where the size and range of the KC-330 will beat the pants off the undersized, aging design of that tired old 767. Of course by then, Boeing might have a little excess capacity on it’s just-a-little-too-big 777 line, space they could afford to divert to some govm’nt-priced tanker birds. Airbus would like to win this round. But they are in this for the long game, and the long game is: Cause pain to Boeing, denying profits and volume where ever possible.
	Gray Eagle July 9th, 2010 at 7:13 pm pfcem– Sorry to disappoint you. I have more hours, more connects, more disconnects and more fuel transferred (over an 8-year period) from the old KC-97 and the KC-135 into my B-47 and B-52 than I care to think about. And, BTW, my comments referred to the selection of the next tanker,not to any specific model.
	JMN July 10th, 2010 at 3:12 am The EADS shot across Boeing’s bow sound more like a media blitz and could end up a bid fat dud. Boeing just won a major victory at the WTO last week. The WTO ruled that the European aviation firm Airbus received 40 years of impermissible subsidies and this ruling should help level the playing field for Boeing now and in future disputes against state-subsidized carriers. The trade body focused on the support that Airbus has received from European governments to help develop and launch virtually all of its large civilian airplane models. Now the U.S. Air Force says that it won’t take into account the WTO findings, but Congress undoubtedly will, and it should! I’ve been saying for a year or so that Boeing should win the Air Tanker contract and the U.S. should begin the process of rebuilding it’s military industrial complex. The U.S. aviation industry is in trouble. The WTO just gave all of us the major reason way it’s in trouble. Wake up America! JMN
	Oblat July 10th, 2010 at 4:35 am The DoD should be overjoyed that the Europeans are subsidizing their purchases. The U.S. aviation industry is in trouble because it is uncompetitive and giving it contracts because it is uncompetitive will just drive it lower.
	JMN July 10th, 2010 at 1:09 pm Oblat, the troubles of U.S. aviation is also part of a larger trade problem, which is, the U.S. lacks a pragmatic national trade policy! 85% of America’s $40 billion dollar a month trade deficit (estimated half a trillion dollar this year) is with 5 countries not including OPEC. Those countries are China, Japan, Canada, Mexico and Germany/EU. One quick example, China uses trade barriers and currency manipulation for massive trade advantage against the U.S.. So does Japan. In 2008 Japan exported 3 million cars to the U.S.A. and produced another 3 million cars inside the U.S for a total of 6 million cars but because of trade barriers the U.S. managed to send only 16,000 cars to Japan. A few years back TRW tried to open an auto supply chain inside Japan and was refused. There are tons of other examples. The U.S. has a liberal free trade policy that our trading partners are exploiting. This has been going on since 1967 and has gotten a lot worse since the U.S. got into the WTO in the 1990’s.
	JMN July 10th, 2010 at 1:24 pm Obalt, unfortunatly last weeks final WTO ruling is too late for tens of thousands of U.S. workers who built commercial jets for Lockheed and McDonnell Douglas, which Airbus took down. I hope the U.S. will now take steps towards a more pragmatic trade policy. The U.S. has lost fifty thousand factories since the mid 1990’s and today has a 17% unemployment and underemployment rate or 26 million people effected. One in three manufacturing jobs (6 million) have recently gone. This Air Tanker contract ought to be the first major step for the rebuilding of the U.S. military industrial complex. It is time for Americans to wake up and pay attention. Lets start by letting the two parties know that we are watching them and will vote out any and all nonrepresnting, representatives. Boeing should win the contract. U.S.A. all The Way! Best regards, JMN
	sferrin July 11th, 2010 at 11:01 pm Blame the politicians, they’re the ones looking for votes. If we had honest politicians (yeah, I know, an oxymoron) this kind of crap wouldn’t be possible. The politicians set the rules, everybody else just plays the game, and the military gets the shaft.
	pfcem July 12th, 2010 at 6:51 pm Gray Eagle, 1. Tankers refuel MANY more ‘tactical’ (aka fighter/attack) aircraft than ‘strategic’ (aka bombers & airlift) aircraft. 2. Even the KC-135 has had plenty of fuel for B-52s & other ‘strategic’ aircraft. 3. Those comparatively few instances where you actually ‘need’ more fuel offload is what the ‘large’ KC-10/KC-Y are for. *** CT_Woods, KC-Y won’t be 767 vs A330. It will be 777 (or 2020s equivalent) vs A350.
	Shail July 13th, 2010 at 1:29 pm Funny how people harp on this whole Made In USA broo-ha-ha over the tanker program. But where are the NIH naysayers now to cry foul about the latest episode in the US Army’s Stryker upgrades (the “new” V-bottom hulls), where 70% of that work is going to be done in Canada, NOT in the USA. One standard for me, one standard for thee, eh? Personally, I think Boeing is just fearful of Airbus building civil freight aircraft in the US just as much as the USAF tankers. Especially if it slaps Boeing’s union workers in the face when non-union workers at Airbus eventually prove they can build the same Made In America quality at lower than union prices. It wasn’t the Japanese that killed the American auto industry. It was greedy, piss-poor American leadership and unions.
	Dorothea Melvina July 15th, 2010 at 11:08 pm I know there is a divide between Boeing commercial and military divs, but the latest FUBAR of the 787 schedule should cast doubt on Boeing’s ability to deliver a tanker, even one based on a 30 year old design. It can’t get its R&D, its testing, its logistics and its management of subs in order. It has lost its ability to integrate smoothly, which once was its cachet. It has also screwed up just about every non-aircraft contract for the government this decade–FCS, SBInet, MDA support. It no longer has cojones. The Europeans, who will go all out to make its tanker a real star, should be able to walk over Boeing, except for the political conniving.
	Jay Citizen July 15th, 2010 at 11:24 pm Don’t forget that one of Airbus’s largest and most successful manufacturing plants is on US soil. Chances are, that with the jobs,jobs, jobs attitude of congress now; all they would have to do is promise to build the fuselage sections on US soil too, and they would probably be a good contender to Boeing.
	bill July 16th, 2010 at 3:10 am I’ts all about jobs dummy! You notice when the EU decided to build an airlifter they didn’t let boeing compete for the job. I lived in europer for 30 years from 1966 — 1996. Germany has created the 4th reich over there. Now’s the time to go to war with thos s.o.b.s before it’s too late.
	Eng August 17th, 2010 at 12:29 pm All of this is the wrong approach. DOD should instead fund X-48 and get a BWB built for a new tanker. Why do that? Because that same aircraft once developed for hauling Fuel, then cargo, could then serve as the new bomber that we want for around 2020. It would have MUCH lower operation costs than any of these crafts. In addition, in the production lines wanted for Tanker, they could make a civilian version for Cargo. Having the costs of flying cargo drop 33 to 50 % would be a huge factor for the private cargo world.