The Ghost of KC-X Lingers

The Ghost of KC-X Lingers

Both EADS and Boeing supporters on Capitol Hill continue to make noise about the Air Force’s now settled KC-X contest which saw Boeing recently win the $30-$35 billion contract to replace the Air Force’s oldest KC-135s with the 767-based KC-46A.

Washington state’ Sen. Maria Cantwell (D) released a statement last night firing a final jab at EADS’ parent company Airbus regarding this week’s final World Trade Organization ruling that rejects much of an EU suit claiming Boeing receives unfair government subsidies:

This final ruling confirms what we already knew: Airbus has had a massive illegal advantage over Boeing for years. In today’s ruling, the World Trade Organization rejected 80 percent of the European Union’s alleged subsidy claims.


The EU suit came after the WTO ruled that Airbus recieved billions in unfair launch aid for its aircraft that allowed it to undermine Boeing’s market share around the globe. That ruling became a political football during the KC-X contest, with Boeing supporters arguing that the subsidies would help EADS undercut Boeing’s 767-based NewGen Tanker offer with its bigger, newer and more expensive Airbus A330 based bid for KC-X.

Canwell went on to say:

The EU should put a stop to launch aid, which distorts the true price of products and creates unfair competition in the global marketplace.

Today’s ruling reaffirms that American sweat equity beat out massive illegal subsidies for the Air Force’s tanker contract. American workers will win every time, if given a fair playing field. The deck was stacked in favor of Airbus – and American ingenuity won anyway.

Keep in mind that KC-X is only one small part of the overall battle between Boeing and EADS who are slugging it out over the top spot in the global heavy aircraft market. Many predict the two giants will need to figure out some way to get along and play nice (aka: resolve the subsidies issue, among other things) in the face of what’s expected to be increased competition from a Chinese aircraft industry in the coming decades.

Meanwhile, EADS backer, Rep. Jo Bonner (R-Ala.), yesterday took an oversight stance in the new contract asking Air Force brass during a House Appropriations defense subcommittee hearing if they were required to inform lawmakers about every small change made to the KC-X contract over the coming months and years. Air Force Secretary Michael Donley effectively replied, not really.

“We owe you annual updates as we come back through the development program…and production,” said Donley. But, “I don’t believe we’re required by law to inform you of every contract change but certainly we’ll make that information available on request.”

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Leave it go, Bonner. Try to get EADS to bring you an assembly line without the taxpayers having to pay for it.

Tanker is done, gone, bye-bye.

Hey Bonner, why don’t you take your crayons to the corner of the room and write a letter to the Chinese “president” and ask him to let your state assemble their COMAC C-919 for the western hemisphere.

Congressman Bonner may not have gotten over the tanker loss yet, but Mobile may yet make sense for a manufacturing or assembly facility for EADS. The parent company is flush with cash, $16 billion at last count, and is looking for ways to spend it in order to avoid becoming overly dependent on Airbus for its profits. I have read they are looking at acquisitions in North America as the easiest way to do this, but they could run into a political firefight if they pick the wrong target. Perhaps a JV with a major contractor would better suit them? The trainer may present an opportunity. There might be others, even in the tight, fiscally constrained acquisition environment that is upon us. Maybe Congressman Bonner should channel all that remorse, regret, and energy into selling Mobile’s potential for a future project?

> the World Trade Organization rejected 80 percent of the European Union’s alleged subsidy claims.

love the smell of blatant hypocrisy in the morning

when the GAO rejected 80% of Boeing’s claims in their tanker protest, these same buffoons were going on about ‘how sweet it is!’ and how ‘Boeing is back in the game.’

What about the other 20%? I fail to believe that Boeing gets any subsidies. I have no information to back that up, but that’s not the way our system works. Boeing gets paid for producing products that are in demand. Many European companies are to some degree make work programs that are heavily subsidized.
Thank God common sense prevailed in the awarding of this contract. A contract this big should not leave this country; for the jobs and because we need our major weapons systems to be American made. Sub systems and small systems can be foreign made to help our allies.

Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government. — http://​online​.wsj​.com/​a​r​t​i​c​l​e​/​S​B​1​0​0​0​1​4​2​4​0​5​2​7​4​8​704

Interesting, European countries having ownership in Airbus stakes/shares does not count as subsidies I guess.

the high-tech and defense is still in country

The GAO didn’t rejected 80% of Boeing’s claims. First of all, the GAO is severely limited on to what it can sustain a protest. Second, the GAO reject the notion that its ruling is/should be seen as rejecting any claim not specifically expressed as such. Third, the reasons that the GAO sustained Boeing’s protest cover many of Boeing’s claims. All of which is easily learned by reading the transcript of the HASC hearing.

> First of all, the GAO is severely limited on to what it can sustain a protest.

you call it ‘not sustain’, i call it ‘reject’

From the looks of everything oil companies and weapons dealers like lockheed, northrop, boeing etc. run this country, not the turds on Capitol Hill.

So if the Air Force just had a KC-X price competition and 20% of the claims against EADS was illegally subsidized, will Boeing be able to file an increased price since the competition held the price down in a competition thrue illegal subsidies? Is it reasonable for the US Governement to allow subsidized price products to drive down the price of nomilly US unsubsidized products.

While I am not in favor of sole source contracts, Reducing profits to US Firms agasint illegally subsidized Foreign products is a race to the bottem for quality of job and shortcuts to the products. Boeing bid the the price to buy into the business, yes but if the Federal Government structured the competition to favor subsidized products as a hammer to the price of the product. This points to the effects of a government without a idustrial development policy.

So the europeans should never expect us to buy any of their products after they have bought all of ours for decades? Boeing gets subsidies in the form of R&D contracts notionally to develop technologies for the defense department. Just because you learned it under contract doesn’t mean you forget it when you go to design a commercial aircraft. I’m not suggesting they are doing anything wrong, but this argument is more gray than black and white IMO.

R&D frequently result in useful tech.. Subsidies are just a check.
Have you seen the way the Europeans build airplanes. Have you seen the videos of them moving large sections of fuselage around the country aide at night through tiny villages on narrow roads. There’s no way they could be competitive without massive subsidies. Either because of the way the company is set up or the structure of the EU they wind up wasting a lot of money with that sort of silliness.

If the founding fathers could see how our representative democracy has been bastardized by backroom lobbys and the military-industrial complex,they would be shocked.R&D yes,favor for favor-NO.

I might get flack for this but what does it matter if EADS got subsidies from the EU? If it brings the price down per plane, wouldnt that be good for us?

No, Europeans should not EXPECT the US to buy any of their products just as the US should not EXPECT Europeans to buy any of ours.

R&D contracts to develop technologies for the defense department are just that, contracts to develop technologies for the defense department. AND many such technologies are restricted from use for anything other than contracts for the defense department.

What IS gray however is the notion that tax breaks/incentives constitute subsidies. The US has the 2nd highest corporate tax rates (& will soon have the highest. http://​blog​.heritage​.org/​w​p​-​c​o​n​t​e​n​t​/​u​p​l​o​a​d​s​/​c​orp–… So should the US (& Japan) have a WTO claim vs the rest of the world? AND/or should any/all countries take case to the WTO any/every time any tax rates change?

No, the GAO ‘calls it’. I know how reality gets in your way.

No, the US (& Boeing) is strictly forbidden for taking any ‘corrective’ action outside the WTO.

Because in so doing it unfairly/illegally hurt US companies. It would be one thing if Airbus’ success was due to FAIR/LEGAL business…

Uhhhh, I think Boeing, Lockheed Martin, NGC, GD all expect the rest of the world to buy US products because if they didn’t, the Pentagon would put them all out of business.

And the US also rebates R&D funding under the tax code, so I’m not sure that one man’s subsidy isn’t another’s tax break.

The point is, both sides are given incentives so they can complain all day about the other guys, but you still have to compete in the global marketplace. Most countries/companies don’t give a crap about how much “subsidy” you got if it does the same thing but costs less.

I hope Boeing will be under the microscope during the building of their Tanker. I bet within 2 years Boeing will come back to the government with a development or production delay so delivery will be pushed to the right and they will be over budget

Part 1 / 6

Hilarious!

Simply hilarious!

Does NO ONE among you ever read newspapers or so, not even relatively serious U.S. American mainstream newspapers like “Finantial Times”, etc. ???

While the article above claims that “last week the W.T.O. slammed Airbus” (LOL!), the Truth is PRECISELY THE OPPOSITE !!!!! Does this Web-site belong to Lala-Land or what?

(Continued)

Part 2 / 6

Some quotes from the Internet:

“March 31, 2011

WTO raps U.S. subsidies to Boeing

Planemaker Boeing received at least $5.3 billion of illegal U.S. subsidies, the World Trade Organization said on Thursday in a dispute that shows no signs of an end to years of inconclusive wrangling.
(…)
The banned aid included $2.6 billion of research funding from Space agency NASA. But a WTO verdict sparked an immediate row over whether trade judges were right to include more than $2 billion of further support on the charge sheet against Boeing.
(…)
’This WTO panel report clearly shows that Boeing has received huge subsidies in the past and continues to receive significant subsidies today’, European Union trade chief Karel De Gucht said.
Airbus, part of European aerospace group EADS, said it had lost $45 billion in plane sales because of the subsidies.
(…)

(Continued)

Part 3 / 6

‘It’s time for Boeing to stop denying or minimizing the massive illegal subsidies it gets’, said Rainer Ohler, head of public affairs and communications at Toulouse-based Airbus.
Boeing acknowledged receiving $2.7 billion of aid on top of a dispute that has already been aired, but accused its rival of diverting attention from more pernicious types of European aid.
(…)
Speaking in private, however, sources involved in the case clashed over whether the $5.3 billion figure cited by the WTO against Boeing was a fair account of where it went wrong.
The figure includes $2.2 billion of export assistance under a previous assistance program known as Foreign Sales Corporations, which the U.S. says is defunct.
’It is interesting but irrelevant’, a U.S. source said.
A European source said Boeing was still living off the benefits of the scheme even though it had been scrapped.
(…)

(Continued)

Part 4 / 6

‘Boeing began its complaint with a strong argument, but Europe’s counter-complaint has muddied the waters’, said aircraft analyst Richard Aboulafia of Virgina-based Teal Group.
(…)
Subsidies gave it an unfair advantage over rival Airbus SAS, the World Trade Organization ruled, backing a European Union complaint.
WTO judges in Geneva confirmed previously confidential findings that the U.S. provided aid to Chicago-based Boeing through federal research grants and state support in developing aircraft including the 787 Dreamliner.
Airbus parent European Aeronautic, Defence & Space Co. has said the aid to Boeing cost it $45 billion in lost sales from 2002 to 2006.
’This report shows Boeing has received huge subsidies in the past and continues to receive significant subsidies’, EU Trade Commissioner Karel De Gucht said in a statement in Brussels. “These subsidies have resulted in substantial harm to EU interests, causing Airbus to lose sales, depress its aircraft prices and unfairly lose market share to Boeing.”
(…)

(Continued)

Part 6 / 6

The U.S. and Europe filed counter-cases at the WTO in 2004 after the administration of former President George W. Bush unilaterally walked out of a 1992 aircraft-aid accord with the EU.”

Suggested combination of Internet search words:
“Boeing” + “Airbus” + “WTO” + “suit” + “5,3 billion”

Link: http://​search​.yahoo​.com/​s​e​a​r​c​h​;​_​y​l​t​=​A​l​3​_​3​y​e​o​W​h​AmZ

(25.500 search results to back my claim — pick any!)

P.S.:
Sorry, only now I understood what Mr. John Reed meant with “This final ruling confirms what we already knew: Airbus has had a massive illegal advantage over Boeing for years.” :

APRIL FOOL’S DAY !

I’ve been flying the KC-135 for 11 years now. The planes are falling apart. Stop the red-tape madness and build us a new jet!

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