A Statofortress overshadows the little Warthog
By Craig Masters
The announcement came this week that the historic 97 building complex covering over 2 million square feet of aircraft manufacturing and support facilities in Wichita, Kansas will be shuttered by Boeing. The total impact to the area is only imaginable for now, but the 2,200 lost jobs will certainly have a ripple affect across the entire local economy. Supporting businesses, retailers, even restaurants and hotels will suffer in the crossfire of this latest skirmish between the great American aircraft manufacturer and the Obama tribunal of the departments of Labor, Justice and the IRS.
The Wichita facility is the home of two of America’s great military aircraft, the World War II era B-29 Superfortress and the magnificent B-52 Stratofortress which, with proposed modifications, could continue to patrol the skies with atomic bombs for another 20 years as it has for the past 60.
Currently, the Wichita facility has been focused on modifications and upgrades of military aircraft. The recent award of a contract to build a tanker based on Boeing’s 767 was expected to breathe new jobs and vitality to the enormous facility. But the grueling process of competing for the KC-46 tanker contract forced the privately owned American manufacturer to compete in a low-price bidding war with the European socialists backed competitor EADS in what was called the KC-X contest.
As a result of the price shoot-out with the foreign government subsidized rival, Boeing is struggling to avoid a loss on the first batch of 17 KC-46 tankers that it is making for the U.S. Air Force. Moving the tanker line to a much smaller facility near Puget Sound, Washington, puts it closer to where the 767′s are built. If the company can survive the initial 17 plane contract, it should be set to profit from future contracts if the 179 plane program is allowed to continue in the current period of defunding the defense department.
But building planes more economically is only part of the strategy to save Boeing owners from having their property confiscated by the administration like what happened to GM owners. The Obama administration has more weapons than just the recently dropped labor board lawsuit. The IRS has opened intense investigations into the company’s records. Such investigations cost taxpayers millions and even if not one dime is gained in return, the company’s cost to comply with the ‘fishing expedition’ will be extensive in money and distractions of management.
In discussing the closure of the Wichita facility, Mark Bass, VP in the modifications and upgrade sector, explained, ” We know that there are many more difficult decisions ahead of us. Labor costs are higher here than other sites.” He went on to explain that competitors in the refit and upgrade business are operating with “just two hangars and an office building.”
The 2,200 jobs lost in Kansas will be offset by approximately 200 new jobs in Puget Sound, and an estimated 1,100 to 1,400 new jobs at company facilities in Oklahoma City and San Antonio, according to Bass. But those jobs too, may fall victim to government intrusion and defense budget cuts which will have a ripple affect into the company’s commercial business.
According to the web site Military.com, the bottom line is: the intransigence, gridlock and dysfunction that have plagued Washington will only get worse until the election — and probably remain in effect afterward. Congressional defense advocates will battle desperately against the sequestration threat, but they didn’t have enough oomph to break the logjam this year, so there’s no reason to think they’ll have any more luck in 2012.
In December, Sandra Erwin writes in National Defense Magazine: “Pentagon suppliers are headed for a period of ‘turbulence,’” says retired Air Force Gen. Charles F. Wald, director of Deloitte Services, a consulting firm. “Companies will be consolidating, downsizing, shedding overhead and striving to maintain their core skills,” he says.
In another NDM issue article, Dan Gouré, VP at the Lexington Institute defense industry think tank, estimates that many contractors have about a one-to-two-year window to make drastic decisions, such as whether to stick around or exit the market. “You already saw companies such as ITT, Northrop Grumman and BAE Systems” shedding assets, he says. “They’ll either get out or buy up others’ assets and hope like heck that things turn around. … If you’re not in position over the next year for the beginning of the train wreck you’re going to be out of luck.”
And while the administration continues its union-backed attack on America’s industry, …the IAM has filed a separate civil suit against South Carolina Republican Governor Nikki Haley, who took office last January, accusing her of suppressing the right of Boeing workers to join a union. Haley bitterly denounced the union in a guest editorial in the April 29 edition of the Wall Street Journal. “We don’t need unions playing middleman between our companies and our employees,” she wrote. “We don’t want them forcefully inserted into our promising business climate.” A fellow South Carolinian, Sen. Jim DeMint, R-S.C., said: “This is nothing more than a political favor for the unions who are supporting President Obama’s re-election campaign. Unfortunately, it comes at the expense of hundreds of jobs in South Carolina and thousands of jobs nationwide.”
Meanwhile, the workers in South Carolina voted 199-68 to decertify the IAM as its sole bargaining representative shortly after the announcement of the expansion.
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