Monday, March 10. 2008
Protectionist Reactions to the US Air Force Tanker Deal
Posted by Nanne Zwagerman in Transatlantic Relations on Monday, March 10. 2008
"There is the industrial base you have to consider," Murtha said. "The political implications are important. All this committee has to do is stop the money, and this program is not going forward."Washington State Senator Patty Murray, in the International Herald Tribune:
"We really have to wake up the country," said Senator Patty Murray, Democrat of Washington State, where Boeing is a significant employer. "We are at risk of losing a major part of our aerospace industry to the Europeans forever."Representative Todd Tiahrt of Kansas in the IHT:
"It's outsourcing our national security. An American tanker should be built by an American company with American workers."Protectionist reactions are coming from both the Democratic and Republican sides, although the Democratic politicians speaking up are more prominent. If the US Congress steps in on the contract, this will do further damage to transatlantic relations. The countries of Europe may traditionally be somewhat less oriented towards free trade than the United States, but crude interventions on the US side will only serve to widen the transatlantic rift.
With a view to the upcoming elections, the Democratic candidates, Obama and Clinton, offer both risks and opportunities for trade relations between the US and Europe. Risks, as their disavowal of NAFTA shows a penchant for symbolic posturing to serve domestic politics. Opportunities, as their proposed solutions of higher labour and environmental standards in trade agreements and better enforcement of these standards are also favoured by much of Europe.
I am not so sure it would be considered crude from a Congressional point of view that the pending WTO case be settled.
As damage to trans atlantic relations, just add this to the long list the euro's have against the US.
The WTO cases (one by the US, and an EU countersuit) will be ruled upon by the panels that have been established at the WTO, presumably in July 2008. I don't see why the US would want to settle now, unless it thinks its chances are poor. It seems more like a convenient excuse.
Ironically, the tanker deal ends up helping the US in the case filed by the EU, as the US can argue that its military procurement is open to effective competition and thereby does not constitute a masked subsidy to Boeing. If Congress overrules the contract, on the other hand, it will help the EU.
What is that long list of things the euros have done?
if it wasn't Boeing, a symbol, then, I suppose that the reactions would have been different.
Now, it'sn't not from yesterday that the american army purchases its technologies from foreign coutries, mainly in EU though; just remember the eurocopters from last year, none say a bit on them ; (it says it in the next article)
http://www.airliners.net/discussions/non_aviation/read.main/1843181/
http://www.weeklystandard.com/weblogs/TWSFP/2008/02/air_force_buys_french_tanker.asp
http://www.247wallst.com/2008/03/air-force-tanke.html
http://seattletimes.nwsource.com/html/businesstechnology/2004121472_airbus12.html
what a military wrote about it on the army blog :
""#1 - AEDS/Airbus had a better product (larger tanker capacity) and a better price.
#2 - Northrop Grumman (U.S. defense contractor) is part of the consortium.
#3 - The consortium will build a plant in the U.S. and do part of the manufacturing here!
#4 - EADS is not a “French” company - It’s a joint U.K. German and French venture.
#5 - Our Nato Allies in Europe buy way more military hardware than we buy from them.
#6 - Blindly supporting a U.S. company without regards to the facts, is NOT patriotism - it’s Nationalism.
#7 - Anyone who know a little about the European defense industry will know that they messure up to their U.S. counterparts in both innovation and quality (There’s a reason the for the term “German Engineering”
#8 - U.S. manufacturers have consistently “under invested” in manufacturing automation and technology which is why our steel and auto industries are getting their buts kicked by Asian manufacturers.
#9 - Pay a visit to any U.S. defense contrator and take a close look at their manufacturing plants and you will realize that the vast majority of precision machine tools are from Sweden, Austria, Germany, France, U.K. and Italy.
We simply don’t produce that kind of high precision tool in the U.S.
Stop being pathetic cry-babies. The only people that are to blame is the management of U.S. manufacturers who are totally focused on kissing their shareholder’s behinds and who’s vision for the future doesn’t go further than the next quarter’s results.""
It's hard to take anything serious from an unsourced and anonymous screed about the US defense industry considering the woeful inadequacies of the Eurofighter and the Rafale M. But there are other reasons this contract went to the consortium, namely that the size of the airframe and range fits better into the USAFs plans while the reworked 767, while adequate, was not as attractive.
But the main reason is that Boeing and its CFO got caught with their pants down by suborning the Air Forces head of procurement to send a terrible contract concerning replacement tankers through in 2004. Both the procurement officer and the CFO pled quilty and went to jail. This contract is simply payback by the Air Force for Boeing trying to bribe not only a civilian employee but also senior officers as well.
As far as cost both Boeing and Pratt-Whitney have pointed out that the maintenance costs of the Airbus tanker will average some 5-7% more for the life of the contract then the Boeing. And that as of today EADS has built exactly one tanker on spec, with $100 million research money from the governments of Spain, France and Germany, while Boeing has built over the last 50 years almost 1,000 with almost 3/4 of those still flying. Not directly over my house I hope!
When all is said and done I'm not too concerned over the source but rather that the Air Force is getting not only what they want but what they need. Sen. Murray should be more concerned over the migration of Boeing jobs to the midwest since the 90's instead of playing some kind of defense hawk now. Many of those complaining the loudest about the contract are also those who seem to be arguing that it's ok to build the weapons but just don't use them under any circumstances.
"As far as cost both Boeing and Pratt-Whitney have pointed out that the maintenance costs of the Airbus tanker will average some 5-7% more for the life of the contract then the Boeing"
http://lexingtoninstitute.org/1234.shtml
"As far as cost both Boeing and Pratt-Whitney have pointed out that the maintenance costs of the Airbus tanker will average some 5-7% more for the life of the contract then the Boeing"
funny, I read the contrary
"It's hard to take anything serious from an unsourced and anonymous screed "
The extra costs to build the KC-30 are in the building of the plants and expansion of existing facilities in Alabama. Which like BMW, Honda and Toyota are born by the taxpayers of those states not the Air Force or the federal government. Gov. Riley-R of Alabama, where most of the assembly is scheduled to be, has already promised whatever it takes in the way of subsidies, land use permits, eminent domain actions and tax breaks to make sure that the assembly and maintenance facilities get built. A special appropriation was rushed through the Alabama legislature, overwhelmingly controlled by the Democrats, last week to begin study and the permit process for a new rail spur and upgraded roads around Northrop's main facility in Huntsville.
Huntsville has been an industrial center of the South for over 150 years and even the relatively "dumb" technical demands of the tanker will be no problem. But many of the federal weapons and space plants in the area have had less to do and all the infrastructure will have to be upgraded. But these hidden costs have to be paid for and in many instances the congressional representatives steer money to the state to offset its out-of-pocket expenses in attracting this new business.
http://bourse.lci.fr/news.hts?urlAction=news.hts&idnews=CFX080311_12070000&numligne=0&date=080311
Boeing buy also "foreign" though, ot only "radial" , laser giroscopes (not far from my home)...
"Nous parlons encore moins d’“Europe” puisque, pour les Américains, EADS c’est la France; si cela ressort d’une obsession psychologique d’un côté, d’un autre côté ce n’est pas si mal vu."
"Cette affaire fait brusquement ressortir de vieux arguments anti-français que l'on n'avait pas entendus depuis l'invasion de l'Irak"
http://www.dedefensa.org/article.php?art_id=4970
http://www.dedefensa.org/article.php?art_id=4969
Alabama rejoiced though : 60 % of the realisation would be in US, 40 % UK and Germany, nothing for France (where "assemblage" is made in Toulouse)
The Lexington Institute link, though interesting and thorough, does not address either the infrastructure costs or maintenance costs. So basically the Europeans have agreed to supply parts og the jigsaw but let those poor unsophisticated Americans with their stone age equipment put them together and fly them.
the fact remains that both planes were about equal in what they claimed to accomplish but the Air Force wasn't about to reward Boeing for past malfeasance and also have managed to create a 3rd source of weapons added to Boeing and Lockheed.
"does not address either the infrastructure costs or maintenance costs."
that was a note ment for the medias, I expect that Northrop has a more complete response in its wallet, while Boeing was evasive on its extra-costs (BTW, I am curious of the source from where you got the5/7 %). here, the Northrop resumé :
http://www.irconnect.com/noc/press/pages/news_releases.html?d=137846
It seems that USAF had enough of Boeing suprematie (because of the high prices that were practiced for army supplyings), therefore USAF decided to make the concurrence playing, also because of a low dollar vs euro the Boeing costs would have incredibly increased (remember, that EU furnishes a lot of their materials, at least France)
http://www.govexec.com/dailyfed/0505/052005cdpm2.htm
Anyway I expect that, you, American people, will have a hard time to swallow the pill, that your economy is not anymore what it was the last decade ago, once more it's the bloody Frenchs'fault, (or the Jews would say the Arabs)
For EADS to call anyone protectionist is [url=http://no-pasaran.blogspot.com/2008/02/obscenity-of-reasoning.html]laughable[/url].
I think this could have its' origins in a number of things. Among them are detestation, the fact that the currency trend will not qork quickly enough in the US' favor to make it the bargain that it appears to be, and another level *[url=http://no-gritaron.blogspot.com/2008/01/lirak-na-t-il-aucune-dette-envers-la.html]clean hands[/url]* in the face of that absurd camel of a "corporation" EADS.
It is both state owned and tangled up with the kind of folk that would get Halliburton disqualified from providing the DoD with toilet paper. Not only that, tossing EADS any sort of contract is bad for internal European competativeness when you would hope that some smaller niche competator might emmerge, the threat of mass layoffs would surely be dangled like a magic wand and cause a government to make that crazy-talk stop tous-de-suite.
EADS is a private company. The French state owns about 17% of the stock, the Spanish state another 5%-6%, and Dubai holds 3%.
The market for large commercial airplanes is structured in a manner that does not allow for very much competition - unfortunately. In other areas, there are still many competitors to EADS.
Regarding your first link, agricultural subsidies from the EU to France were 10 billion euros in 2005, since then I'd guess they have decreased a bit. France itself would add about 0.5 billion to that number. US subsidies in 2005 were 21 billion dollars (still comparatively less, of course).
I suspect that there might be some lowballing of the percentage of stock owned by government entities as EADS own website posts the figure of 33.02% owned by the governments of France, Spain and Dubai. Plus a government owned bank in Russia just completed purchasing 5% of the stock, mostly from private owners and Daimler AG. If the figure of 38% holds true then obviously, like Professor Higgins comment about Americans not speaking English anymore, there is a huge disconnect between the two continents definition of a private company.
One interesting item, not addressed by the European press, is that of the three bids, only the consortium bid, Northrop and EADS, came from a company headquartered in a Right to Work state. It appears that 60% of the contract is being outsourced to a low cost nation, the US. Oh, the irony!
Name, except that the average agricultor doesn't get the real benefits ttoo big investment are requierred to suit the rules), so far, Prince of Monaco, queen of UK, big foreigners societies, Eu Parlementors... who own thousands of ha in our country take the adventage
One of many guides to the rat's nest: [url=http://defence-data.com/ripley/pagerip1.htm]here[/url]
Regardless of the portions of it that are publicly held, they are held by a lot of other partially state owned entiites, or onse with a kind of cartel over the governement. Imagine a "woe is me" statement from a EADS subsidiary plant manager wondering what the social costs of laying off his entire workforce would be... now imagine the reaction of the applicable government. Now imagine a contract being signed, a state delegation going abroad, an elected official leaning hard on a foreign government... [url=http://64.233.167.104/search?q=cache:WB-g5xkL83QJ:www.cei.org/utils/printer.cfm%3FAID%3D4679+airbus+thailand+aid&hl=en&ct=clnk&cd=15&gl=us]etc.[/url]
[i]Beyond subsidies, European governments use their clout to pressure foreign airlines—many of which are state-owned—to buy Airbus. In fact, European governments have even suggested that favoritism to Airbus was a condition for accession to the EU. When the Czech Republic moved toward freer trade in 2000, a European Commission report admonished the Czechs on their nation’s accession hopes:
“The Czech Republic has unilaterally applied a suspension of MFN tariffs levied on imports of 12 civil aircraft products. Despite the Commission’s strong opposition, this exceptional measure, introduced in 2000, and due to end in 2001, was prolonged until December 2002. The Czech Republic will need to ensure that this tariff suspension will not be prolonged beyond 2002.”
In other words, restore tariffs against Boeing, or forget EU membership.
Turkey had a similar experience while pursuing EU membership. According to a Turkish news source, German Foreign Minister Joschka Fischer told one Turkish Parliamentarian to “let 80 percent of the airplanes you buy be Airbus.”
In a particularly unsavory example, weeks after the tsunami hit the Indian Ocean at the end of 2004, while most of the world was sending aid to the affected countries, the European Union sent Thailand a threat. On December 31, the EU slapped a new tariff on Thailand’s perfume exports, on top of existing EU tariffs on shrimp. The disaster-stricken nation could escape these tariffs, EU trade officials stated, if Thai Airlines would by six A380s.
European governments regulate slots at European airports, and airlines who buy Airbus are often favored. In 2003, The Economist reported, “no sooner had Air Mauritius bought Airbus A340s in 1994 than it obtained an upgrade from Paris Orly (a second-tier airport) to Charles de Gaulle airport, which is Air France’s main base with better onward connections.”,[/i]
They will, of course, demand "fairness" from whatever governs other trade zones, and blame someone else (US banks, US caused weather, US caused gravitational pull of the earth, etc.) for their woes. With state appointed boards of governers, as monstrouslty large integral feature of the They'll have to. Because they've put so many of their economic eggs in the monster they've created, that the consequences of missing out on a contract are political.
I really don't know why the American taxpayer should prop them up with one red-eye Abe Lincoln into that "miltary-industrial complex"-like beheamoth, even if it costs us.
Interesting collection - but really, does it surprise you?
What do we have the EU for, if not for the promotion of european interests in the world?
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