Technology with attitude

Air Force Tanker Deal Makes Sense

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Yesterday, I wrote about John McCain’s involvement in a Air Force tanker deal that ultimately went to Airbus as partnered with Northrup-Grumman. McCain’s involvement aside, the story raised the question as to why we’d ever let a foreign company win a contract to build American military equipment. Now, via RealClearPolitics, American Thinker Editor and Publisher Thomas Lifson has the answer:

In an ideal world, defense dollars generated by American taxpayers might always stay at home. But those who spend military budgets face a world in which there is only one potential American supplier of airliner-based aerial platforms. Competition for Boeing, to keep the procurement process vigorous must come from the only other major player, Airbus…

Like airlines, the Air Force desperately needs at least two healthy potential suppliers of airframes for airliner-based transports and tankers. The dangers of relying on a monopoly supplier are all too evident in the wake of the scandal a few years ago. While current jobs manufacturing the new tankers are important, so is the question of the effect of this contract on future competitive dynamics.

Not only will a new final assembly facility be erected in Alabama, many other contracts will be let for American suppliers to manufacture components, assemblies, and other specialty equipment to make the airliner shells into functional tankers, and to supply services. Some of these contracts will go to new entrants in the defense aviation business. They will provide the competition for Boeing that was once provided by the likes of McDonnell-Douglas before it merged into Boeing.

Simply put, without competition from Airbus, Boeing would have no free-market controls over its costs and quality. Since nationalization of a company like Boeing is neither wise nor practical, foreign competition is the only current solution. However, since much of this plane will be assembled in the United States, the deal will still use an estimated 48,000 American jobs while giving new U.S.-based competitors a foothold in the defense industry.

Boeing will continue to protest this deal, but its specifics are not as worrisome as a cursory look might indicate.