Just before the New Year, Armed Forces Journal magazine published an opinion piece entitled "Industry pulse: Giving away the store" by noted aviation analyst Scott Hamilton. Hamilton boldly opines that the growing trend of outsourcing jetliner production "threatens the viability of America's aerospace industry and our national security." Hamilton believes there are solid reasons for the Pentagon and Congress to be concerned about this growing trend and its implications for America's national defense.
Hamilton observes that while outsourcing has serious implications, the issue was fully overblown by Boeing's labor unions and its supporters in Congress when the Air Force awarded the KC-X aerial refueling tanker contract to Northrop Grumman for its KC-45 tanker based on the European Airbus A330-200 commercial jetliner.
As Hamilton correctly points out, "Boeing's supporters also ignored the fact that the Airbus/EADS member countries, France, Germany, Spain and — under contract — Britain are all NATO members and that, more to the point, EADS, Airbus and Northrop knew full well that if they failed to perform, the KC-45 contract will be the last ever awarded." In contrast he notes, "the fuselage, tail and some wing components for Boeing's KC-767 are built in Japan, Italy and the U.K."
Also, as Hamilton reports, Boeing's supporters also disregarded several keys facts including that the KC-45 will be assembled by 2,000 new workers in new final-assembly facilities in Mobile, Ala., and Northrop, a U.S. company, will install the militarily sensitive equipment in Mobile using American workers. Also overlooked is that Northrop Grumman's tanker program will create 48,000 new direct and indirect U.S. jobs with more than 230 U.S. suppliers located in 50 States.
Hamilton states that "it is disturbing that there is the total silence the flag-wavers professing protection of America's aerospace industry and national security interests have when it comes to technology transfer and production outsourcing of commercial aviation and the potential for leakage to the military interests of our adversaries."
As Hamilton writes, "Nothing epitomizes this more than the massive outsourcing by Boeing for its 787 airliner. Boeing makes the vertical tail; the Japanese, Italians and other American companies make the rest of the airplane. Design and engineers on many critical components are outsourced overseas."
Hamilton reports, "Boeing is a partner in the Moscow Design Center, which employs 2,000 engineers and has sponsored several hundred Russians in Everett, Wash., to learn engineering from SPEEA members — a sore point that SPEEA views as training their own contract replacements. A similar China design engineering center is said to be in the works."
"The deterioration of America's aerospace expertise and the national security implications are real issues. Boeing has publicly expressed concern about losing aerospace expertise in connection with delays or loss of certain military fighter programs, yet it willingly and proactively outsources American jobs and engineering to overseas companies," Hamilton writes. He states none of the major commercial aircraft manufacturers -- Boeing, Airbus, Bombardier and Embraer, wishes to see technology transferred to the militaries of adversaries, but the reality is that there is nothing they can do to stop the Russians or Chinese from doing so.
Hamilton says, "China has a dismal record of honoring intellectual property rights, and Russia's aggressive spying is a matter of record. To think that there won't be improper cross-pollinating between commercial work and military uses in these countries is naïve in the extreme. In addition to creating new commercial competition, it is highly likely that their militaries will benefit. It's virtually impossible to build a "Chinese Wall" between commercial and military here in the U.S., let alone where the political mentality doesn't care."
"The Chinese and Russians (and the Japanese) take the long view, willing to work to improve technological capabilities over decades. Recent Chinese space shots with astronauts are clearly for more than just prestige."
"That may be, but with insourcing, subcontracting and joint ventures comes knowledge."
As Hamilton concludes, "With the aggressive industrial and military espionage undertaken by China and Russia, as evidenced by well-publicized spy cases and historical documentation, Congress should be more concerned about these commercial enterprises than whether America's NATO allies are the 'enemy' in the procurement of 179 tankers."
The complete story can be read at the following link:
Industry pulse: Giving away the store