Tuesday, November 29. 2011
Tony Capaccio: Overrun Forecast in Boeing Tanker Work: Well, that didn't take long. The overrun is $500 million over the first $4.8 billion chunk of $7.1 billion in "development funds" -- the first actual aircraft, based on Boeing's now-obsolete 767 airframe, aren't scheduled for delivery until 2015. Moreover, the widely touted $35 billion program is now described as "planned as a 179-aircraft, $51.7 billion program that includes research, production, and aircraft support." Unlike the golden age of cost-plus-10% Air Force contracts, Boeing's on the hook for the overruns -- which is good news, unless you work there, in which case it just becomes more fuel for Boeing's psychotic efforts to squeeze its workforce, and to scam all of the political jurisdictions that think Boeing is doing them a favor by exploiting their labor. We've already seen the first of that with Boeing's threat to close its Wichita facility -- i.e., the one plant Boeing has that has almost all of the company's experience maintaining the Air Force's KC-135 tanker fleet. Still, despite all its attention to cost, delays and overruns have plagued Boeing's management for decades now. They've become so adept as scamming the system they've forgotten what got them into the game in the first place: the skills to build airplanes.
In another sense, the cost overruns are Boeing's fault: it was widely felt that they deliberately underbid the tanker contract to counter EADS. They had lost the previous competitive bid in large part because their numbers were way out of line, and only got the contract rebid through their lobbying clout. I wouldn't be surprised to find they found the right numbers through their revolving door contacts: they've had one VP go to jail for trying to fix the deal, and it would be surprising if the graft ended with her.
I keep returning to the Boeing tanker story because it seems so central to what is sick with America today. The tankers themselves are the platform upon which the American military empire is built: you can't project power to the far corners of the globe unless you can find a gas station when you get there. Any time some fool calls for a "no flight" zone, they're not only calling for the fighters and bombers to shoot down contraband flights, they're calling for the tankers to keep those fighters and bombers in the air over their targets. Making a $51.7 billion investment in new tankers shows us that the imperial command has no plans to back down from America's commitment to bully the world. On the other hand, if you do accept the need for the US to roll back its armed forces, the first place to cut funding is this $51.7 billion -- plus the untold billions it will cost to maintain and fly those planes if and when they ever get built.
On the other hand, stopping the new tanker program leaves the old one in place, and that KC-135 fleet has gotten the US to where it is today. Indeed, there's no reason why those planes can't stay in service for many more decades. They've been repeatedly rebuilt, periodically refitted with new wings and/or engines. They fly in spaces where they don't need to worry about being shot down. The main people who have emerged as opponents of Boeing's tanker scam have either been anti-graft imperialists like Sen. John McCain, or pro-graft ones like Sen. Richard Shelby who want more of the booty for themselves. So while opposing new tankers is one step, opposing the old ones is another. The main reason to shut down the old ones is to make it harder for the US to get involved in foreign wars -- most obviously the air-focused ones like Kosovo and Libya, although the ability to maintain the "no fly" zones in Iraq was what kept war with Iraq on the burner, making the 2003-11 war virtually inevitable.
But then there are a whole other set of reasons for opposing the new tanker program: those rooted in the management culture of Boeing, their vast political lobbying network, their revolving doors in and out of the Pentagon. For a while Boeing could market itself as a national treasure as America's number one manufacturing exporter. They may still be, but they've turned into a national disgrace. They've become poster boys for the collapse of business ethics that plagues the entire country. It used to make sense for the public to support corporations that in turn made useful things that built up the public's standard of living. That they made a profit in the process was tolerated, in large part because it was taxed -- another way corporations gave back to the society, and to the nationhood, that supported them. Now, however, they've become rackets, predators, out to suck as much profit as possible any way they can get away with it. Nor are they merely part of a bad trend: Boeing is an innovator here, a model for other companies to follow. This isn't so much because anyone at Boeing was all that clever. It's more because ever since WWII Boeing has been nursed by the Defense Department, a training that they wound up taking as their entitlement. Moreover, they built their commercial business the same way, through one crooked, cross-financed deal after another. Most notoriously, to sell planes in China, they agreed to build some of them there, and they went further and lent out their lobbying subsidiary to promote China's "most favored nation" trading status. (If you factor in the subsequent trade loss to China, Boeing no longer looks like much of an exporter.)
Some of this may be inevitable in the airframe business. Europe wound up nationalizing its various aircraft companies, consolidating them into Airbus. Airbus has two advantages over Boeing. One is that they can draw on public funds for development expenses -- actually, not that big of an advantage given how Boeing has been able to scam the US military and so many states and cities across the country for just that purpose. The other is that while Airbus has to break even to stay in business, it does so for the sake of the industry, its workers, and the nations that own it. It isn't compelled to strip and scavenge the way Boeing does. Those actually seem like good reasons to nationalize Boeing: run it as a unionized non-profit, allow it to borrow cheap through the Fed (even to finance sales, given sane regulation), cap the executive salaries and get rid of the crooks.
If I had much more time and patience than I do, I'd start a website dedicated to squashing the tanker program and smashing Boeing; maybe nomoretankers.org. It would be one way to start a reevaluation of what companies are good for in America, and a realization of what they are no good for. And armed forces, too. The tanker deal is a "teachable moment" -- and Boeing is an object lesson.
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