The European aircraft manufacturer, EADS (Airbus) won the contract to build the new Air Force tanker. Northrop Grumman is listed as the representative, and the manufacturing will be in the US, but it will be based off of the European built commercial airliner Airbus A330. Either way, the Europeans will be walking away with a lot of money Boeing (and American workers and taxpayers) will have missed out on.
Under the new deal, the team of Northrop and European Aeronautic Defence and Space, Airbus's parent company, initially will make 179 tankers for the Air Force. The deal to replace the roughly 500 tankers in the Air Force's fleet ultimately could be worth as much as $100 billion over the next several decades, analysts said.
As the dollar falls against the euro, expect the Europeans to demand more and more money from this contract with overruns. This is a big blow to Boeing who is in tight competition with Airbus for commercial airline orders. This move will put an end to the 767 line in Everett, WA.
This is unprecedented. It is the largest contract that the military has ever awarded to a foreign country. The force behind the Northrop-EADS bid was EADS. Northrop Grumman was added to legitimize the deal and talk of plants in Mobile, AL and other sites in the US was to placate American politics. But don't be fooled, the lions share of the profit will end up overseas, taxed by foreign governments and ultimately hurt the US economy.
The only hope is that this wake up call for Boeing fosters a stronger product in the future. That was the problem after the Cold War ended and the "peace dividend" put out so many US aircraft manufacturers, specifically McDonnell Douglas which was the only real competitor to Boeing before Boeing bought McDonnell Douglas.
After reading the literature on the two aircraft manufacturers, I concluded the EADS aircraft was superior to Boeing's so there was no favoritism like there was in 2004 when the Air Force acquisition world was rocked by scandal.
Still, it is sad to see so much money going overseas. All that is left now is for the Air Force to award the next generation UCAV (Unmanned Combat Air Vehicle) contract to a Chinese backed US company.
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