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High tariffs may cut role of Boeing in Russia

By Bloomberg News

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Boeing, which has pumped more than $1.3 billion into Russia's economy since the fall of the Soviet Union, has been struggling over the past 15 years to sell its planes inside the country because of a 40 percent tax on imported planes.

"It is more and more difficult for us to consider more investment and more work over here, creating thousands of new jobs, helping the government to limit emigration of the best minds at a time when we cannot sell over here," said Sergey Kravchenko, head of Boeing for Russia and the former Soviet Union.

Russia's aerospace industry, which rivaled that of the U.S. during the Cold War, has suffered since the fall of the Soviet Union as the state couldn't financially support planemakers. The country, which produced about a dozen regional and long-distance commercial planes last year compared with about 150 during Soviet times, has imposed high tariffs to protect its domestic industry.

More than 750 engineers work on contract at Boeing's research centers around Russia. The company also has about 100 employees in Russia.

Russia's demand for planes is increasing amid economic growth. Russia's air-transport market grew by 12 percent in the first quarter, outpacing the country's 8 percent economic growth, according to Renaissance Capital, a Moscow-based brokerage. Most Russian airlines have been unable to buy foreign planes because the tariffs make them too expensive.

"We are disappointed that we have not been able to sell more civil aircraft in Russia, and this is in large part due to high tariffs," said Thomas Pickering, senior vice president of international relations at Boeing and a former ambassador to Russia, at a conference in Moscow.

Pickering said he was in the country in part to meet government officials to talk about tariffs.

Rockwell Collins wins another 7E7 contract

CHICAGO — Rockwell Collins, a supplier of cockpit instruments for military and commercial aircraft, won a contract to make pilot controls for Boeing's new 7E7 commercial jet, bringing the combined value of Rockwell's 7E7 contracts to $3.5 billion.

The pilot controls include the steering wheel, rudder pedals and engine thrust controls, Cedar Rapids, Iowa-based Rockwell said. The work will be done at a company facility in Irvine, Calif.
 
Boeing has awarded most of the supplier contracts for the 200- to 300-seat 7E7, scheduled for first delivery in 2008. Rockwell Collins, which makes cockpit equipment for other Boeing models, including the 737, also has won 7E7 contracts for cockpit displays, the collision-avoidance system, weather radars and radios.

— Bloomberg News