Airbus claims it would bolster U.S. jobs by winning tanker work

Paris — America's industrial base will be bolstered, not diminished, if the Airbus A330 beats out Boeing's 767 for the U.S. Air Force tanker contract, top executives of Airbus parent company EADS said in Paris Saturday.

EADS chief executive Louis Gallois said Boeing outsources much of its parts manufacturing overseas, while the tanker proposed by Airbus and U.S. partner Northrop Grumman would create jobs at a new assembly line in Mobile, Ala.

"We will see at the end of the day who is creating more jobs," Gallois said at a press seminar the weekend before the Paris Air Show begins, "We are starting from scratch (in Alabama). We have to create an industrial base."

Gallois was responding to an exchange last week between Sen. Patty Murray and the Secretary of the Air Force suggesting that the Pentagon will seek to protect the American industrial base and jobs when it awards the multibillion-dollar tanker contract.

The Airbus plane would be shipped in sections from Europe to the U.S. for final assembly in Mobile, Alabama. After the airframe is finished, Northrop Grumman would install military features such as the refueling boom, also in Mobile.

"We are not exporting an airplane from Europe to the United States," said Gallois. Mobile stands to gain some 1,500 direct jobs on the program. Indirect jobs at suppliers would be added across the U.S.

The Boeing plane would be assembled in Everett. Its military systems would be added at another site, possibly the Boeing defense plant in Wichita, Kan.

A win for Boeing would add about 2,000 jobs at the company's Everett plant -- and perhaps more than 6,000 new jobs overall in Washington State.

Ralph Crosby, head of EADS North America, said Airbus also has committed to build A330 commercial freighters at the same plant in Mobile if it secures the tanker contract.

"A new industrial aeronautics center in the United States, producing not only tankers but also freighters, cannot help but be more beneficial to the U.S.," Crosby said.

Last week Sen. Murray, questioning Air Force Secretary Michael Donley at a Senate hearing about the tanker competition that is expected to reopen next month, said she was "very worried about our domestic industrial base."

Donley responded that the Pentagon has an interest in ensuring that "industrial base issues … are taken into account."

This answer seemed a subtle political shift.

When EADS was originally awarded the contract in February 2008, an award that Boeing successfully reversed after a protest, then-Air Force acquisitions chief Sue Payton said categorically that the creation of jobs in the United States was not a factor in the decision.

Legally, the Pentagon must consider only the technical needs of the military and the financial impact on taxpayers: essentially the performance and the price of the airplane.

Crosby said there is sufficient protection for domestic jobs in the Buy America Act, which requires that at least 50 percent of the content of any airplane must be produced in the U.S.

Crosby said the Department of Defense has historically weighed a trade of capability against price--an assessment of best value. But he said there have been suggestions this time that in the re-opened competition the Pentagon could instead set new rules so that the cheapest plane to make the minimum threshold of capability would win.

Such a recasting of the rules would likely favor Boeing because the smaller 767 is less capable in terms of refueling capacity, but is cheaper.

Crosby expressed some worry that politics would push the Pentagon in that direction. "It's not absolutely clear that this is the way the Department of Defense is going, but there are indications that it might be," he said. "If all (the government) were doing was buying value (the A330 would win). So there must be another dimension to this."

Gallois said EADS will aggressively pursue the tanker contract and that he expects fair treatment by the Pentagon.

"We have different signals indicating the competition will be fair," Gallois said.

Separately, Gallois spoke about how Airbus is handling the steep downturn facing the industry because of the decline in the general economy and in air traffic.

He said Airbus has already scaled back some 15 to 20 percent on its previous plans for increases in jet production.

And he said the company could make further rate cuts if necessary and still avoid layoffs. Gallois said keeping the workforce intact would help Airbus ramp up production again when the cycle swings back up.

"We have to be able to increase production when it is needed. And it will be needed," he said. "We have to be careful with the way we manage our manpower. Competence and experience are key in our field."

On the recent crash of an Air France A330 into the Atlantic Ocean off Brazil,which killed all 228 people aboard, Gallois said "It is essential for everybody to know what happened, and you know it's not easy."

"In such an accident there is not one cause. It's a convergence of different causes," Gallois said. "I hope sincerely we will find the root causes."

"We have no idea for the time being," he said, "Be patient. It's a long story."

Dominic Gates: 206-464-2963 or dgates@seattletimes.com