Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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French union understands “Buy American” on tanker
Update, July 19: Airbus says CGT is fourth Union out of five for Airbus in France, representing about 10 percent of Airbus employees in France.
Update, July 16: We received this from CGT: the union severed ties in 1978.Christian and Jean-Jacques were amused and laughed about the Airbus response.
Original Post:
Only a few days after EADS and Boeing (and the long-shot bid from US Aerospace-Antonov) submitted their bids for the $35bn KC-X contract to supply tankers to the US Air Force, a French union at Airbus declined to endorse the EADS bid.
The Federation des Travailleurs de la Metallurgie, or CGT, holds the position that the French military should buy its equipment from French industry and to be consistent with this position, told us that it understands the “Buy American” approach of Boeing supporters.
Airbus and EADS dismissed the CGT’s view as that held by a minority union concerned about outsourcing and off-shore jobs.
Questioning the effect of the WTO
We’re not the only ones questioning the effect of the recent WTO ruling against Airbus and its illegal subsidies.
A respected business writer from The Seattle Times has weighed in with this opinion piece.
We’ve long been cynical of the WTO and the Airbus/Boeing complaints as little more than political talking points. We’ve noted before the ineffectual rulings that Canada and Brazil illegally subsidized the Bombardier CRJ and Embraer EMB-jets, and nobody imposed sanctions.
Boeing offers KC-767 to USAF
It’s now official: Boeing submitted a bid for the KC-X competition, offering the KC-767 NewGen tanker.
Boeing did not schedule a press conference, so the initial press release detailing its bid is below the jump, with our reporting following the PR.
EADS submits tanker bid; Boeing to follow
Update, 2:30 PM:
- Here are three PDF slides of information from the press conference, comparing the KC-45 with the KC-767 NewGen: KC-45 slides 7-08-10.
- Boeing does not plan a press conference with its tanker submission tomorrow-just a press release and a note on its Tanker Blog. We will create a separate posting for this information tomorrow.
- Addison Schonland has an 11-minute podcast with Airbus Americas Chairman Allan McArtor.
Original Post:
EADS will submit its bid today for the KC-X tanker competition. Boeing’s bid will be filed tomorrow, when they are due.
(Detour:) This just moved from Bloomberg: The release of the WTO’s Interim Report on the EU complaint about “illegal” subsidies to Boeing has been pushed from July 16 to September.We cannot help but be skeptical about this. Every time this report was due, with timing happening to coincide with a key date in the KC-X tanker competition, the WTO mysteriously postponed its release date. Call us conspiratorial, but it seems that multiple “coincidences” are at work here. The announcement came from the US Trade Representative’s Office. Hmmm…..
Here is the Airbus statement concerning the delay:
EADS statement on WTO affect on KC-X competition
From Guy Hicks, VP of corporate communications at EADS North America:
“The Obama Administration and Department of Defense have opposed every attempt to use the ongoing WTO commercial trade dispute to derail the KC-X competition. The only beneficiary of such a noncompetitive action would be the Boeing Company. Everyone else—the warfighter, the taxpayer and 48,000 Americans who stand ready to build the KC-45—would lose. Read more
Airbus responds to WTO public release of final subsidies report
The 1,038 page Final Report by a three-member panel of the World Trade Organization on the US complaint about illegal subsidies to Airbus was made public today.
Findings and Conclusions: 5 pages, PDF. These are difficult to grasp when taken in isolation of reading the entire report, which at this posting we’ve not done.
Home Page to the Report in segments and the entirety.
The Interim Report was issued in September and the Final Report in March, but these were supposed to be confidential. Riddled with leaks to Airbus and Boeing partisans and promoted in the press as wins and losses by both sides, the public report is the first opportunity to read it for one’s self and draw conclusions.
At 1,038 pages this is going to take a while.
In a pre-release, embargoed press briefing, Airbus and its parent EADS said the appeals by the US and European Union are expected on points each side believes were in error.
Airbus made the point that this panel report has not been adopted by the WTO as fact and therefore any claims by Boeing that this is the final, and actionable, conclusion is misleading. The panel report may be appealed (and will be), after which the WTO appeals panel must decide on these appeals. After this process is done, the WTO itself must accept or reject the report.
“More has been costing more”
With the Pentagon’s announcement this week that a major push has begun to wring costs out of the defense budget, will this macro approach trickle down to one of the largest defense procurements in decades–the KC-X tanker recapitalization?
Remember when Defense awarded Northrop Grumman the KC-X contract in 2008? A key, if not the key, to winning was, “More, more, more.”
Now Ashton Carter, the top procurer in DOD, says “more has been costing more.”
Given one advantage Boeing has over EADS in the current KC-X competition–life cycle and MilCon costs–will “more, more, more” cost EADS the contract?
Dictionary and the KC-45
We love clever ads.
Here is the PDF. KC-X_Dictionary
Below the jump is EADS’ ad that appeared yesterday.
Weak Euro helps Airbus vs. Boeing
The weak Euro at its present level could help Airbus lower the cost (mostly in Euros) and therefore the price (entirely in dollars) by as much as 10%, according to Charles Armitage, an aerospace consultant based in London.
Check out this story in Aviation Week.
This is bad news for Boeing generally and for the KC-X competition specifically. This could put pressure on Boeing Commercial Airplane prices.
Let’s talk about the planes
Update, June 4: Reuters has this recap from Jim McNerney’s appearance at an investors’ conference in which he says EADS could win the tanker competition on price–a key point of our column below.
Original Post:
Note: this is a very long column.
In a previous post, we lamented that the debate over the KC-X procurement seemed to be about everything BUT the attributes of the planes offered by Boeing (the KC-767 NewGen) and EADS (the KC-45, based on the Airbus A330-200).
The public relations campaign and the shrill political posturing has been about the WTO trade dispute between the US (Boeing) and the EU (Airbus) over illegal subsidies to both companies and whether these should be included in the Pentagon’s evaluation; about jobs; about extending the deadline to submit bids so EADS can do so; and about freezing Obama administration appointments in a particularly snitty move by an EADS Senator.
None of these has anything to do with how the USAF evaluates the plane. The USAF evaluates the equipment on the merits of performance, capabilities, life cycle costs, military construction costs (MilCon) and a bunch of technical requirements, 372 in all.
If the airplanes’ costs come within 1% of each other, another 93 discretionary criteria will be scored, including exceeding capabilities.