SC’s unemployment problem: $2bn

Following the presentation of the Business Case for Consolidating Line 2 in Everett by the governor to Boeing, a few Republicans, a business association and a few others focused on the fact that Washington isn’t offering new incentives. We discussed why in this posting. The critics of the report also noted that Boeing continues to complain that Washington’s unemployment insurance rates are too high, and a Boeing spokesman also referred to this view when commenting on the report.

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A320 upgrades on the way

Airbus has decided to proceed with a winglet program for the A320 family and will decide by the end of 2010 whether to re-engine the family. Also: CFM International is ready to advance its schedule for the LEAP-X program to meet a requirement by China’s Comac for the C919. This also opens the way to potentially re-engine the Boeing 737.

Below are stories we did for Commercial Aviation Online.

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Boeing files permits for SC for new assembly building

Boeing has filed for permits in Charleston (SC) to clear more than 80 acres of forest to make way for an assembly site and delivery center, taxiways and related stuff. The building would be 720,000 sq. ft. Boeing wants to begin clearing in November and be done by February. Boeing now owns 240 acres in Charleston, with the recent acquisition of the Vought facility and the previous purchase of 50% of Global Aeronautica there.

Here is the story from the local Post and Courier newspaper. The newspaper has this quote from a Boeing spokesperson:

Boeing spokeswoman Candy Eslinger said today that the permit request is “just a procedural step.”

“It does not mean the company has decided to locate a second line in North Charleston,” she said. “The filing was necessary because the permitting process is very comprehensive and requires a lot of lead time.”

For comparison, the Everett plant is on 98.3 acres and the building is 4.3 million sq feet.

787 Line 2 incentives: WA vs SC

Some media and a few politicians misinterpreted the study released yesterday by Washington State, as well as not having correct what South Carolina is or isn’t doing, to land production Line 2 for the 787.

The misinterpretation comes from headlines and conclusions that Washington “won’t” offer new incentives to Boeing to win Line 2. First, this ignores that new Boeing Commercial Aircraft CEO Jim Albaugh told Gov. Christine Gregoire that Boeing isn’t asking anything of the State–that the decision comes down to what accord might be reached with the IAM to remove the threat of future strikes.

(Boeing’s response to the study also overlooked the fact that Albaugh said the company wasn’t asking for anything.) Read more

Washington State pitches 787 Line 2

Washington State last week made a pitch to the new Boeing Commercial Airplanes CEO James Albaugh for locating the second 787 assembly line in Everett, the home of Boeing’s wide body production.

Charleston (SC) is competing for the line.

The 32 page State white paper provided Albaugh is here. WA787 Sept09

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Airbus: A400M, Future funding

With tanker news dominating this week, there are a few Airbus items that haven’t received much attention: the A400M, future airplane program funding and the A350.

(Updated September 26.)


This disastrous program appears heading for some resolution. Aviation Week has this report. It looks like Airbus is headed toward a new agreement with the A400M customers (most of which are Airbus member-states) that will restructure the contract, terms and conditions in a program which has already cost Airbus billions of dollars in cost overruns. The program costs the company $100m a month, and it–along with the A380–has been a huge financial drag.

UBS estimated that the restructured contract could add 5bn Euros to the charges Airbus has already taken. We spoke with Airbus CEO Tom Enders earlier this month and he said the estimate is “completely unreasonable.” While he would not offer a “reasonable” number, published reports suggest a 3.5bn Euro figure.

The program has been a perfect example of political interference, notably on the engine selection at the start, which speaks more than ever why Airbus and EADS should divorce from ownership by the French and German governments.

The ever-candid Enders said the A400M should have stuck with the proposed Pratt & Whitney turbo prop rather than having a new design forged in Europe forced upon the airplane. “The choice was made under political pressure,” he said.

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KC-X tanker DRFP released

Update, September 28: DOD Buzz reports Boeing is going to offer two bids, one each for the KC-767 and KC-777. Here is the link. We think this is a brilliant move.

Original Post:

Here is the link to the RFP. We’ll add information after we’ve read it, which will take all weekend. One thing we did find right away: the USAF is asking for field performance data on runways 6,000 ft to 15,000 ft. This means the Boeing 777 isn’t zapped on this criteria; the 2006 RFP required 7,000 ft. runways. The Systems Requirements document does include a 7,000 ft. runway requirement. SRD document pg. 26,

On another requirement from the 2006 competition: spare engines had to be transportable in the C-130 cargo plane. A 777 GE 90 wouldn’t fit; this requirement has been changed to the C-17. The C-17 has an 18-foot wide cargo bay; the GE-90 is slightly over 10 ft wide (bare engine, without nacelle). SDR pg. 40,

Here is Boeing’s statement, issued upon receipt of the DRFP:

“Our next step is to conduct a detailed review of the document. We want to understand how requirements will be defined and prioritized and how the proposals will be evaluated. That information will help us decide which plane to offer or whether to offer both planes. We appreciate that there will be frequent, open discussion with the U.S. Air Force as we go forward. Both the Air Force and the American taxpayer will benefit from the tanker options we can offer. Boeing has a KC-7A7 ‘family of tankers’ available to meet the warfighter’s requirements. Whether it’s the agile, flexible 767-based tanker or the large 777-based tanker, Boeing will deliver a combat-ready tanker with maximum capability at the lowest cost.”

What is noteworthy is the reference to offering the KC-767 and the KC-777. This is contrary to stated DOD intent to buy only one airplane. This is something we suggested Boeing do for the 2006 competition on the theory it would checkmate the Northrop bid. While we think the 777 is too big for the KC-X competition, a dual-offer by Boeing simply cannot be matched by Northrop.

Northrop believes its KC-30 is the right-sized aircraft in the sweet spot.

Here is Northrop’s statement:

“Northrop Grumman applauds the Defense Department and U.S. Air Force for re-starting the effort to replace its Eisenhower-era KC-135 aerial refueling tankers, and the company is looking forward to competing for and winning the contract again.

“Northrop Grumman will review the draft RFP and provide the U.S. Air Force with comments on the draft in short order.  We will defer further public comments until we have completed our review.”

Here is the synopsis as publish on the Business Opportunity website.

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DOD Tanker Briefing


Here is a running update of the Pentagon briefing to reporters, 4pm EDT, 24 Sept.

William Lynn Deputy Sec Def:

  • USAF will be source-selection team but overseen by DOD. There will be independent review panels as well, including from other services.
  • This is not a re-run of the prior process. GAO found substantial flaws in previous process and we’ve taken pains to be explicit about criteria, scoring system and decision tree.
  • This is a Best Value competition, not a price shoot-out. Price is extremely important but not only point. We will look at price, life cycle and war-fighting requirements.
  • This is a step forward toward acquisition reform.
  • This is not a cost-plus contract, and includes not-to-exceed prices. Will constraint prices considerably and move toward avoiding cost overruns.
  • We’ve played this right down the middle.

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So there, Boeing: put this in your smipe and poke it

Boeing is known for its complaining that Washington State is a lousy place to do business.

Yesterday (September 22) the Tax Foundation came out with its new state rankings for business-friendly tax states. Washington’s ranking: #9. South Carolina: #26. North Carolina (the runner up in the 787 Line 1 competition): #39. Texas (second runner up for Line 1): #11. The four-page Executive Summary is here. The 60-page full report is here.

Today (September 23), Forbes came out with its list. The results: Washington is #2 (up from #3). South Carolina: #25. North Carolina: #5. Texas: #8.

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Refueling Dr. Strangelove

The Draft Request for Proposal for Round 3 of the KC-X tanker competition isn’t even out yet and the procurement process is already perverted.

The DRFP is thought to be ready for release tomorrow (September 24). The USAF reportedly has scheduled briefings for Congress at 11 AM EDT.

In what is clearly an orchestrated effort spearheaded by Boeing, the political focus is entirely on the interim report by the World Trade Organization that Airbus benefited from illegal subsidies for its A-series commercial airliners, including the A330-200 on which the Northrop Grumman KC-30 is based.

Washington State and Kansas Members of Congress demand that the US Air Force include language in the DRFP that considers the launch aid–a reported but unconfirmed $5bn for the A330/A340 sister program–in evaluating the KC-X proposals.

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