Airbus Spies With Its Little Eye?
By Pejman Yousefzadeh Posted in Airbus | Boeing | Defense Expenditures | National Security | Northrop Grumman | Not Giving Away The Store — Comments (18) / Email this page » / Leave a comment »
Boeing is based in Chicago and as a Chicago lad, I rather like it when hometown industries do well. Good for the local economy and all that. However, being the free marketeer that I am, I want there to be tough, vigorous competition in all instances where companies vie for business and work.
Boeing is currently vying for some business from the United States government:
The government is due to pick the winner this week in a huge warplane competition that pits No. 2 U.S. defense contractor Boeing Co (BA.N: Quote, Profile, Research) against a team made of No. 3 Northrop Grumman Corp (NOC.N: Quote, Profile, Research) and its European partner, Airbus parent EADS (EAD.PA: Quote, Profile, Research).
Closely watched on both sides of the Atlantic, the battle involves one of the largest airplane orders expected for years to come. Each of the teams has spent tens of millions to hone its proposal, advertise it widely, and enlist high-profile former generals to underscore the merits.
Most defense analysts expect Chicago-based Boeing to win the contract for 179 new aerial refueling tankers, valued at $30 billion to $40 billion over the next 10 to 15 years, but Northrop insists it has a fighting chance.
May the better company win. But somehow, I have a hard time believing that the better company will or should be Airbus. No offense intended against our European friends, but when your employees periodically go on strike, it tends--or at least should tend--to reduce confidence in your workmanship. Also, there is that whole industrial espionage bit, which ain't all that appealing.
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Airbus Spies With Its Little Eye? 18 Comments (0 topical, 18 editorial, 0 hidden) Post a comment »
...for something like twenty years now? Didn't Boeing already propose to retrofit their 767 platform for this application? I can't believe they still haven't made a decision on this yet.
And didn't Boeing play some dirty pool to try to get the deal, that ended up with a bunch of Pentagon civilians getting fired and some Boeing execs going to jail? And didn't not one but two successive Boeing CEOs (Stonecipher and Frank Shrontz) resign because of alleged romantic involvements with Pentagon staffers involved in the project? (Who knew Pentagon civilians were so sexy???)
And wasn't our old friend John McCain somehow involved in getting Boeing disqualified from bidding on this because of all the shenanigans?
I am shocked.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
"Wait a minute, hasn't the Air Force been working on this for something like twenty years now? Didn't Boeing already propose to retrofit their 767 platform for this application?"
The Boeing tanker program was the famous procurement scandal of 2003, in which it was revealed that they had bribed an Air Force procurement official, Darleen Druyun. She gave Boeing proprietary information about Airbus' design in exchange for their promising Druyun a cushy executive position.
http://en.wikipedia.org/wiki/Darleen_Druyun
Congress was livid. Druyun went to jail, and Boeing was actually banned from competing on tanker contracts for years.
That scandal left a bad taste in Congress' mouth. I'll bet that is the "chance" that the Airbus-Northrop team is alluding to.
There's plenty more about Darleen Druyun's bribe by Boeing if you search Google.
temptation than government procurement types. Typically, someone making $40 - 60K/yr. is making decisions worth millions or even billions of dollars to someone with all sorts of political types looking over their shoulder and lobbyists hanging from every limb. If anyone bothered to look, it wouldn't be hard to send lots of them to jail from every level of government.
In Vino Veritas
I understand that. I had personal experience with that kind of industrial espionage. In my case, the company seeking to pump me for information tried to bribe me by offering me a woman.
I declined with thanks.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
the women aren't reticent to offer themselves. Lady Lobbyists can be VERY persuasive! More than once I've found myself sitting beside some lithe young thing that I know full well wouldn't give me the time of day if I couldn't do something for her or whomever she was working for. You just have to know you can't do it - no matter how much you might want to. The price is just too damned high, and you'll be paying it for the rest of your life.
In Vino Veritas
Frank Shrontz was Boeing's old guard, and to my knowledge, not involved in any scandal.
http://www.boeing.com/history/boeing/shrontz.html
Phil Condit was the CEO who got in big trouble because of money and government contracting (but not a slouch in the sex department, either):
http://en.wikipedia.org/wiki/Phil_Condit
Harry Stonecipher was the CEO pierced by Cupid's arrows. In the executive suite, unfortunately.
Fortunately, the front office guys are far removed from putting the airplanes together. Thank God.
the "tanker toads" that Northrup has brought to the last few ATA conventions, I am a Boeing girl through and through.
I am really rooting for the home team here. Seattle and St. Louis have both been home to my family, and ahem, my hubby is a little partial to a particular Boeing bird. Fingers crossed, toes crossed, prayers and all.
the "tanker toads" that Northrup has brought to the last few ATA conventions, I am a Boeing girl through and through.
I am really rooting for the home team here. Seattle and St. Louis have both been home to my family, and ahem, my hubby is a little partial to a particular Boeing bird. Fingers crossed, toes crossed, prayers and all.
Airbus has the better plane: Bigger, holds more fuel, stays in the air longer, can be based farther from the front, and can accomplish other missions (e.g., transport) because of carrying capacity. It's basically the same plane that the Australians recently ordered, and are just now receiving.
Moreover, the Airbus plane is going to be built in Alabama (IIRC), not France or Germany. The labor market advantage touted by Pejman doesn't seem to apply.
I still expect Boeing to win, but it's not clear that it would be a win for the American taxpayer.
For we have a peculiar power of thinking before we act, and of acting, too, whereas other men are courageous from ignorance but hesitate upon reflection.
...it does for airliners. On the commercial side of the business, Airbus is getting their tails handed to them by the strong euro, which makes their airliners much harder to buy.
Boeing, of course, is responding to this golden opportunity by having major production and supply-chain problems that are handing business right back to Airbus.
I wonder if currency issues are a factor for the Air Force.
relief of an unwelcome kind may be in store for both Airbus and Boeing, regardless of currency issues. (I imagine that both companies hedge their exposures to mitigate some of the latter.)
...market is going to Asian and Middle-Eastern countries these days? God knows, they're not concerned about wasting money.
Almost any kind of hedge is incredibly expensive these days due to high volatility in almost every market.
Airbus management have been howling about the currency issue for months now. Of course, you have to consider the source. Those guys are full of homegrown problems that they'd love to deflect attention away from.
although mature markets, dwarf the rest of the world in terms of the "installed base". Their replacement needs are the most important market available to the manufacturers.
There is also a difference between the Middle Eastern carriers, who are kind of international network players (Emirates really comes to mind here) and the Chinese, more focused on the internal market (where high fuel will really pinch).
Yes, hedging now probably isn't going to work. But they should have been doing it consistently years in advance. In the case of Airbus, they were certainly astute enough to do a little advance insider trading. As for Boeing, l'amour, toujours l'amour, as you noted above. And they say the French have all the fun. :>)
I don't believe this post has been updated but Boeing lost the $40B contract to Northrop Grumman and EADS.
On an interesting side note how will McCain's past clashes with Boeing playout in the media and in Washington state:
http://blog.oregonlive.com/mapesonpolitics/2008/03/mccain_blamed_for_boe...
"It was McCain who cried foul when the Department of Defense awarded Boeing the tanker contract back in 2003. According to the Everett Herald, McCain "nearly single-handedly killed the firm's multi-billion dollar deal" to lease 100 Boeing air tankers. As the Herald explained:
In 2001, McCain's laser-like probe of defense budgets unearthed a $30 billion earmark to pay for leasing 100 KC-767 jets from Boeing -- without first following a competitive bid process.
His unrelenting criticism brought down the program three years later and ignited investigations into the inappropriate ties between Boeing and Air Force officials."
The article finishes with this:
"Rep. Norm Dicks, D-Wash., a powerful figure on the House Appropriations Committee, predicted a "firestorm of criticism on Capitol Hill" over sending many of these jobs overseas. And Dicks added of McCain:
"I hope the voters of this state remember what John McCain has done to them and their jobs."
it isn't uncommon for Boeing's employees, at least the Seattle ones, to go on strike.
In Vino Veritas