Airbus v. Boeing

I find this rather ridiculous. Unless there is a national security threat posed by having our Air Force Tankers manufactured by a foreign government, we should not be discriminating based on the country of origin. How hypocritical of us to claim we are for free trade and globalization, but then play favorites and only award big contracts to domestic businesses. As I wrote the last time this issue came up - I believe it is improper for the government to play favorites with my tax dollars. I want the best product at the lowest price possible, period (unless there is a security issue, which in this case, there isn't). Notice how there is no mention of the relative size of Boeing's bid vs. the bid put forth by Airbus. If Boeing really wanted the contract, they should have made the best offer. That's how it is supposed to work.

Article Link

Airbus v. Boeing: What Do Voters Think?
By Hugh Hewitt
Thursday, March 20, 2008

The recent award of a $35 billion dollar contract to Airbus-Northrop Grumman shocked more than the Boeing executives and employees who have always supplied the United States Air Force's tanker fleet.

It also sent the Pentagon-watchers into a tizzy of speculation and gossip.

Was Boeing being punished for the past corrupt practices of long-gone and rightly punished bad executives?

Had Boeing arrogantly ignored pushes and nudges from the Air Force?

Had the Air Force changed the rules in the middle of the process?

All these questions and more will be answered via the bid protest process launched by Boeing. But assume for the moment that the general Accounting Office rejects the protest and allows the contract to stand. Should the United States Congress intervene even if the GAO delivers a clean bill of health for the process. (Let me answer that one - NO)

There are lots of reasons to shake your head at the prospect of a French-led consortium building the next fleet of supertankers for our air force. The French have not exactly been the best of allies in the long war, and have been of almost no help at all in Afghanistan. The new president is a sharp uptick, yes, but even if became the new John Howard, would it send a good signal to our allies concerning the costs and benefits of cooperating with U.S. foreign policy to cut Airbus in on the biggest contract in a long, long time? (Are we now using contracts to reward behavior? This is supposed to be an objective bidding process, not a popularity contest. How petty would we be if we said, "well, the government didn't support us on issue X, so we are going to punish private enterprise in that country - of course, if you want to say the gov subsidies make Airbus a semi-public company, I will listen to that argument)

Doesn't selecting Airbus suggest that there is no way the Americans will ever put bad conduct of an ally ahead of its bottom line, and thus increase the likelihood of future bad conduct by other allies? (So disagreement constitutes "bad conduct"? No wonder foreign governments think we are arrogant. Additionally, if America feels the need to levy sanctions against all French imports from a diplomatic/political perspective, then go that route, but you can't single out an individual firm and hold them accountable for the actions of that country's government.)

Then there is the question of national industrial policy -or rather the lack of it. Even confirmed free traders --and I am one of them-recognize the difference between massive military contracts and the ordinary flow of goods and services across global markets. To have a preference for retaining the basic industrial capacity that allows for a robust national defense sector is not to contradict free trade principles, but is rather to limit their application at that point where the national security may be eroded by shipping jobs and capacity overseas. I asked one friend within Boeing for an assessment of this argument. His reply:

It is yet one more blow to our aerospace capability, and in this case, a big blow in terms of loss of skilled jobs. A continuing erosion of our capabilities has other long term consequences such as fewer engineering students. (Right, because people choose to enter the engineering field based on the nationality of the firm supplying our aircraft refueling jets. What a bunch of fear-mongoring crap. Are we really to believe that the awarding of this tanker contract is going to cripple our technological advantage over the rest of the world? Or that this contract going to Airbus is going to play a significant role in the continuing outsourcing of jobs for the economy as a whole? And even if it does, is it the job of the government to stop such a trend? If so, we should do away with imports and force all consumers to only buy American all the time.)

Any transaction involving critical infrastructure or technologies should be subjected to heightened scrutiny; particularly, where the real parties in interest are foreign governments. If the DoD did make a national security determination, we should know that and the basis for their determination, and if not, why not. If Airbus had tried to enter the US market through the front door by acquiring an interest in Northrop Grumman, the transaction would have been subjected to a CFIUS review. (I think the awarding of the contact to Airbus proves that it was not a national security determination - what is his point here?)

There are only two countries that have the ability to project force around the world - Russia and the US - and tankers are the key. Why would we want to put that capability in the hands of others.

He added: "It strikes me as absolutely absurd that the US would give an award to Airbus at the same time that the US has a huge trade case against the Europeans for subsidizing Airbus." (This, to me, is the only legitimate point raised in this article)

Of course a Boeing man will put forward's Boeing's point-of-view, but these are all compelling points to which I invite the response of Airbus fans.

In the meantime, though, the issue will become a factor in the politics of 2008. It seems likely that voters will react to this deal as they did to the ill-fated Dubai ports deal of two year ago. Americans believe in free trade, and they certainly welcome economic growth. (First of all, many people are ignorant and behave irrationally when it comes to economics and trade, as evidenced by the very port deal Hewitt mentions. This will only be a voting issue for uninformed people who are susceptible to manipulation and rhetoric.)

But they have a deep belief in maintaining a vibrant, independent defense sector, of which Boeing has always been a leading participant. (Oh, I see, so they should just receive all future military contracts outright? What a clown)