Boeing takes a gamble on the C-17

Discussion in 'Modern' started by syscom3, Jun 21, 2007.

  1. syscom3

    syscom3 Pacific Historian

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    Press-Telegram - Boeing takes a gamble on the C-17

    Boeing takes a gamble on the C-17
    Local: Company will pay to keep the line open through 2010, in the hope Congress will fund more planes.
    By Don Jergler, Staff writer
    Article Launched: 06/20/2007 09:37:21 PM PDT

    Boeing is investing its own money to keep the C-17 production line running while Congress decides whether to purchase more of the aircraft.

    (Press-Telegram)LONG BEACH - Boeing Co. will front its own money to keep the C-17 assembly line in Long Beach open through at least 2010, company executives said.

    The company told workers on Tuesday that it is committing Boeing resources to build 10 new C-17s. An order of 10 more planes would keep the line from shutting down, allowing the possibility of an even larger order to come through later.

    Boeing had announced in March that it was taking steps to close down the line.

    The move comes after C-17 funding was given a low priority on the Air Force wish list that goes to Congress and the President, who didn't include funding for the craft in his version of the budget.

    However, Boeing officials said they have received recent hints from the Air Force and Congress that funding for more C-17s could be forthcoming.

    A letter from Dave Bowman, Boeing vice president and C-17 program manager, announced the news to federal, state and local officials who had banded together to lobby for more C-17s.

    "Because of your hard work, we have continued bipartisan Congressional support, and increasing signs that the U.S. Air Force is interested in 30 additional C-17s," Bowman wrote.

    Boeing has directed key suppliers

    to begin work on new aircraft beyond the 190 currently on order, he wrote.

    The company has delivered 166 of the 190 planes on order. The final craft was scheduled to be delivered in mid-2009 and the assembly line was due to be shut down at that point.

    Boeing officials say the 30 added planes, if approved by Congress, would extend work on the line through at least 2010.

    Boeing officials won't know how far into 2010 the line could stay open until funding is identified.

    "It buys time while Congress completes its decision-making process," said C-17 spokesman Garry Lesser.

    It costs about $200 million to build a C-17. From the time of a contract issuance to the delivery of a craft takes about 34 months. It takes about nine months to assemble a C-17 once the craft's components are delivered.

    City officials who lobbied for the C-17 expressed some hope about the news.

    "We're guardedly optimistic," said Robert Swayze, the city's economic development director. "It's a great signal from Boeing that they believe there's hope that at least 10 planes will be identified in Congressional funding."

    The House Armed Services Committee has authorized funding for more C-17s, but the Senate Armed Services Committee has yet to approve that authorization.

    "The fact that Boeing turned the line back on, Boeing's giving the signal to the Air Force that they're committed to the plane, and I'm sure their hope is that the Air Force will give the signal back to Congress that they want those 10 planes," Swayze said.

    Boeing employs 5,500 workers on the C-17 line, and another 5,300 employees through suppliers in the state. It's estimated the program indirectly generates another 10,000 jobs statewide.

    "We estimate the total annual payroll for employees working on the C-17 to be over $1 billion a year," Swayze said.

    Should no C-17 funding be found in the federal budget, the company would not only close the line, but it would be forced to pay certain suppliers who are keeping their shops open because of this week's decision.

    "Turning the supply chain back on is a financial risk to Boeing," Bowman wrote. "But this decision reflects the company's long-standing willingness to ensure the viability of the C-17 supply base and to minimize cost - if and when the Air Force decides to buy additional C-17s."
     
  2. SoD Stitch

    SoD Stitch Banned

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    I'm kinda surprised they're doing that; last I heard the F-22 program was their "sacred cow", and the last thing Boeing wanted to do was divert any monies from the Raptor program, even towards the -17.

    However, I also firmly believe the gamble will pay off; if the US doesn't order any more -17's (which they probably will), there are several foreign customers who are very interested in possibly purchasing and/or leasing C-17's. Britain, in particular, has already signed-on to lease ten (I think) examples for a 10-year period with (I believe) the option to purchase them at the end of the lease; at least two that I know of have already been delivered to Britain. I'm willing to bet there are a few other Commonwealth countries who will probably order the -17 in the near future, including possibly Australia Canada.

    Edit: Did my research (finally): Britain has already received delivery of four (4) C-17's with a fifth on it's way, and they do indeed plan on purchasing all five (5) C-17's from the US when the lease expires in 2008. Also, both Australia and Canada have also elected to purchase four (4) examples each; Australia has already taken delivery of two (2) -17's, and Canada's first -17 just rolled off of the assembly line a few days ago.
     
  3. FLYBOYJ

    FLYBOYJ "THE GREAT GAZOO"
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    They can't loose on this. If the AF doesn't buy any more C-17s, they shut the line down, lay off all the workers and sell the land they're on which will more than cover their costs and them some.
     
  4. syscom3

    syscom3 Pacific Historian

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    If they dont sell the land back to the Long Beach Airport, then the cleanup costs would run into the 10's of millions, assuming they could even clean it up.
     
  5. FLYBOYJ

    FLYBOYJ "THE GREAT GAZOO"
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    Perhaps. I don't know the current state of the facility but based on other situations in SoCal when other facilities were closed they might be a little smarter and have even cleaned up any mess or developed sales clauses where they could close shop and leave the clean up to who ever buys the place (Long Beach?).
     
  6. Glider

    Glider Well-Known Member

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    I don't know anything about land prices but in the UK 10's of millions to clear up Long Beach Airport would be cheap at the price.

    Technically it isn't an issue.
     
  7. FLYBOYJ

    FLYBOYJ "THE GREAT GAZOO"
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    The property value in that area is very high. I think in a worse case clean up scenario Boeing would still make a fortune when they sell the land.
     
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