Published: Wednesday, April 9, 2008
Boeing rival Northrop says 787 is almost half foreign
EVERETT -- Is the Boeing Co.'s 787 Dreamliner less American than Northrop Grumman and EADS' KC-30 tanker?
If you ask Boeing, the answer is no. But that's not the angle presented recently by Northrop, which teamed with Airbus' parent company, EADS, to beat out Boeing for a $35 billion U.S. Air Force contract. During an investors update last week, Northrop officials responded to criticism that their tanker isn't made in America by emphasizing the increasing use of outsourcing in the commercial jet industry.
"Globalization is widespread," said Paul Meyer, vice president of Northrop air mobility systems.
Boeing has upped the foreign content in each jet it has introduced beginning with a 2 percent foreign-built Boeing 727 to a 15 percent KC-767, Meyer said. The KC-30, based on Airbus' commercial A330, is 42 percent foreign content.
Supporters of Boeing's protest of the Air Force contract contend that awarding Northrop and EADS the tanker sends U.S. jobs overseas. But that is what Boeing has been doing on the commercial side all along, Northrop argued. Boeing's decreasing use of American content hit a new low with Boeing's 787 Dreamliner -- a plane that Northrop says is 43 percent foreign material.
"Let's just be fair, open and honest -- we both have foreign components," Meyer said.
Boeing acknowledges that its 787 relies more on foreign suppliers than did its previous jets. It disputes, however, Northrop's information on the Dreamliner. The discrepancy comes at a time when both Boeing and Northrop are lobbying for public and political support as Boeing's protest with the Government Accountability Office goes forward. As part of its fervent public relations campaign, Northrop notes publicly when it believes Boeing has misrepresented information about its tanker.
Northrop's corporate director of media relations, Dan McClain, said on Friday the company stands by its assertion that the 787 is only 57 percent U.S.-made.
"We got our numbers from looking at Boeing's Web site," McClain said. "And we took a very conservative approach."
McClain said that Northrop has seen the 787's U.S. content change on the Web site, sometimes dipping much lower than the 57 percent estimate Northrop selected.
Boeing 787 spokeswoman Mary Hanson said the company's latest estimate for the jet's U.S. content is 70 percent by dollar value. Even if a customer chooses the Rolls-Royce engines, which are built in the U.K., the 787 still would contain more than the 57 percent U.S. content than Northrop noted, Hanson said.
"I'm not aware of any scenario that could make it that low," she said.
Industry observers say Boeing has to keep the 787's U.S. value above 51 percent to qualify for financing through the Export-Import Bank of the United States.
Boeing's 787 Dreamliner has pushed the global jet model to a new level to the ire of the company's unions. The Chicago-based company relies on global partners -- in Japan, Italy, Australia and the United States -- to design and build major sections of the 787. Workers in Everett piece together the 787.
Northrop and EADS also will use a dispersed build model as they ship major KC-30 pieces from Europe to Mobile, Ala., where the tanker will go through final assembly.
Supply chain and assembly problems have led Boeing to delay the first delivery of its Dreamliner by nearly a year. Boeing will provide an update on the 787's progress this morning. The Government Accountability Office has until mid-June to review the Air Force tanker contract.
If you ask Boeing, the answer is no. But that's not the angle presented recently by Northrop, which teamed with Airbus' parent company, EADS, to beat out Boeing for a $35 billion U.S. Air Force contract. During an investors update last week, Northrop officials responded to criticism that their tanker isn't made in America by emphasizing the increasing use of outsourcing in the commercial jet industry.
"Globalization is widespread," said Paul Meyer, vice president of Northrop air mobility systems.
Boeing has upped the foreign content in each jet it has introduced beginning with a 2 percent foreign-built Boeing 727 to a 15 percent KC-767, Meyer said. The KC-30, based on Airbus' commercial A330, is 42 percent foreign content.
Supporters of Boeing's protest of the Air Force contract contend that awarding Northrop and EADS the tanker sends U.S. jobs overseas. But that is what Boeing has been doing on the commercial side all along, Northrop argued. Boeing's decreasing use of American content hit a new low with Boeing's 787 Dreamliner -- a plane that Northrop says is 43 percent foreign material.
"Let's just be fair, open and honest -- we both have foreign components," Meyer said.
Boeing acknowledges that its 787 relies more on foreign suppliers than did its previous jets. It disputes, however, Northrop's information on the Dreamliner. The discrepancy comes at a time when both Boeing and Northrop are lobbying for public and political support as Boeing's protest with the Government Accountability Office goes forward. As part of its fervent public relations campaign, Northrop notes publicly when it believes Boeing has misrepresented information about its tanker.
Northrop's corporate director of media relations, Dan McClain, said on Friday the company stands by its assertion that the 787 is only 57 percent U.S.-made.
"We got our numbers from looking at Boeing's Web site," McClain said. "And we took a very conservative approach."
McClain said that Northrop has seen the 787's U.S. content change on the Web site, sometimes dipping much lower than the 57 percent estimate Northrop selected.
Boeing 787 spokeswoman Mary Hanson said the company's latest estimate for the jet's U.S. content is 70 percent by dollar value. Even if a customer chooses the Rolls-Royce engines, which are built in the U.K., the 787 still would contain more than the 57 percent U.S. content than Northrop noted, Hanson said.
"I'm not aware of any scenario that could make it that low," she said.
Industry observers say Boeing has to keep the 787's U.S. value above 51 percent to qualify for financing through the Export-Import Bank of the United States.
Boeing's 787 Dreamliner has pushed the global jet model to a new level to the ire of the company's unions. The Chicago-based company relies on global partners -- in Japan, Italy, Australia and the United States -- to design and build major sections of the 787. Workers in Everett piece together the 787.
Northrop and EADS also will use a dispersed build model as they ship major KC-30 pieces from Europe to Mobile, Ala., where the tanker will go through final assembly.
Supply chain and assembly problems have led Boeing to delay the first delivery of its Dreamliner by nearly a year. Boeing will provide an update on the 787's progress this morning. The Government Accountability Office has until mid-June to review the Air Force tanker contract.
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