Keep eye on diversification

Local reaction has been notably restrained over Northrop Grumman’s decision to walk away from the $35 billion Air Force tanker competition, essentially handing victory to Boeing.

After nearly a decade of wild turns in this saga, some caution is warranted. Will the absence of dual proposals prompt calls for yet another (fourth!) round of bidding? Doubtful, as long as Boeing’s bid is reasonable. Much of the current fleet of tankers, which refuel bombers and jet fighters in flight, has been in service for half a century. The need to replace the oldest 707-based airplanes is clearly urgent.

Some Gulf State members of Congress will no doubt gripe, having lost a chance to bring several thousand jobs to Alabama, where Northrop and Europe’s EADS would have set up final assembly. (Their real hope, we suspect, was that Airbus would also start building commercial jetliners there.) But Alabama Sen. Richard Shelby and friends probably can’t derail an Air Force-Boeing deal.

With Northrop out of the picture, might EADS find a different partner? Insiders don’t think that’s likely.

It truly is looking like Boeing’s Everett plant will be churning out 767s for at least another couple of decades. A Boeing study says the tanker contract would create up to 70,000 jobs in the United States, about 12,000 of them in our state. Some 70 Washington suppliers will work on the KC-767, Boeing says.

That’s clearly worth toasting, and vindicates Boeing’s decision to contest the Air Force’s decision in 2008 to award the contract to Northrop/EADS. The larger European airframe wasn’t needed, after all, which was confirmed in the Air Force’s updated requirements. The smaller KC-767 can do the job, and deliver better value to taxpayers over the long haul.

Despite the good news, regional leaders should guard against making too much of it.

“We should be mindful that aerospace will not stay the way it is forever,” Everett Mayor Ray Stephanson said, citing emerging competition from China and elsewhere. “It’s a changing environment all the time. We need to work harder than ever to find ways to diversify our economy.”

Boeing’s launch of a second 787 line in South Carolina is another obvious reason.

Indeed, local and regional economic development efforts need to focus on recruiting and supporting new industries that will broaden the job base. The growth of the software, biomedical and military sectors has been encouraging, but aerospace still the biggest player in town, by a long shot.

Its successes are the region’s successes. For a stable and prosperous future, however, we need more players.

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