Boeing’s decision to close a Kansas aircraft facility put its congressional delegation in a place unfamiliar to many red-state lawmakers: locking horns with a defense contractor.
The defense-aerospace giant, during a nearly decade-long competition to build new aerial tankers for the Air Force, said a win would bring production work on those aircraft to its Wichita, Kan., facility. That work, the firm estimated, would deliver 7,500 new jobs.
That study led Boeing executives to set in motion plans to close the Wichita plant by the end of 2013. Gone will be the facility’s existing 2,100 jobs and the promised tanker jobs.
As the U.S. economic picture continues to look blurry, losing more than 9,500 expected jobs is a crushing blow to the Wichita and Kansas economies.
The Air Force tanker work will shift to Washington state, while other work will be moved to company sites in Oklahoma and Texas.
The stunning move set off the rarest of scenes in the defense sector: Republicans who are for the military industrial-complex pounding a weapons manufacturer with visceral statements and allegations of dishonesty.
“This is unusual,” said Richard Aboulafia, an aviation and defense analyst at the Teal Group. “Kansas senators and congressmen were quite active on Boeing's behalf during the KC-X fight.”
Rep. Jerry MoranJerry MoranAt the table: The importance of advocating for ABLE GOP lawmakers lead way in holding town halls Yahoo reveals new details about security MORE (R-Kan.) on Wednesday accused Boeing of failing to “honor its commitment to the people of Kansas.”
Sen. Pat RobertsPat RobertsPicking 2018 candidates pits McConnell vs. GOP groups IRS chief says he's committed to finishing his term Overnight Finance: CBO predicts budget deficits, debt to hit new highs in 30 years | Meet Trump’s Ms. Fix-It | Trump, Mnuchin talk tax reform | Mexico's B windfall MORE (R-Kan.) said in a statement that he had secured assurances from top Boeing executives that if the firm won the Air Force tender, the assembly work would be done in Kansas.
“Boeing's chairman sat in my office 22 months ago during that battle and promised me ... that if we won the fight to get the tanker contract back, Boeing would stay in Wichita," Roberts said. "The chairman again promised the entire delegation the work would remain in Wichita just last February, when the tanker contract was settled in Boeing's favor.
“Today's announcement by Boeing’s leadership is hugely disappointing to me, but more importantly to the thousands of workers whose livelihoods are affected by this decision," Roberts said. "No lawmaker can compel a private company’s economic decisions, although [Gov. Sam Brownback (R)] and the congressional delegation together have made the best arguments possible for Wichita."
Rep. Mike Pompeo (R-Kan.) said Boeing will “break years and years of promises.”
“Boeing, like every company, has the right to change its business plans and operate in the best interests of its stakeholders,” Pompeo said. “What neither Boeing, nor any other company, has the right to do is make false statements, violate long-held commitments to communities or to receive federal contracts based on representations that it knows are not accurate.
Pompeo slammed the company for planning to leave “a state that helped make Boeing successful for more than 80 years and a state whose pride in its heritage with Boeing is second to none.”
While company executives said they plan to continue buying aircraft components from Kansas-based firms, Pompeo said “that work in no way substitutes for the decade of promises made by the Boeing Co. with regard to defense work on the KC-46 tanker at the Boeing Wichita facility.”
During a midday press briefing from Wichita, Mark Bass, Boeing's vice president and general manager for maintenance, said company officials “do not take this decision lightly.”
The bottom line, he said, is that the Wichita facility is primarily used for aircraft maintenance and modification work on existing aircraft, while the Air Force project would require assembling new planes.
If the tanker production line was set up in Wichita, the other parts of the plant over time “would erode” because there are “few opportunities” coming to secure that kind of work, Bass said. He noted that labor costs in Kansas are pricier than at Boeing’s other facilities.
Bass and other company officials said they had no idea they would close the Kansas facility when the Air Force awarded that $35 billion tender, an assertion challenged sharply by the state’s congressional delegation.
“During the competition for the [tanker] contract, Boeing pledged that a win would bring approximately 7,500 jobs to Kansas, including hundreds of Boeing jobs associated with the finishing work on the new tankers,” Moran said. “It is hard to believe that conditions would have changed so rapidly over the past few months to bring about the decision to not only move the tanker finishing work elsewhere, but to also close down the entire facility.”
Boeing spokesman Doug Holmes said the company had hoped to secure additional aircraft modernization and maintenance work that it ultimately did not get in 2011. Those losses undercut the business case for keeping open the Wichita plant, Holmes said.
“Boeing probably doesn't see any new aircraft modification and upgrade opportunities where politics will play a big role,” Aboulafia said. “It's a question of eliminating overhead as defense spending falls versus preserving political clout.”
The bottom line is that in an era of declining annual Pentagon budgets, Aboulafia said, “cost-cutting won.”