Loss of Contract Stuns Boeing Workers, Neighbors

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Shock, disappointment and anger abound in the state of Washington as Boeing loses a $40 billion Air Force contract to European rival EADS. Boeing had supplied the Pentagon with refueling tankers for nearly 50 years.

STEVE INSKEEP, host:

Just don't expect Boeing workers to see it that way. They say planes for the Pentagon should be made in America with American workers. From Seattle, NPR's Wendy Kaufman reports.

WENDY KAUFMAN: Yesterday's meeting of Local 751 at the Machinist Hall in south Seattle began as they always do.

Unidentified Man: All right. I'd like to welcome everybody here to the eleven o'clock meeting for the Local E and if you'd like to all stand, we'll pledge allegiance to the flag.

Unidentified Group: I pledge allegiance to the flag of the United States of America.

KAUFMAN: Patriotism runs deep among members of Boeing's biggest union, and the awarding of the tanker contract to a European airplane maker was a devastating blow.

Mr. LINCOLN OLSEN (Employee of Boeing): As a veteran, this really upsets me. I'm gonna e-mail all my buddies from the army and tell them to e-mail their Congressman. I'm gonna let them know, hey, we're not gonna have a French-made product protecting the United States.

KAUFMAN: Lincoln Olsen works on Navy jets at Boeing's plant in Renton, Washington. He was one of several Boeing workers who gathered around a conference table and shared their views. Garth Luart(ph) was another.

Mr. GARTH LUART (Employee of Boeing): I get sick when I think about this. I do not understand why American work, in a time of a recession, is getting sent over seas. It doesn't make any sense at all to me, my family, my friends that are overseas fighting the war right now in Iraq - and for them to say that this gonna be a good thing for jobs in Alabama - are you kidding me?

KAUFMAN: The EADS Northrop-Grumman project will use an Airbus jet converted to an aerial tanker. Much of the manufacturing will be done in Europe with final assembly in Alabama. The EADS team says the project will result in 25,000 American jobs. But Boeing has said that had it won the contract, far more jobs, 44,000 nationwide, would have been created.

Mr. CLARK HALEY(ph) (Employee of Boeing): This ain't gonna fly with the American people.

KAUFMAN: Clark Haley is another Boeing worker.

Mr. HALEY: You know, this is a slap in the face, you know, and I am not alone in this feeling.

KAUFMAN: The Pentagon said that its mandate was to get the best tanker at the best price.

Mr. HALEY: It's not the best. Boeing makes the best aircraft in the world, not Airbus. Airbus makes cheap crap.

KAUFMAN: Boeing is entitled to an explanation as to why it lost the contract and a detailed briefing by the Air Force could occur as early as today. Boeing has already publicly challenged some of the assessments the Air Force made. The company has the right to appeal the decision, but based solely on the fairness of the bidding process. Boeing would have five days to challenge the contract award and stop it. The Government Accountability Office has occasionally ruled against a defense department contract, but Lauren Thompson, a veteran defense industry analyst thinks it's highly unlikely in this case. He says Boeing didn't just lose the contract, it lost in a blow out.

Mr. LAUREN THOMPSON (Defense Industry Analyst): They missed in every significant measure of merit. There were five selection criteria. It did not manage to beat the other team in even one of them. So this was pretty definitive.

KAUFMAN: What happens next remains uncertain. Congress certainly isn't very happy about a huge piece of the military contract going to a foreign supplier. But what action, if any, it will take is anyone's guess. In the meantime, EADS and Northrop-Grumman are celebrating. The initial $40 billion contract comes at an opportune time for EADS, which has been struggling with technical problems and delays on Airbus's super jumbo jet.

As for Boeing, the loss of the contract will have little impact on company revenue over the next few years. As industry analyst Richard Aboulafia notes, Boeing is selling lots of commercial jets and has a long list of orders.

Mr. RICHARD ABOULAFIA (Defense Industry Analyst): And then there's the defense side that's looking at a flattened defense market, few programs to compete for, a memory of a 50 year old franchise that they've now lost, and worst of all a new foreign competitor on their home turf.

KAUFMAN: And Boeing's union workers fear that this is just the beginning of intense foreign competition for all U.S. defense contracts.

Wendy Kaufman, NPR News, Seattle.

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