No contract binds Boeing to local jobs

11/23/2011 5:00 AM

08/08/2014 10:06 AM

Boeing seems “very serious” about its study on whether to shut down its Wichita plant, Sen. Jerry Moran said Tuesday.

“I think Boeing considers this a real option,” Moran said.

His comments followed Boeing’s announcement Monday that it was studying the future of its Wichita site, including whether to close the facility.

Elected officials from Kansas and Wichita, and union leaders reacted Tuesday by requesting meetings with Boeing officials to remind them of the promises they made to put jobs in Kansas should the company win an Air Force contract for aerial refueling tankers.

Gov. Sam Brownback said he and Kansas’ congressional delegation will “fight and fight hard” to keep Boeing in Wichita.

What the state can do, however, is unclear.

There’s no contractual agreement between Boeing and the state of Kansas that binds the company to the jobs, Brownback said.

Boeing’s competitor for the tanker contract, Airbus, aligned itself with the state of Alabama and other states, saying it would put work in those states if it won. Boeing, meanwhile, aligned itself with Kansas and the state of Washington and promised jobs there, Brownback said. Boeing was awarded the contract, worth about $35 billion, earlier this year.

“It’s ... the nature of how those (military) contracts are awarded and won,” Brownback said.

Brownback and other elected officials have requested a meeting with Boeing CEO Jim McNerney.

“We’re going to remind them of their obligations that they have made in seeing these tankers are built in Kansas and in Wichita,” said Rep. Mike Pompeo, R-Wichita.

Boeing repeatedly said during the long fight over the contract that a win would mean 7,500 jobs for Kansas, including several hundred jobs at Boeing Wichita. The Congressional delegation pushed hard for Boeing on the tanker program, Brownback said. In fact, he said he doubts Boeing would have gotten the bid without that help.

The tanker competition spanned a decade, Pompeo said, and Boeing conducted many studies during that time. He said the company knew the costs at its Wichita facility well before the contract was awarded, he said.

“Why now?” Pompeo asked.

Boeing said it had no comment on the study Tuesday.

The company said in a statement Monday that its Wichita facility – which employs about 2,100 people – faces a number of issues, including defense budget cuts, product and service contracts that have matured and expired, and limited prospects for future work. Its study is to be completed by the end of the year or early 2012, it said.

The Wichita site currently performs maintenance and modification work on military and government aircraft, such as B-52 modifications and maintaining Air Force One. The plan was to make the site a finishing center for the new tankers.

Boeing’s reasons

Moran, who was in Wichita on Tuesday, said he learned of Boeing’s study last week.

He said the news doesn’t appear to be a tactic by Boeing to receive state incentives or for use as a negotiating tool with its largest union. Contract negotiations with the Machinists open next year.

His impression from Boeing is that it will be more economical to finish the tanker as it goes down the production line in Everett, Wash., than to fly it to Wichita and finish it here, Moran said.

He also said there is no demand for the tanker outside the United States.

“So they have no other potential purchasers for the tanker,” Moran said.

And cuts to defense spending will hurt. On top of that, work to refurbish Air Force One on an ongoing basis has diminished.

“So we end up with a facility in Wichita that we don’t have enough work to fill,” he said.

The contract is initially going to cost Boeing in overruns on the tanker’s development, said aviation analyst Scott Hamilton. So Boeing has to ask whether it makes more sense to consolidate work in San Antonio – where it performs Boeing 787 finishing work – or bring it to Washington state and perform the tanker finishing work there, Hamilton said.

Boeing has already placed work in San Antonio that’s traditionally been done in Wichita, a union official said. And it has moved work from California to a site in Oklahoma City.

“We ... need to look at what we can do as a community and state to make sure it’s a profitable venture for them here,” Moran said.

It’s unclear whether incentives to Boeing are a possibility or even a necessity, Moran said.

“Those incentives were not required when Boeing communicated to us ... that they would finish the tanker in Wichita,” he said.

The state has not put together an incentive package to offer Boeing, Brownback said. First, officials want to meet with Boeing to understand the situation and the company’s needs.

“I want to have a chance for us to be competitive,” Brownback said. “I want a shot at this.”

City, union want meeting

City and union officials also want to speak with Boeing.

“It think it’s imperative that we talk to Boeing face to face at the earliest convenience to better understand what their concerns are,” said Janet Miller, a Wichita City Council member. “What we don’t want to happen is a decision being made in a vacuum and hearing that the decision is made and it’s final.”

Boeing should not change the site of its tanker finishing center, said Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace. SPEEA represents 550 engineers at the facility. It will meet with the company Dec. 1 to discuss the development, the union said.

“At this time of Congressional scrutiny of defense budgets, it would be a mistake to materially alter the tanker program they sold to the customer,” Goforth said in a statement.

Wichita engineers are world experts in building refueling tankers, he said.

“They can get the job done and provide the best value to the Air Force and the taxpayer,” Goforth said.

Boeing’s largest union, the Machinists union, also wants to meet with company officials.

The union lobbied in Washington, D.C., for Boeing during the tanker negotiations. It held an e-mail and letter-writing campaign with members at Boeing in Wichita and Seattle and at Spirit AeroSystems, said Steve Rooney, directing business representative with the Machinists union District 70 in Wichita. The union represents 400 hourly workers at Boeing Wichita.

“Boeing should show the loyalty to keep the work here,” Rooney said.

Contributing: Brent Wistrom, Dan Voorhis and Deb Gruver of The Eagle

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