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Globalization Bites Boeing

Globalization Bites Boeing - "32 GLOBALIZATION BITES...

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Unformatted text preview: "32 GLOBALIZATION BITES BOEING The flap over the loss of a his contract to EADS ignores the planemaker’s dependence on foreign suppliers By Keith Epstein and Judith Crown When is globalization a dirty word? When a consortium led by Northrop Grumman and the European Aeronau— tic Ilefence & Space IEADS), the parent J company of Airbus. bests hometown hero Boeing in the competition for a ‘ $35 billion U. 5. Air Force contract for airborne refueling planes. Ever since the decision was announced on Feb. 29, Americans from Seattle to Capitol Japan‘s Toray for an international Hill have railed about lost jobs and the ' 1MB Wk“ commercial market security risks in outsourcing produc - mm?! and a tanker aircraft tion of military gear to foreign comps - developed solely as a nies. Boeing filed a formal protest with the Government Accountability Office Northrop- -EADS tanker will be assem- on Mar. 11—its first such filing in more bled at a facility in Mobile Ala, but ‘W military asset " The than 30 years—citing "irregularities" I 40% of its components will be sourced in the bidding process. ‘ from overseas. The rival Boeing aircraft Yet Boeing itself serves as acase would depend on non-11.8. suppliers i study in how globalization can cut for 15% of its parts. both ways. By its own admission, the $66 billion company could never stay competitive if it were not for the Executives at Boeing have been I careful not to say that the Pentagon should have favored their “American" benefits of global alli- plane. Yet the company ances. Around 60% of wasted no time in filing the components of all a formal complaint. The Boeing commercial models GAO must carry out an are supplied by foreign 0 impartial review and make contractors, and that u a recommendation within rises to 70% on its new 787 65 to 100 days. 0.3. politi- Dreamliner. "It 's a little ' . d cians, on the other hand. hard [for critics] to com - components have been open about their plain about foreign con- lg Boom Brat pro-American bias. Presi- tent on the future tanker am“ I dentia] candidates Barack when Boeing’s Dreamliner W SUFFIIBIS Obama and Hillary Clinton was designed for manu- M1! . have played up the tanker facture by a global supply ' issue on the campaign trail chain,” observes defense to reach out to voters who analyst Loren B. Thomp- are anxious about global- son of Lexington Institute, a public policy think tank. Boeing spokesman Daniel C. Beck counters that there’s “no comparison between an aircraft developed solely BIBINESSWEEK MARCH 241,ng ization. “It’s an irresistible issue dur- . ing an election year,” says Richard L. ! Aboulafia, vice- president at aerospace ' consultant Teal Group. ' The political rhetoric ignores the NEWS realities of the modern aerospace industry. Simply put, it's hard to make a plane these days without a global supply network. Companies must avail themselves of state~of-the- art technologies wherever they caufind them. That‘s one reason Boeing tapped Japan '5 Toray Industries, an expert in sturdy but light carbon -fiber compos - lies, to supply materials for the Dream- liner’s fuselage. Also, the company needed so much space to build the new plane—3 million square feet — it found it more efficient to spread the work around the world. Parts are produced at the same time. rather than in sequence, saving time and money. Outsourcing work to other countries doe sn't hurt either when planemakers are trying to clinch orders from foreign carriers. But global supply networks can also become a liability. Deliveries of the Dreamliner are already about 10 months " behind schedule and could be delayed further. The latest 3113qu involve as - sembly of the fuselage at a South Caro- lina plant run by an alliance of Italy’s Alenia Aeronautics and Vought Aircraft Industries of Texas. "What was sup- : posed to be their salvation now works against them.” says Coweuar Co. senior analyst Cal von Rumohr. The number of Drearnliners he now expects to be ready inzooo? Fifty-five instead of the 109 .' promised by Boeing. lBWI ran til DUEL-1E NERJAFWGEITY mamas: ...
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