Long Beach Seeks to Help With C-17 Costs as Lobbying Intensifies
The FY 2006 House defense budget bill included $3.5 billion for C-17 Globemaster III strategic transports, but DID has also covered reports that the Pentagon will recommend that the aircraft cease production in 2008 at 180 planes, despite heavy demands on the aircraft that are shortening the service life of the existing fleet.
The Washington Post’s December 28, 2005 article, “Campaigning for the C-17,” describes the efforts underway in Long Beach, CA (near Los Angeles) to reduce Boeing’s costs and hopefully encourage further orders.
Efforts and assistance span a variety of industry suppliers and players. Southern California Edison has said Boeing may be eligible for a 5-year, 15% discount on its energy bill, and discussions re: reducing the company’s water bill and airport fees are also underway with appropriate providers. Tax breaks and extension of the existing enterprise zone designation are under consideration. The city is even considering assuming responsibility for Boeing’s internal fire department. In total, 19 cost-saving proposals are currently being considered.
The best line in the article undoubtedly belongs to Brookings Institute Senior Fellow Michael E. O’Hanlon: “You usually only see these types of heroics involved when a baseball stadium is at stake.”
Perhaps it’s because there’s so much at stake for Long Beach.
The jobs at the C-17 plant reportedly pump $1.4 billion a year into the local economy of a city that has lost 42% of its manufacturing base in the past 15 years. Boeing Co. is the city’s largest employer, with 5,000 workers who earn an average of $65,000. During the past five years, however, Boeing’s southern California workforce for military and civilian projects has fallen by 11,444 (to 31,356).
As the Washington Post notes, even saving 1% of the cost per plane would represent a significant achievement ($1.6-2.0 million) – but that level of savings may not make a real dent.
Meanwhile, the C-17 has received a potential lift from the US Senate, and lobbying efforts are underway from California’s congressional delegation, the United Aerospace Workers union local and its national office, and (to some extent) from Boeing. The company has reportedly focused on supporting the efforts of Long Beach officials thus far, promising to pass on all cost cuts and providing lobbying information. Boeing is also allowing union officials to outline their own lobbying strategy to employees during work hours.
Some analysts believe that Boeing’s restrained lobbying effort is connected to a belief that further C-17 production may jeopardize the USAF’s planned buy of military tankers, where Boeing’s KC-767 or KC-777 will compete against EADS Airbus/ Northrop-Grumman KC-30 variant of the A330 MRTT.
The paper notes that the C-17 has been saved from extinction before. In 1990, Defense Secretary Dick Cheney reduced the planned buy from 210 to 120 as part of the expected “peace dividend.” In 1993, the Pentagon even capped the program temporarily at 40 planes as part of ongoing negotiations re: price, performance, and the project. Improvements were made, and the C-17’s capabilities and performance (plus the limitations of the C-130) eventually made it a mainstay of US global mobility, and the number of planes on order eventually grew back to 180.
The full Washington Post article include more coverage of efforts underway by the various players, as well as some context that explains the context in which the C-17 is competing for funds. For additional perspective, DID has a Congressional Budget Office study worth examining, not to mention coverage of the House FY 2006 defense appropriations bill.