Boeing Executes Airbus Model For India

We loved how Boeing went straight for the Patriotism argument when they lost the KC-X contract. The political argument was that Northrop Grumman was outsourcing jobs to Europe through Airbus.

We honestly have no opinion regarding the outsourcing subject, we simply observe that is how globalization works, and yes globalization applies to all industries including the defense industry. We also observe that if a company is going to claim work done overseas is the problem, and shoot for the patriotism political argument to keep jobs in America, they should execute that strategy consistently. Clearly Boeing recognizes Northrop Grumman's plan was smart, because this is the economic news out of India today.

US civil and defence aerospace major Boeing has decided to outsource two critical components of the F-18 Super Hornet combat aircraft to India and the order for one of them could go to the Tatas.

Lt Gen Jeffrey B. Kohler, Boeing vice president for international strategy, told the India Strategic defence magazine that as a “responsible world player in aerospace, Boeing wanted a long-term, trusted partnership with India and that the orders for these two components are being placed now irrespective of whether or not the company wins the tender for 126 Multi Role Combat Aircraft (MRCA).”

Both the components are made with sophisticated composite materials, appropriate technology for which will be transferred to India. Details are to be given later.

We observe this strategy for winning the MRCA is very similar to the strategy that Airbus had in regards to the tanker deal. The idea is Boeing will build the airframe here in the US, and the component technologies will be built in India. That is virtually the same model Northrop Grumman is using for the KC-X tanker deal.

It raises the question, how can Boeing legitimately protest the KC-X model if in fact they are doing exactly the same thing in regards to the MRCA contract for India? Seems to us their biggest complaint isn't how Airbus set up the division of labor for the KC-X contract, rather that Boeing lost the contract period. While we understand there are other factors, this specific point which is the one that resonated so clearly in the political argument now appears less legitimate, otherwise Boeing wouldn't be doing exactly the same thing with the MRCA contract in India.

Either way, one might ask the question, are the components to be built also for future US Navy F/A-18E/Fs? The question is legitimate, because the Navy is planning on buying more Super Hornets starting in FY2010, and one might wonder if Boeing is shifting existing jobs to India, rather than doing what Airbus/Northrop Grumman is doing, which is essentially a division of labor for new jobs.