September 15, 2005
Pentagon delay is threat to Boeing's C-17 transport
Builder of C-17, widely used by military, says it would have to end production without firmer orders.
By Otto Kreisher
Copley News Service
WASHINGTON -- Boeing officials warned Tuesday that the company would have to begin shutting down production of the C-17 transports in Long Beach if the Air Force does not provide by January a firm indication that it will buy more than the 180 on order.
But Air Force officials said that although they know they need more C-17s, they cannot commit to buying more of the long-range aircraft until the Pentagon reviews studies not expected to be completed before February or March.
A delay in a decision on the future of the C-17 could affect many of the 6,500 Boeing employees working on the four-engine transport in Long Beach and thousands of other workers at about 500 other Southern California companies and 200 firms in 41 other states that supply parts for it.
"We're not making a threat to shut down in January," said Ron Marcotte, Boeing vice president for airlift and tanker aircraft. But without a Pentagon commitment to continue buying C-17s, "we would have to make some very hard business decisions."
David Bowman, C-17 program manager, noted Boeing must order some components from its suppliers more than two years ahead of an aircraft's final production.
"We are already in that time frame" for the last C-17 covered by the current contract, he said.
Without a commitment from the military to buy more than 180, "we would start a line shutdown by telling our long-lead suppliers. They would make their own decisions," Bowman told reporters at a briefing.
The C-17, called Globemaster III, has become the backbone of the military's long-range air transportation effort, carrying the bulk of material and personnel into Afghanistan and Iraq, and playing a major role in the U.S. relief effort for the destructive tsunami in Southeast Asia and now in Hurricane Katrina. It can carry heavy loads for several thousand miles and land on relatively short and rough landing fields.
U.S. military commanders in Europe, the Middle East and the Pacific have called it indispensable and asked for more.
Gen. John Handy, the retiring commander of the U.S. Transportation Command, has told Congress that an earlier mobility requirement study found a need for at least 222 C-17s, and that was before Sept. 11, 2001, triggered the global war on terrorism.
But the Air Force has authority only to buy 180, which are being produced at the rate of 15 a year. Boeing has delivered 139 to the Air Force, Bowman said, and number 180 would be delivered early in 2008.
Without a strong indication that future orders were coming, production could start shutting down early next year.
Restarting the process would add millions of dollars to the price of the C-17, which has dropped from more than $200 million each to $150 million, Bowman said.
"If there is overwhelming need for more C-17s, then waiting to make a decision is not good" for the supplier base, for the Air Force or for the taxpayers, he said.
Gen. T. Michael Mosley, the new Air Force chief of staff, told reporters Monday that the C-17 "is playing out to be one of the most valuable airlift programs" and that the military could not have conducted its missions in Afghanistan and Iraq without it.
But he said he could not commit to buying more C-17s until Defense Secretary Donald Rumsfeld reviews a Mobility Capabilities Study and the associated findings of the ongoing Quadrennial Defense Review, which are not due to be completed until next spring.
The need for more C-17s could be affected by decisions on whether to spend billions of dollars to extend the life and to improve the huge C-5 Galaxies and on whether the Air Force will buy a new refueling aircraft that also could carry cargo, Mosley said.
The House and Senate armed services committees have included authorization to buy 42 additional C-17s in the 2006 defense bill.
"Clearly, that would allow us to accept more risk," Marcotte said.