Aviation News, Boeing, Airbus

In the end, the subsidies were “irrelevant'’ in Boeing’s selection process, said Senior Vice President John Warner. He said the aircraft manufacturer picked Chicago over Dallas and Denver after evaluating volumes of data gathered during visits to all three cities.

“As we looked at the total cost issues, it became an irrelevant point,'’ Warner told the Sun-Times before addressing the annual meeting of the Chicagoland Chamber of Commerce. “Every place had incentives. Every place has certain costs.

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“As we looked at it in the long-term scheme of things, we said this (incentives) is not a major factor,'’ said Warner, who led a company committee that recommended Chicago as the site. Boeing Chairman Philip Condit made the decision, which was announced May 10.

Of far greater importance, Warner said, was Chicago’s pro- business mind-set and the capacity that local leaders exhibited for working together.

“Clearly, it’s how people treat business. It’s something that sends signals for a very long time,'’ he said.

The Boeing decision to move from its ancestral home in Seattle promises the regional economy two benefits: about 500 new jobs and a burnished reputation. Gov. Ryan promised the company $41 million in subsidies, mostly as credits against the state income taxes Boeing workers would pay.

However, the Illinois House on Thursday passed a bill that would reduce that amount to $29 million, with Senate approval of that expected. Mayor Daley’s administration has pledged another $23 million in Boeing aid, generally comprised of offsets against property taxes.

Warner said the outcome in the legislature is of little concern to Boeing and that the company is not lobbying the General Assembly.

Boeing’s 18,400 machinists voted yesterday (29 September) to approve a contract proposal and return to work after a strike that began on 2 September.

The agreement gives the machinists nearly 17% more in pension payments and also guarantees that new staff will get retirement medical benefits, while healthcare premiums would remain the same as in the old contract. The agreement includes lump sum bonuses to the machinists of USD11,000 over three years, however it contains no general wage raise. A previously offered provision for employees to have pay incentives based on the company’s performance was not included in the final agreement, The Associated Press reported.

Mark Blondin, president of Machinists District Lodge 751, told union workers that about 80% of the votes had approved the new three-year agreement, according to ABC News.

Up until now, the rival bidder, Raytheon, has called most of the shots. Not only is it offering a weapon system based on proven technology, it has also guaranteed to deliver it for half the price of Matra BAe Dynamics’ Meteor missile. More importantly, Raytheon has the big gun himself, President Clinton, on its side explaining to Tony Blair how the special relationship could be made even more unique if only the RAF would select the US system.

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By rolling out its partnership agreement with Boeing, however, BAe has dramatically changed the battle plan. The Clinton administration can no longer back Raytheon in such gung-ho fashion, for to do so would be to undermine another US defence contractor. Moreover, Boeing brings something to the party which Matra BAe alone could not achieve - access to the vast US military market through existing fighter platforms like the F-15 and F-18.

Cleverly, Boeing has agreed not to take any stake in Meteor, nor will there be any technology transfer. To have done so would have been to leave Eurofighter exports vulnerable to veto by the US Congress - the very danger that BAe has highlighted in the event that Raytheon is selected.

BAe waxes lyrical about all the lean manufacturing skills and systems integration expertise that Boeing will bring to its bid. But the fact is that the tie-up is at root a good old-fashioned spoiler. It may not, however, prove to be the knock out blow. This procurement battle is shaping up to be the most political and most contentious since Mrs Thatcher selected the Boeing Awacs over the GEC Nimrod. A Cabinet decision has already been delayed by six months. Expect more loud bangs before the winner emerges from the smoke and noise of war.

Boeing remains a major producer,” he said. Aeroflot management last year asked the government — the company’s controlling shareholder — to approve a deal to upgrade its long- range fleet by buying 22 Boeing 787s and an equal number of Airbus A350s. Chief Executive Valery Okulov said later that no permission had been received and a deadline for the deal had been missed, though a Boeing spokeswoman said talks were continuing. Aviation analysts have valued the Boeing order at $2.5 billion.