THE DECISION BY the U.S. Air Force to purchase air refueling tankers from Europe-based Airbus instead of U.S.-based Boeing will cost the United States at least 14,000 jobs, according to an analysis conducted by the Economic Policy Institute (EPI).
In a report issued June 5, EPI economist Robert Scott says that the Boeing proposal would likely have created twice as many jobs in the United States as Northrop Grumman/Airbus will create under the $35 billion contract. That difference amounts to 14,000 positions.
In addition, the contract will give the winning bidder sizable advantages in future competitions. The Air Force expects to replace its entire fleet of aging tankers at an ultimate cost of $100 billion.
The initial contract award in February was controversial because European-based Airbus was the subject of an ongoing trade case before the World Trade Organization, brought by the U.S. government, for receiving illegal subsidies.
Boeing protested the award, and it is currently under review by the Government Accountability Office, which could force a new round of competition.
Air Force officials have stated that employment effects were not considered in awarding the contract. As Scott noted, “There are few, if any, other major countries that do not take into account the location of production and employment in military procurement decisions.”
Based on publicly-available information, Scott found that Boeing would create 28,707 jobs per year at full production, at least twice as many U.S. jobs as NG/Airbus, which would support an estimated 14,353 jobs if it were to win the contract.
Total employment impact estimates put forward by both bidders were higher than the figures arrived at by EPI, although the difference was far greater in the case of NG/Airbus. Scott said the claims by NG/Airbus were at least 45 percent higher than what could be realistically expected.
A previous contract for light duty helicopters awarded to Airbus parent company EADS failed to create even half of the U.S. jobs claimed in the proposal.
SOURCE: The Economic Policy Institute (EPI) is an independent, nonprofit, nonpartisan research institute – or “think tank” – that researches the impact of economic trends and policies on working people in the United States and around the world.