Boeing's $35 Billion Aerial Tanker Award Means Big Investments in Numerous States

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Researched by Industrial Info Resources (Sugar Land, Texas)--After a decade of embarrassing delays, the U.S. Air Force has made its final award of its proposed replacement program for its aging airborne refueling tanker fleet. Boeing Company (NYSE:BA) (Chicago, Illinois) was awarded the $35 billion program over European Aeronautic Defense and Space Company (France), its chief competitor in the highly competitive aircraft manufacturing sector. This award could not come at a better time, not only for Boeing but for the country as a whole. This program will create significant investment across the U.S., as Boeing will work with its network of suppliers to meet the demands of the contract.

The initial $35 billion award will be broken down into phases. The initial phase of the award will be in the form of $3.5 billion for the development, engineering and manufacturing of the first four aircraft. The first 18 aircraft are scheduled to be delivered by 2017, with additional aircraft to follow. The program could end up being worth $100 billion if the Air Force decided to exercise its option to increase the total number of aircraft to be delivered. The initial $35 billion is for a total of 179 aircraft, which will be based on the Boeing 767 platform.

Boeing utilizes a network of hundreds of companies across the U.S. to provide parts for its aircraft. This massive award could mean as many as 50,000 jobs over the life of the contract and possibly hundreds of millions of dollars in spending, as Boeing and its suppliers invest in their own facilities to meet the demands of the contract. Boeing is expected to invest in the states of Washington and Kansas, where the aircraft manufacturer has the majority of its manufacturing base.

However, Boeing's supplier network is based in numerous states, which should mean investment in several areas of the country. Illinois may play a major role in this program, as many of Boeing's key suppliers are in the state, placing themselves close to Boeing's corporate offices. California probably will see some significant investment within its borders, since Boeing does much of its development activities at its offices in the state. Initially, developmental and engineering jobs probably will be added as Boeing ramps up its internal divisions to handle the program, but as development proceeds and awards are made to suppliers, manufacturing jobs will have to be created as well.

Boeing will be in the market for new developmental, support and engineering workers, and its suppliers will be seeking similar personnel as they have to design, engineer and finally produce any parts they are awarded. Universities across the country can expect an influx of companies searching for qualified students in the engineering, design, procurement, program management and other disciplines in the near term, as they ramp up staffing the meet this need.

The benefits of this single award will be felt for years to come. The development and delivery time of a contract of this size will take decades to complete, and the hiring and investment will be a continual thing as suppliers do not rely on a single contract for their business. Hopefully, this award will lead to similar contracts down the road which will allow for continual growth in this vital manufacturing sector, especially after Boeing perfects the tanker platform, as the aircraft maker can sell similar designs to others interested in replacing their aerial refueling fleets in the future.

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