The Airbus March on America Could the Air Force Contract Cost European Jobs?
US politicians are outraged by the Pentagon decision to have European plane builder Airbus deliver hundreds of tankers to the US Air Force. But could the deal actually result in an accelerated Airbus exodus out of Europe?
Trans-Atlantic relations don't have to be contentious when money is at stake. Last Wednesday evening, Henry Kissinger, éminence grise of American foreign policy, was campaigning for donations to rebuild the Berlin city palace -- a royal residence heavily damaged in World War II and demolished by the Communists -- in faraway Germany.
At a charity dinner at the German embassy in Washington, Kissinger said that in New York, where he lives and works, there is little understanding for the fact that he is raising money for Berlin. But if the donations start adding up, he promised a high-level visitor from the United States at the 2015 opening of the palace: John McCain will show up, he said, "as a president, then in his second term." The comment was met with polite chuckles and a toast to common interests.
But as cozy as Kissinger's event was, a cold trans-Atlantic wind was blowing across the country at the same time. Last week, the US Defense Department announced it was awarding the second-biggest contract in its history to a consortium that includes the European Airbus Group, leaving domestic aviation giant Boeing on the outside looking in. A political flap among politicians of all stripes quickly ensued, with calls for the contract to be reviewed and warnings that US national security may be at risk.
On its surface, the deal looks simple enough -- the contract is for several hundred in-flight refueling aircraft. But days of protest have made it clear that the issue at stake is more one of production locale than logistics -- and the formula of global economic power.
Meanwhile, Republican presidential candidate John McCain was surprisingly cautious in his remarks. He merely said that he was "interested to learn how the Air Force came to its contract award decision here and whether it fairly applied its own rules in arriving at that decision," adding that he wanted to examine the details of the deal before commenting on it. Nevertheless, the Republican Party base is incensed.
Many consider the contract award to be unpatriotic. A deep-seated fear of globalization has taken hold among large segments of the population. For many Americans unrestricted world trade, a sign of imperial strength not too long ago, is now seen as a threat.
Airbus planes will soon be refueling the US Air Force, as seen in this computer simulation.
It is a divergence that has been coming for some time. Blue collar laborers in the US are unhappy and have seen the number of industrial jobs in the US decline by a third in the last three decades. Most of these jobs were lost in traditional working-class states like Ohio, Michigan and Illinois. The United States, once the world's largest net exporter, has racked up an enormous balance of trade deficit. And now even the federal government, by awarding major contracts to foreign companies, has given the appearance of having lost confidence in domestic industry.
Boeing is currently considering a legal challenge to the Airbus deal. But should the court come to the conclusion that everything about the contract was perfectly legal, it could provide Americans with an unmistakable confirmation of something experts have been saying for years: that the competitiveness of the US economy has declined dramatically.
Almost everything Americans need in their lives today is imported. Shrimp comes from Thailand, television sets from Taiwan, toys from China, and now the Pentagon will be importing some of its equipment from Europe. Until now, the job of outfitting the US Armed Forces was sacrosanct -- and reserved for domestic manufacturers. The Pentagon's decision to award portions of the Air Force contract to a European company is thus both a provocation and a violation of a taboo -- precisely because it was based on the strictest of quality specifications for the products of both manufacturers.
The battle of the giants.
It was a moment of glory for the demagogues and polemicists. "Having made sure that Iraq gets new schools, roads, bridges and dams that we deny America, now we are making sure that France gets the jobs that Americans used to have," said Rep. Rahm Emanuel of Illinois.
Powerful California Congressman Duncan Hunter even speculated that the revenues from the contracts "benefited the treasuries of European governments," adding "these are the same European governments who are unwilling to support us in the global war on terror." Republican Senator Sam Brownback warned that US soldiers might have to learn French in the future to be able to operate their equipment.
Oddly, though, the mood isn't quite as jubilant as one would expect across the Atlantic Ocean in Europe. German Chancellor Angela Merkel did refer to the US Air Force deal as a "huge success." But Airbus' new customer may give the company the push it has been waiting for to implement its new strategy. For months, the airplane manufacturer has been talking about increasing its production capacity in the dollar zone. Airbus workers, already nervous as a result of the company's far-reaching cost-cutting measures implemented last year, are far from euphoric.
- Part 1: Could the Air Force Contract Cost European Jobs?
- Part 2: Will the Airbus Deal Cost European Jobs?