Alcoa Fastening Systems is like a lot of aerospace suppliers in Los Angeles County.
The Torrance subsidiary of Alcoa Inc. is curious to know if Boeing Co. or Los Angeles’ own Northrop Grumman Corp. will receive the huge $40 billion contract to build a new generation of U.S. Air Force tankers to replace the aging KC-135.
But no matter which defense giant is chosen as prime contractor, Alcoa Fastening expects big business to come its way. The subsidiary has been specifically identified by Northrop as a supplier for its KC-30 tanker program. But the contractor also is a supplier to Boeing and that means it would likely get business if Boeing’s KC-767 is chosen as the new tanker.
“A lot of the local suppliers need to be neutral because both are their customers,” said Rick Sharpe, senior vice president of global aerospace customers and marketing for the subsidiary. “(Either tanker) is going to need the unique things we make.”
So while Northrop Grumman and Chicago-based Boeing duke it out on a national stage in the fight for the massive military tanker program, the local aerospace industry which produces everything from electrical wiring to wing components is sitting pretty, even though the final assembly of either plane would be completed out of state.
Boeing and Northrop are competing to build 179 aerial refueling tankers to replace a fleet of Boeing-made aircraft that have been in the skies for more than 50 years. The stakes are monumental: After the initial order, the military plans to buy several hundred additional planes in what would amount to well over $100 billion in new orders.
The Air Force has pegged this program as one of its top priorities, and is expected to announce the winner in late January. A production schedule has not been released.
Northrop, which has $30 billion in annual revenues, is expected to announce this week that it has identified 40 California companies that would supply parts to its KC-30 tanker program, contributing some $360 million annually to the state’s economy. In total, the program would support about 7,500 direct and indirect jobs in California.
But the state also would receive big business from Boeing, which still runs the massive C-17 cargo jet assembly line in Long Beach. Boeing says its program would have a $175 million impact in California, generating 4,000 jobs.
“There would be a significant amount of work in L.A. County,” said Bill Barksdale, Boeing’s tanker spokesman.
International team
It might seem that the larger economic and job creation figures and the fact that Northrop has its headquarters in Century City would give the local company an edge in California.
But Northrop has caught flak for partnering with European Aeronautic Defense and Space Co. to build its aircraft, a modified version of the Airbus A330 airliner.
The team plans to assemble the plane in an Alabama facility, but much of the work would be done in France, which has caused concern among some politicians and labor groups.
The California Labor Federation, the state arm of the AFL-CIO that represents more than 2 million union members, expressed concern last month over the inclusion of EADS in the Northrop bid and asked the Air Force to award the contract to Boeing.
“EADS’s violation of trade laws should be enough to disqualify this European company from receiving any U.S. government contract,” said Art Pulaski, executive secretary-treasurer of the federation, in a letter to Air Force Secretary Michael Wynne.
But Northrop is fighting back, saying the program would support 25,000 American jobs in total.
“Sixty percent of the parts for the KC-30 will be supplied by U.S. manufacturers,” said Randy Belote, Northrop’s tanker spokesman. “Any attempt to cast it as anything other than an American tanker is misleading and disingenuous.”
Boeing boasts that it plans to assemble its KC-767 tanker a modified version of its 767 commercial aircraft in plants in Washington and Kansas with no major production done outside the United States. As a result, Boeing says its program would support 44,000 American jobs.
But both companies have singled out L.A. as an important manufacturing center for their respective programs.
Indeed, while L.A.’s aerospace manufacturing industry has declined from its heyday more than two decades ago, it still boasts a vast network of suppliers who specialize in everything from wing tips to electrical wiring to fuselage skins. Sharpe of Alcoa estimated up to 90 percent of the country’s aerospace fastener makers are in the county.
As the industry has transitioned from one characterized largely by final aircraft assembly to one of subassembly and technological development, the sector has lost jobs, but it has stabilized in recent years. The local aerospace industry supported over 200,000 jobs in 1990, a number that fell to a record low of 75,000 in 2003, about where it is now.
Local presence
But as the industry has shrunk, it has given aerospace suppliers a larger piece of the puzzle as each new program comes forward.
“There are fewer players in aerospace today than there were 20 years ago, so that makes each program more important for you to be a part of and it makes the programs bigger,” Sharpe said.
Still, Northrop and Boeing have significant local presences.
With more than 20,000 workers in Los Angeles, Northrop is the county’s second largest employer, while Boeing is the third largest, with 16,510 local employees.
Nearly 6,000 of Boeing’s local employees work in the company’s Long Beach assembly plant for the C-17 cargo plane.
Boeing said in June it expects the government to fund the purchase of 10 additional C-17 planes next year, which could keep the plant open until at least 2009. But the program is widely thought to be in danger of being shut down soon.
The tanker program could help replace many of the expected C-17 job losses locally, but Jack Kyser, chief economist of the Los Angeles County Economic Development Corp., said it remains to be seen exactly how many jobs are local.
“If they’re scattered around California, then that wouldn’t go very far for us in Los Angeles County,” he said.
