And so it begins…
Northrop chief warns on fight over US tanker
By Sylvia Pfeifer and Kevin Done in Farnborough
Published: July 16 2008 03:00 | Last updated: July 16 2008 03:00
Ronald Sugar, the chief executive of Northrop Grumman, the defence company that is battling with Boeing to win a contract to provide tankers to the US Air Force, has warned of "dire consequences to the transatlantic alliance" if the competition were to be influenced for protectionist reasons.
The competition between Northrop and its European partner, EADS, and Boeing for the $35bn contract to provide refuelling tankers to the USAF has attracted an unprecedented amount of political attention in recent months. Northrop and EADS originally won the contract in February, a victory some Boeing supporters warned would cost American jobs.
The two saw their victory dramatically overturned last week as the US Department of Defence decided to re-open the competition after Boeing complained about the process of the initial competition.
The decision came after a damning report by the General Accountability Office, an arm of Congress, which said it agreed with Boeing that there had been flaws in the process used to choose Northrop and EADS.
"There will be dire consequences to transatlantic alliance if this decision is reversed on political grounds because it would basically send a chilling signal in terms of our relationship with our most trusted Allies that we do have to fight together with in the future," Mr Sugar said in an interview with the Financial Times at the Farnborough International Airshow.
"All major US defence and aerospace companies fully support international trade and global access to technology. We have one strange anomaly here where for the purpose of this programme you have an argument being made for the purposes of protectionism. But even the companies involved, even our adversary here, is extraordinarily supportive of international trade - they have to be, they built half of the 787 out of the US," he added.
According to Mr Sugar, much of the political noise surrounding the competition was due to "a handful of political people who are more concerned about work in their state".
"The bizarreness of this is that [the Northrop/EADS proposal] will create 48,000 new jobs in the US and we are an American company," he added.
Speaking separately at the Farnborough show, Jim McNerney, chief executive of Boeing, insisted that protectionism had had nothing to do with the company's protest. Its protest had been based on the process. "This is a technical issue for us. I have worked hard to get our employees to focus on the issue in this way," he said.
Mr McNerney said the company's protest could risk its working relationship with the USAF, although this was its first objection to a procurement process, whereas Boeing's rivals had filed at least 28 protests in the last decade.
http://www.ft.com/cms/s/0/ea5f4e16-52cf-11dd-9ba7-000077b07658.html