Local aerospace contractors await patiently for a piece of the action as a battle heats up between Boeing Co. and Northrop Grumman Corp. to build plane refueling tankers for the Pentagon.
At $35 billion, the contract is a major one that’s back up for grabs after the Government Accountability Office, a congressional audit arm, recommended last month that it be rebid.
Whoever ends up with the deal, local subcontractors are set to see work.
Los Angeles-based Northrop, which doesn’t have operations in the county, has listed eight local subcontractors that it would likely work with if it ends up keeping the contract, which it initially won in February.
A win for Boeing wouldn’t directly affect its Orange County operations employing 9,700 workers here. But it too works with many subcontractors here that stand to benefit.
Boeing hasn’t said which suppliers it would contract with here. Nationwide, Boeing said the deal would generate business for thousands of companies.
Most of the work stands to be done at Boeing’s Everett, Wash., and Wichita, Kan., facilities, according to the company.
“It’s a long-term deal for whoever wins it,” said Amos Deacon III, vice president of sales and marketing for Orange-based Phoenix International Systems, a potential contractor on the Northrop side of the fight.
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Refueling by Boeing tanker: company hasn’t outlined potential subcontractors but has big ties here |
As a small supplier of data storage for planes, Phoenix’s workforce could double to about 25 to handle work on the refueling tanker, Deacon said. The work could last for as long as a decade, he said.
The contract to build the military’s midair refueling tankers initially was awarded to Northrop and its partner, European Aeronautic Defence & Space Co., or EADS.
The announcement shocked some who assumed Boeing would keep its half-century lock on the business.
“We thought Boeing was a shoe-in,” Deacon said. “It was a pleasant surprise.”
Now the government plans to rebid the contract, after the GAO called the Air Force’s accounting methods flawed. Northrop and Boeing are scrambling to meet an end of the year deadline for new proposals.
A Boeing win would be a lift for the company, which recently announced layoffs for its satellite program in Seal Beach and El Segundo after losing a government contract earlier this year.
“All of the company would benefit in terms of growth and productivity and that would flow down to Orange County,” said Dan Beck, a spokesman for Boeing’s Integrated Defense Systems, which has operations in Seal Beach, Huntington Beach, Anaheim and Irvine.
Many of the county’s subcontractors that make parts for Boeing and Northrop will benefit in either outcome.
Cleveland-based Parker Hannifin Corp.’s air and fuel division in Irvine, the second biggest aerospace company in the county after Boeing with 1,800 workers, makes parts for all three companies involved in the contract bidding.
The company declined to comment.
Potential Subcontractors
Northrop has listed Parker as a subcontractor for its proposed KC-45 refueling tanker.
Independent Forge Co. in Orange, which makes metal forgings, is another company that contracts for both Boeing and Northrop. It could add to its 30 employees with work on a refueling tanker.
Other potential local subcontractors listed by Northrop: Esterline Kirkhill Elastomers in Brea, part of Bellevue, Wash.-based Esterline Technologies Corp.; ACRA Aerospace Inc. in Anaheim; Paoli, Pa.-based Ametek Inc.’s operation in Costa Mesa; Cleveland-based Eaton Corp.’s Costa Mesa operation; and RBC Transport Dynamics Corp. in Santa Ana.
Who gets work from the contract is a point of contention. Boeing and its supporters claim a Northrop win would mean fewer U.S. jobs, with many going to the Netherlands’ EADS.
Northrop has said the contract would mean 48,000 U.S. jobs as it taps into 230 companies in 49 states. Assembly mostly would take place in Alabama, according to Northrop.
California could see 7,500 jobs, the company said.
A win for Northrop and EADS could send a positive signal to U.S. allies, as was the case with the Joint Strike Fighter jet, said Hector Cuellar, president of Costa Mesa-based RSM Equico Inc., an investment bank that works with aerospace companies.
The Joint Strike Fighter, a bomber and fighter jet, is being made by Northrop, Lockheed Martin Corp. of Bethesda, Md. and Britain’s BAE Systems PLC.
But a Boeing win probably would lead to more U.S. jobs, according to Cuellar.
Boeing has shaken up its management for the tanker program and moved the program’s headquarters to the Seattle area as it goes for a second shot at the work.
Dave Bowman, who was formerly in charge of Boeing’s C-17 cargo plane program in Long Beach, now heads up the program.
Boeing also altered its chain of command. Bowman reports directly to Boeing’s Integrated Defense Systems boss and former OC executive Jim Albaugh.
