India's $4.1 billion aircraft order with Boeing is boost for Long Beach factory

What would be nation's largest defense deal with a U.S. contractor, for the purchase of 10 C-17 military cargo jets, will extend work at Boeing's Long Beach plant through 2014.

 A C-17 cargo jet is produced at Boeing's Long Beach factory. India’s government has approved the purchase of 10 C-17 military planes for $4.1 billion. The deal would give workers at the Long Beach plant one year of new work. In January, Boeing said it was cutting 900 of the plant's 3,700 jobs.(Bob Chamberlin, Los Angeles Times / June 7, 2011)

By W.J. Hennigan, Los Angeles Times

June 6, 2011, 10:01 p.m.

Boeing Co.'s beleaguered jet-making complex in Long Beach received a major boost with a year's worth of new work after India's government approved the purchase of 10 C-17 military cargo aircraft for $4.1 billion.

The deal should keep things humming at the sprawling plant through 2014, Boeing spokesman Jerry Drelling said.

The company received formal approval Monday from Prime Minister Manmohan Singh's Cabinet committee on security. The deal would be India's largest defense contract with a U.S. company.

All that remains to make it official is for the two governments to sign a letter of acceptance, which Boeing said it hopes will be completed by the end of the week.

"We're still waiting on the signatures, but the deal is 99.9% done," said Stan Klemchuk, president of the United Aerospace Workers Local 148, which represents 1,600 workers at the Boeing factory. "Folks are buzzing in Long Beach. It gives us one more year of work and couldn't come at a better time."

In January, Boeing said it was cutting 900 of the 3,700 jobs at the plant. Last year, with slowing orders from the Pentagon, the Chicago company announced that it was cutting production rates by one-third to 10 aircraft a year from 15 to draw out the assembly line's life by several months.

The slower production rates would also buy time for the company to sell more planes to foreign buyers, Boeing had said. The production line had been slated for closure at the end of next year.

"This deal keeps the line open for more sales to come to fruition," Klemchuk said. "It gets us through a crucial time."

The C-17 Globemaster III, a massive, four-engine jet that hauls 60-ton tanks, troops and medical gear across continents and lands on short runways, has been in production since the early 1990s. The Boeing plant, next to Long Beach Airport, is the last major conventional aircraft factory in Southern California.

The plane has been a workhorse in hauling supplies to Iraq and Afghanistan and on humanitarian missions in Japan and elsewhere.

Boeing has sold the aircraft to foreign governments in the past, but mostly to close allies and in small batches. Britain, Australia, Canada and Qatar have C-17s in their fleets. Workers at the Long Beach plant will fill an order by United Arab Emirates for six planes by 2012.

But because these orders are small — about five planes at a time — they have not been enough to sustain the production line, Boeing said. The company has relied on the Air Force to extend its orders every year since 2006.

Congress has continually come to the program's rescue because it supports roughly 25,000 supplier jobs in 44 states. Boeing said that in California, about 14,000 jobs — many at small mom-and-pop machine shops — depend on the program.

Last year, lawmakers provided funding for 10 new planes. But this year analysts have said congressional concerns about rising federal deficits may make continued C-17 funding doubtful.

The India deal could open a new business market and signifies a budding trade relationship with the U.S. Indian officials have said the country expects to buy six more C-17s in the coming years.

Traditionally, India has purchased more arms from Russia. When the Indian Air Force receives the new C-17s between 2013 and 2015, they will replace the country's fleet of Soviet Union-era Ilyushin Il-76 planes.

Seeing the potential for greater trade with India, President Obama lobbied the Indian government to purchase U.S.-made military hardware during his visit in November, and officials gave initial approval at the time.

Once the C-17s have been delivered, "India will have the second largest C-17 fleet in the world, behind that of the United States — a highly visible manifestation of the U.S.-India defense partnership," aState Department spokesman said in a statement Monday. "This sale will double the value of U.S.-India defense trade and provide the Indian Air Force a strategic airlift and humanitarian response capability unique in the region."

Tom Captain, aerospace analyst with Deloitte, said India was embarking on a weapons spending spree of $80 billion over the next five years.

"It's unprecedented for a foreign country to spend that much money in that short of a time period," he said. "The country is now leaning more toward the Western world for its arms."

In April, India announced its short list of bidders for about $10 billion in fighter jets. It rejected bids by Boeing and Bethesda, Md.-based Lockheed Martin Corp. Instead, the country said it was considering two French companies — European Aeronautic Defense & Space Co., the parent of Airbus, and Dassault Aviation.

Captain said India was looking to shore up its homeland security and project itself as a major power in a region that includes Pakistan, Afghanistan and China.

william.hennigan@latimes.com

http://www.latimes.com/business/la-fi-cargo-jets-20110607,0,6717873.story