Wichita Government officials said they are alarmed and none too pleased that Boeing Co., which has promised to bring thousands of jobs to Kansas, is studying the future of its Wichita defense plant.
The aircraft manufacturer had called on city and state officials during its decade-long fight to win Pentagon approval to build 179 refueling tankers worth at least $35 billion. The project has long been touted as being able to create some 7,500 direct and indirect jobs in Kansas, with an overall economic impact of $388 million.
But now some officials said Boeing appears to be considering going back on its word. The Chicago-based company acknowledged Monday that options being reviewed as part of the study include “the potential closure of the Wichita site.”
“I am incredibly, incredibly concerned that Boeing is now backing off the commitment that they made, and it’s my expectation that they will continue to honor that commitment and they need to tell us that,” said Republican U.S. Rep. Mike Pompeo, whose congressional district includes Wichita and who previously ran a business that supplied aircraft parts.
The Wichita facility, which specializes in modifying commercial aircraft for military or government operations, has 2,100 employees. Boeing spun off its commercial aircraft operation there several years ago.
Boeing has slowly been moving work from Wichita since the late 1990s, after buying McDonnell Douglas, said Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace. The Seattle-based union represents more than 20,000 Boeing engineers and technical workers, including about 550 engineers at Boeing’s Wichita facility.
Goforth said Wichita had been looking like “a site in trouble.” Still, he said the facility is at the center of the company’s expertise in aerial refueling. The hope had been that the tanker contract would reverse the job losses and solidify the company’s role in the city.
But the tanker work wouldn’t come immediately.
On Tuesday, Boeing spokesman Jarrod S. Bartlett said engineers in Wichita work on the tanker, but the first ones were not expected to arrive in Wichita until around 2014. In the meantime, other work was drying up and there was little prospect for future work, the company said in Monday’s statement.
Kansas Gov. Sam Brownback said he and the state’s congressional delegation would be seeking meetings as soon as possible with the heads of Boeing Defense to understand why the company would consider leaving. Brownback is a former U.S senator and worked hard while in Washington to fight for Boeing to win the tanker contract. He said the company made statements in April 2010 that a significant amount of the work on the new tanker would be completed in Kansas.
“We’re going to hold the Boeing Co. to those words,” Brownback said. “This is a serious matter.”
Brownback declined to speculate on whether Boeing’s announcement that it was considering closing the Wichita plant was linked to the failure of the congressional bipartisan committee to reach an agreement on cuts in federal spending. The U.S. Department of Defense stands to see its budgets slashed by hundreds of billions of dollars over the next decade, raising questions about appropriations for large military contracts like the tanker project.
The governor said Kansas had a history of a “fabulous” workforce that has served Boeing and the aviation industry for decades. He said the state would do what it could to compete to keep Boeing in Wichita once the company completes its review.
“I want a fair shot of competing for those jobs,” he said.
Wichita City Councilman Jeff Longwell said Boeing made promises when it was seeking help lobbying for the tanker contract.
“We want to have conversations, if you will, to remind them that promises made should be promises kept,” he said. “And we want to work with them on making sure those jobs do come to fruition here.”
The whole defense industry was retrenching even before this week’s budget stalemate in Congress threatened steep spending cuts. The Pentagon has already begun driving a harder bargain on defense spending. Military spending in Europe is under pressure, too, although military spending in other parts of the world remains strong.
Northrop Grumman Corp. said last month that it plans to cut 800 jobs from a unit in Linthicum, Md., which makes electronics for jet fighters and missile defense systems. And Lockheed Martin Corp. is cutting 1,500 positions by the end of the year, including 540 layoffs announced in September at plane-making operations in Texas, Georgia and California.
“Other companies have already started taking action,” said Craig Fraser, an analyst and the head of the Aerospace, Defense and Transports team at Fitch Ratings.
And that’s even before the current budget mess in Washington. Fitch estimates that the automatic spending cuts called for under current federal law would slice as much as 13 percent from defense industry revenue starting next fall. Fraser said defense spending is going to be very uncertain for the next year.
“The planned automatic cuts are across the board, they’re indiscriminate, and the timing could be very harmful for the industry,” he said.