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Boeing's KC-X Tanker: Not That Big a Deal

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"Boeing NewGen Tanker Win Would Bring 580 Jobs, $30 Million to New York."

So boasted Boeing (NYSE: BA  ) in a press release yesterday, part of the firm's ongoing effort to boost political support for its bid to build the Air Force's next flying fill-up station.

In recent weeks, we've seen a plethora of similar announcements from defense contractors spooked by the spectre of Pentagon budget cuts. In duels reminiscent of election-year mudslinging campaigns, United Technologies (NYSE: UTX  ) blasted the funding of a new engine for Lockheed Martin's (NYSE: LMT  ) F-35 fighter jet. General Electric (NYSE: GE  ) , maker of said engine, responded in kind. But nowhere has the battle been hotter than in Boeing's dogfight with EADS over the fate of KC-X.

What's in it for me?
According to Boeing's latest PR puff piece, if New York's legislators help pressure the Pentagon to award it the KC-X contract, New York will make out like a bandit. Boeing said the Empire State could score "580 total jobs" and a $30 million "annual economic impact" as the aerospace giant parcels out subcontracts to companies with a New York presence, including BE Aerospace (Nasdaq: BEAV  ) , Ducommon (NYSE: DCO  ) , and Parker Hannifin (NYSE: PH  ) .

Sweet deal, right? But just for fun, let's take Boeing's press release and shuffle the numbers around a bit, to see what Boeing's really saying here.

Out of the "nearly 732 suppliers/vendors" with which Boeing works in New York, only 13 are named as producing "critical" KC-X components. While KC-X could bring 580 jobs to New York, Boeing employs just 85 people there today. And if KC-X could bring $30 million in new revenue, Boeing already "delivers" an $871 million "annual economic impact" to the state. In other words:

  • Fewer than 2% of New York-based businesses would benefit from KC-X.
  • Out of 157,100 jobs spread across the globe, Boeing has hired just 85 New Yorkers -- 0.05% of its workforce.
  • KC-X would increase New York's impact from Boeing by less than 3.5%.

Much ado about nothing
I doubt we'll see Boeing's PR department advertising the above bullet points any time soon. But they do help put things in perspective for New Yorkers. Simply put, KC-X just isn't that big a deal to the Empire State.

Boeing, quit wasting taxpayer dollars building "economic impact" mountains out of PR molehills. Focus on building a good plane and controlling costs. Then, when you beat EADS and win the KC-X, we'll be cheering along with you.

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Enter your email address below to find out what made Jobs so enraged!

Fool contributor Rich Smith does not own shares of any company named above. Check out his latest stock recommendations on Motley Fool CAPS. The Motley Fool has a disclosure policy.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 20, 2010, at 10:51 PM, FBEditorial wrote:

    Perhaps when yous start dissecting the PR garbage pushed by EADS on KC-X and other issues, many here will start to take you seriously as well.

  • Report this Comment On August 22, 2010, at 4:56 PM, jasonhad wrote:

    Would someone explain just how Boeing is "wasting taxpayer dollars building 'economic impact' mountains out of PR molehills? They are spending shareholders' dollars trying to protect their business from an illegally-subsidized competitor, and as a taxpayer I laud their pulling out all the plugs to get the contract. I want taxpayer money to go to American workers and businesses, not French and German workers.

  • Report this Comment On August 23, 2010, at 1:19 PM, FlyingKnignt wrote:

    Welcome to the Motley Fool, the Fox News of the financial world. First, the Boeing PR notice is one of only several detailing the economic benefits to states that will be contributing to the Boeing Tanker. Nearly every state will have something to contribute thus get an economic benefit. Some states like Texas, California, Washington State, and Kansas will receive much more than N.Y. I am sure if you polled the average NY taxpayer or voter if they would like to receive this benefit, even though only 2% of the state businesses would receive direct benefit., they would say yes. Most voters and taxpayers are smart enough to realize that there are indirect benefits derived from the direct benefits and they would rather have our military flying American made tankers than French made. They know it is more secure to have a American company make such a strategic and important piece of our defense than to have French government supported company. As many a voter know the French government has been at odds with our policies several times. It is not hard to believe the French could halt maintenance and support for a French made Tanker during a crisis where they disagree with our government like say the Iraq war. France was vocal and active critique.

  • Report this Comment On August 23, 2010, at 1:37 PM, gallenjag wrote:

    Why is it in the article, MrSmith is so quick to bash American companies like Boeing. It continues to amaze me how one of the last American manufacturing companies providing many thousands of American high paying jobs and providing very high technology can be so bashed.

  • Report this Comment On August 23, 2010, at 2:04 PM, DNMay wrote:

    Mr. Smith aims to be controversial, i.e., to print a "different" viewpoint to grab publicity for himself. Unfortunately he shoots from the hip through a bad gunsight with faulty eyesight. The pity is that Motley Fool chooses to accept such stuff, and can get it before the public.

    But we can look on the bright side. If ignorant investors respect his advice, smart investors will benefit.

  • Report this Comment On August 23, 2010, at 3:37 PM, 2007GTCS wrote:

    It seems as though most people reading this article who have taken the time to comment are for American companies and against the ignorance Mr. Smith seems to be pushing.

    In the KC-X competition, I would bet that the majority of Americans want an American company to build this tanker.

    But if we didn't just look at this from a patriotic view, what I wish would be taken into consideration of this competition is the entire economic impact this contract has on the American tapayer.

    With the American-built aircraft, the taxpayer would save billions in fuel costs.

    With the American-built aircraft, the taxpayer would save billions in changes to runways and infrastructure.

    With the American-built aircraft, we receive the additional benefit of more tax dollars received, and less money wasted on unemployment for the people who who design and build these planes.

    With the American-built aircraft we retain the technology to build aircraft like this in the future.

    With the American-built aircraft, we have an weapon that the selling country will not block sales of parts to us if we differ in political beliefs. (Remember, the current aircraft we are replacing has been in service for OVER 50 years - France is almost communist now, where will they be in 20 years?)

    I could go on, but I think you get my point...

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