KC-X and Jobs

The Economic Policy Institute, a self-proclaimed independent, non-profit and non-partisan think tank in Washington, D.C., issued a study earlier this month claiming that the Air Force’s KC-X tanker award to Northrop Grumman/EADS will generate 14,000 fewer jobs than if USAF had chosen Boeing to build the new tanker platform. Using publicly available data from the Bureau of Economic Analysis, EPI economist Robert Scott estimates that Boeing would create 28,707 jobs at full-rate production of its KC-767 tanker model, while Northrop Grumman/EADS would generate 14,353 positions in the US to manufacture its KC-30 design (now dubbed the KC-45A) at full-rate manufacture. Scott found both contractor’s own job-creation assertions to be overinflated, but noted that the Northrop/EADS team’s figures diverged from his own calculations much more. In some cases, he said, the Northrop/EADS numbers were “at least 45 percent higher, and as much as 179 percent higher than what could be realistically expected.” The Air Force chose the KC-30 over the KC-767 in February. USAF officials have said the KC-30 represented the overall best capability. By law, the Air Force is precluded from examining issues like jobs creation when evaluating bids and picking a winner. Boeing said during the competition it would generate about 45,000 jobs with its tanker work, with about 85 percent of the aircraft’s components of US origin. Northrop and EADS have said in the wake of their win that there will be about 48,000 positions involved in the US in their tanker work. Roughly 60 percent of their design will be from US-built parts. Boeing supporters on Capitol Hill are citing issues like jobs creation, maintaining industrial base, and trade disputes to thwart the tanker work from proceeding. And later this week, the Government Accountability Office is set to rule on the protest filed by Boeing.