Snub of Boeing-made fighter rattles Missouri manufacturers

Reuters News
Posted: Dec 21, 2013 8:01 AM
Snub of Boeing-made fighter rattles Missouri manufacturers

By Tim McLaughlin

(Reuters) - Brazil's decision not to buy the American F/A-18 Super Hornet fighter jet, and instead purchase an untested plane from a Swedish rival, hit the rural Missouri town of Alton this week, where Chet Sisco's family-owned company has made parts for Boeing Co planes for nearly four decades.

The Super Hornet, supplied by vendors across Missouri, looked sure to win Brazil's $4 billion-plus contract. But revelations that the U.S. National Security Agency spied on Brazil's president helped to kill the deal at the last minute.

Brazil's snub of Super Hornet, and the loss of a major F-15 deal in Korea last month, threaten St. Louis-area production lines that support Boeing employees, suppliers and municipal credit ratings.

At current production rates, the Super Hornet would run out of production in 2016, and the F-15 two years later. Boeing and its contractors had been counting on foreign military deals to extend the life of the two planes, but budget pressures are delaying contract decisions in some key foreign markets and also curbing U.S. purchases.

"We're certainly worried how this will play out," said Chet Sisco, general manager of Central Ozark Machine Inc, which employs 25 people and derives about 85 percent of its work making aluminum and titanium parts for Super Hornets and F-15s.

Sisco said Brazil would have gotten more plane for its money with the Super Hornet than with the Swedish Gripen, made by Saab AB, which has never seen combat.

The Super Hornet, whose biggest customer is the U.S. Navy, supports about one-third of Boeing's 15,000 employees in Missouri. The plane and other Boeing business provide about $1 billion in annual orders for nearly 700 Missouri suppliers.

Some U.S. lawmakers and Boeing are pressing hard for support for the jet programs.

"Keeping that line open and extended in St. Louis is ... obviously an important thing for our state," U.S. Sen. Roy Blunt, a Missouri Republican, told reporters on a conference call after Brazil announced its decision. "I'm certainly disappointed by this."

Blunt said the loss of the Super Hornet contract underscores "a weakened position" in U.S. foreign policy, partly because of the NSA spying revelations.

Documents leaked by former National Security Agency contractor Edward Snowden enraged Brazilian President Dilma Rousseff, changing her mind about choosing Boeing's Super Hornet combat plane, several Brazilian officials told Reuters. Snowden's documents revealed that Washington had spied on Rousseff's personal communications.

Enough's Enough
Walter E. Williams

In Hazelwood, a suburb north of St. Louis, where the $50 million Super Hornet is made, Boeing is the largest employer and accounts for 6.0 percent of the tax base. Analysts at Moody's Investor Service have warned that any downsizing to Hazelwood's chief taxpayer could hurt its "Aa3" municipal bond rating.

With the future of Boeing's fighter jets in question, Hazelwood City Manager Matt Zimmerman said his small city is doing everything it can to support Missouri's bid for building Boeing's next advanced commercial airplane, the 777X.

But at Central Ozark Machine in Alton, it's not easy switching gears to make structural components for commercial planes, which are now demanding composite materials, Sisco explained.

"It's hard to teach an old dog new tricks. It's a whole new style of manufacturing," Sisco said.

(Reporting by Tim McLaughlin, editing by Martin Howell)