Trump on Boeing's Air
Force One contract: 'Cancel order!'
Tue Dec 6, 2016 | 5:57pm EST
U.S. President-elect Donald Trump urged the
government on Tuesday to cancel an order with Boeing Co for a revamped Air
Force One - a prominent symbol of the U.S. presidency - complaining that costs
were out of control.
It was the latest example of Trump using his
podium, often via brief Twitter messages, to rattle companies and foreign
countries as he seeks to shake up business as usual in Washington. Trump, who
takes office on Jan. 20, took aim at what he called cost overruns even though
the plane is only in development stages.
"Boeing is building a brand new 747 Air
Force One for future presidents, but costs are out of control, more than $4
billion. Cancel order!" Trump said on Twitter. It was not immediately
clear what prompted the timing of his complaint.
Trump, who has vowed to use his skills as a
businessman to make good deals that benefit American taxpayers, then made a
surprise appearance in the lobby of Trump Tower in New York, where he amplified
his comments.
"The plane is totally out of control. I
think it's ridiculous. I think Boeing is doing a little bit of a number. We
want Boeing to make a lot of money but not that much money," he told
reporters.
Boeing, which has built planes for U.S.
presidents since 1943, has not yet begun building the two replacements for the
current Air Force One planes, which are scheduled to be in service by 2024.
Boeing has not yet been awarded the money to
build the proposed replacements.
"We are currently under contract for $170
million to help determine the capabilities of these complex military aircraft
that serve the unique requirements of the President of the United States,"
the company said in a statement.
NOT A 'VANILLA' JUMBO JET
The U.S. Air Force, which operates the
presidential planes, first announced in January 2015 that Boeing's 747-8 would
be used to replace the two current presidential planes.
The planes can fly direct from Washington to Hong Kong, 1,000
miles (1,600 km) farther than the current Air Force One. They are designed to
be an airborne White House able to fly in worst-case security scenarios, such
as nuclear war.
President Barack Obama, who was flying on the aging Air Force
One to Tampa, Florida, on Tuesday, has called the plane one of the best perks
of the presidency.
The Air Force said in a statement that it had budgeted $2.7
billion in the coming year for the initial stage of the project involving
research, development, testing and evaluation.
The current Air Force plan envisions extensive modifications to
a Boeing 747-8, including military avionics, advanced communications and a
self-defense system, according to budget documents seen by Reuters.
"Of course it’s not like buying a vanilla Boeing jumbo
jet," said defense consultant Loren Thompson, who has close ties to Boeing
and other companies.
A March report from the Government Accountability Office, the
investigative arm of Congress, estimated the cost of the overall program at
$3.21 billion, including the purchase of two aircraft.
But the GAO estimated the costs for research and
development would be would be low, at just under $2 billion. If the GAO report
used the same Air Force estimate for research and development, then its
estimate would be around $4 billion.
Boeing shares dipped after Trump's tweet but were flat at the
end of the trading day.
HIS OWN PLANE
Trump is known for his love of his own Boeing 757 jet. In a
2015 Rolling Stone profile, he said his plane was "bigger than Air Force
One, which is a step down from this in every way."
"Did you know it was featured on the Discovery Channel
as the world's most luxurious jetliner?" he said.
Trump's broadside against Boeing comes as Washington's business
lobbyists are bracing for a wild ride.
A New York real estate developer, Trump took aim at big
corporations during his campaign, saying that they often harm ordinary
Americans by sending jobs abroad.
Since winning the Nov. 8 election he has taken credit for
pushing United Technologies Corp and Ford Motor Co to backtrack on outsourcing
plans.
Both Ford and United Technologies said they support Trump's
efforts to cut corporate tax rates and overhaul regulations, which could save
the companies billions in the long run.
Trump’s attack on Boeing was the main topic of discussion at
the annual luncheon of the Aerospace Industries Association on Tuesday, where
the group’s CEO Dave Melcher urged the new administration to promote trade and
bolster the high-paying manufacturing jobs that the $143 billion a year sector
offers.
Industry executives say they are seeing willingness from the
Trump team to take another look at export controls that limit exports of U.S.
weapons. But in the short term, his tweets and comments on Boeing put defense
contractors on notice.
"The chilling effect on industry is huge, if you are a
contractor," said Franklin Turner, a partner specializing in government
contracts at law firm McCarter & English.
Boeing relies on the U.S. military and other arms of the
federal government for a significant share of its defense, space and security
business which is worth $30 billion a year.
The company clashed during the past year with Republicans in
Congress over the Export-Import Bank, a federal program Boeing uses to finance
sales to certain overseas customers. Boeing executives have also been outspoken
supporters of the Trans-Pacific Partnership trade deal with Asia, which Trump
opposed.
(Additional reporting by Timothy Gardner, Emily
Stephenson, Mike Stone, Susan Heavey, Andrea Shalal and Doina Chiacu in
Washington; Ayesha Rascoe aboard Air Force One; Steve Holland, Alana Wise,
Jeffrey Dastin, and Lewis Krauskopf in New York; Writing by Roberta Rampton;
Editing by Frances Kerry and Alistair Bell)
Original post: reuters.com
No comments:
Post a Comment