Boeing gets another big contract, for 99 V-22 Osprey aircraft

An inspector and sheet metal assembler work inside the fuselage of a V-22 Osprey tilt-rotor aircraft. A five-year contract worth $6.5 billion from the Navy should help ensure steady work at the Ridley Township factory, which employs 6,200 workers.
An inspector and sheet metal assembler work inside the fuselage of a V-22 Osprey tilt-rotor aircraft. A five-year contract worth $6.5 billion from the Navy should help ensure steady work at the Ridley Township factory, which employs 6,200 workers. (MICHAEL S. WIRTZ / Staff Photographer)
Posted: June 15, 2013

For the second time this week, the Pentagon delivered good news to 6,200 workers at Boeing Co.'s Delaware County helicopter plant despite looming cuts to U.S. defense spending.

Two days after receiving a $4 billion contract to build 177 CH-47F Chinook helicopters at its Ridley Township factory, Boeing said Thursday that the Navy had signed off on a $6.5 billion, five-year contract for 99 V-22 Osprey tilt-rotor aircraft.

Boeing builds the Osprey - whose 20-year development has included crashes that have killed about 30 people - in a 50-50 joint venture with Bell Helicopter Textron Inc. Boeing builds the fuselage, which is shipped to Bell in Amarillo, Texas, for final assembly.

"The Chinook and the Osprey built by Pennsylvania workers are proven on the battlefield, and the fact is our military will need more of them," said U.S. Rep. Patrick Meehan, whose district includes the Boeing plant.

"These long-term contracts for necessary equipment make more sense in an era of sequestration, not less, since they'll save taxpayers $1.8 billion between the two aircraft," Meehan said. Long-term contracts make it easier to negotiate lower prices from suppliers.

No additional jobs at the Ridley plant are expected, a Boeing spokesman said.

A defense-industry analyst said the mandated defense cuts of more than $500 billion over a decade did not mean the military must stop signing long-term contracts.

"You might take 9 percent of the budget away. That doesn't mean you stop spending on the other 91 percent," said Richard L. Aboulafia, a vice president with the Teal Group Corp. in Fairfax, Va.

Loren B. Thompson, chief operating officer of the Lexington Institute, an Arlington, Va., think tank, said, "The military is only funding programs that have proven themselves and killing everything that looks problematic in terms of its performance."

The Chinook "has been supporting the Army successfully for many decades. It's actually the most inexpensive way of maintaining a large . . . transport-helicopter fleet," Thompson said.

"In the case of the V-22, it has been a top priority of the Marine Corps for at least two decades, and it has now proven itself everywhere from the Pacific to the Mediterranean," he said.

The V-22 Osprey takes off like a helicopter and flies like a plane, making it more flexible than either. More than 200 of the aircraft are used by the Marine Corps and Air Force Special Operations Command. The long-term plan is for those services to buy 410 V-22 Ospreys, with the possibility of an additional 48 for the Navy.

The new contract, covering 2015 through 2019, has an option for an additional 23 V-22 Ospreys.

Unlike the Chinook, which is used by 18 foreign governments, the Osprey has not yet gained a foothold overseas, though it is under consideration for an Israeli package.

"The Chinook's been around, and it's an accepted part of people's militaries. It offers a known capability at a good price. The V-22," Aboulafia said, "is an all-new capability with a very expensive price."

Each V-22 Osprey costs about $70 million, compared with $35 million to $40 million per Chinook, which has been produced since the early 1960s, Aboulafia said. Given the V-22's hefty price tag, its future is uncertain beyond the 410 in the program of record for the Marines and the Air Force.

Complicating the picture is an expected downturn in the U.S. rotorcraft industry staring in 2020, after the current contracts expire.

"We're cresting a wave, and it's coming down," Aboulafia said, "and no one knows how far down."


Contact Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.

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