Sunday, April 06, 2014

End of Boeing line won't damage key suppliers-US

(Reuters) - Shutting down a Boeing Co fighter jet production line in St. Louis after 2016 would not drive any key suppliers out of business, a senior U.S. defense official said, citing a recent Pentagon review.

The Defense Department decided it could skip further orders for Boeing's F/A-18 fighter jets and EA-18G electronic attack planes after concluding that a halt in their production would not jeopardize suppliers for other big weapons programs, said Elana Broitman, the Pentagon's top industrial base official.

"Nothing piqued our concern (about) a critical supplier going away entirely if ... they do indeed have to close that line," Broitman, deputy assistant secretary for manufacturing and industrial policy, said in an interview on Friday.

Broitman's office carefully monitors the health of the U.S. defense industrial base, and provides additional funding or other aid in select cases if the manufacturers of key components are likely to go out of business or stop making those parts.

Those pressures are mounting as U.S. military spending declines as a result of mandatory budget cuts, the end of the war in Iraq and the withdrawal of U.S. forces from Afghanistan.

Current orders for the Boeing jets ensure production through the end of 2016 and possibly into mid-2017, but the company needs to decide in coming months whether to start shutting the line down or keep buying certain components from suppliers that take years to build.

The Navy's fiscal 2015 budget request did not include money for any more of the Boeing planes, but the Navy has now asked lawmakers to add $2.1 billion to the budget for 22 more EA-18G Growlers, if money becomes available. Growlers jam enemy radars so fighter jets can carry out their attack missions safely.

Congress is weighing the Pentagon's overall budget request, and $36 billion in items identified by the Navy and other services as "unfunded priorities." But lawmakers have said they intend to stick to budget caps, which means that funding for any of those items would reduce spending in other areas.

Broitman said the decision to skip further orders in the 2015 budget request reflects the mounting budget pressures, not any dissatisfaction with the Boeing plane.

"It's not that the Growler isn't a great system. It's just what could be afforded," she said, adding that the department would keep a close eye on the issue in coming years.

Rear Admiral Michael Manazir, director of the Navy's air warfare division, last month said the Navy decided to add the Boeing warplanes to its wish list after classified studies showed the planes would improve the effectiveness of the overall 44-plane strike group on a carrier.

He said adding a next-generation jamming pod being developed by Raytheon Co (RTN.N) to the Growlers would help them to assure access for U.S. fighters to enemy airspace for years to come.

Outfitting the 22 planes with Raytheon jammers would cost an extra $750 million, plus up to $140 million a year to operate the jets, said a U.S. defense official familiar with the issue.