Monday, May 02, 2011

Boeing, the Obama Administration, and the future of the Defense Industry

In April, a controversy developed between the Obama Administration and Boeing, the United States’ sole mass producer of wide-bodied civil aviation aircraft, and one of its largest defense contractors. The National Labor Relations Board, headed by Obama appointee Lafe Solomon, decreed that Boeing must halt its plans to produce the new 787 Dream Liner aircraft in South Carolina and instead shift production, set to begin next year, to Washington state. The change was made due to South Carolina being a right-to-work state, and the NLRB’s desire to have the 787 Dream Liner produced by union labor.

Though this action the part of the NLRB is a clear affront to Boeing’s rights as a private business entity, Boeing does not cut a sympathetic figure when one takes into account the government protection the aerospace giant has received from the government in recent years. In the realm of civilian and military contracts, Boeing has been the beneficiary of the current administration’s protectionist policies. Since President Obama entered office, Boeing has been given over 45 million dollars in government contracts, in addition to over 14 billion dollars in guaranteed loans from the Ex-Im bank as part of the administration’s efforts to boost US exports. Boeing’s ties with the current administration run deep, and it appears that this case of the NLRB’s ruling is nothing less than the administration cashing in on an IOU.

While the current battle pertains to the construction of a civilian aircraft, its potential effect on the defense industry is great. Boeing’s ties with the government, and our current government’s ties with Big Labor has created a conflict of interests which will continue to stifle the US defense industry. While the trend of meting out defense contracts to key congressional districts is nothing new, technology is reaching a crossroads that could make government corruption with the defense industry a long-term security threat.

If Unions are going to continue to be catered to by defense contractors, then it is not beyond the realm of possibility to see the once-great companies of Boeing or Lockeed Martin to go the way of general motors. One could argue, that given their ties with the government, Boeing may already be the aerospace equivalent of ‘Government Motors’.

Though the government has clearly overstepped its bounds in the case of the NLRB’s ruling, the bulk of the blame needs to be placed at the feet of Boeing. The Aerospace giant has behaved in a manner that first allowed such a crime to take place, and second severely limited any potential response to the ruling, as such a response could result in the government gravy-train grinding to a halt. For decades Boeing has sought to limit competition by courting pro-Union Democrat politicians in order to gain favorable treatment. Now the latter is simply seeking a return on its ‘investment’. To their dismay, Boeing is only now seeing the pitfalls of its selling-out, and will perhaps in the future will rethink which political forces it chooses to ally itself with.

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