A $35 billion contract awarded Thursday to Boeing Co. to build nearly 200 giant airborne refueling tankers for the U.S. Air Force is expected to be an economic windfall for Michigan aerospace suppliers.
Chicago-based Boeing said Michigan will benefit from about 450 jobs and an estimated $25 million in annual economic impact from the Boeing NewGen Tanker, called the KC-X. It replaces 179 of the current KC-135 aircraft.
Boeing currently works with more than 280 suppliers across Michigan, resulting in an estimated $551 million in annual economic impact.
At least four Michigan manufacturers are ready to produce components on the NewGen Tanker. One is Livonia-based LaSalle Electric Supply Co., which will provide electrical standards, lighting products and tie straps.
LaSalle currently stocks aircraft lamps for Boeing, including the 767 aircraft. The NewGen Tanker is a wide-body, multimission aircraft based on the Boeing 767 commercial airplane and updated with advanced technology.
“There’s a lot of homegrown interest in this,” said Jim Gatward, president of LaSalle Electric Supply. “It does two things for us: extends the lifeline of the Boeing 767 aircraft platform for many years and all ancillary product and support that go into that aircraft.”
Gatward said the KC-X is an expansion into a new type of Boeing 767, but LaSalle’s product will remain the same.
“The feeling of anticipation is gone,” he said, “and everyone from here is excited that we can continue with the 767 platform.”
As of right now, Gatward’s not sure whether more employees will be needed. But according to the U.S.Department of Defense, the first phase of the deal, worth $3.5 billion, calls for delivery of 18 aircraft by 2017.
“If that accelerates or the Department of Defense wants them sooner,” he said, “we definitely could see hiring more people.”
Gavin Brown, executive director of the Michigan Aerospace Manufacturers Association, said he expects $500 million in contracts will go to Michigan aerospace companies over the life of the Boeing NewGen Tanker contract.
Brown estimates the residual benefit for companies to last about 40 years because of the longevity of the planes and the need for replacement parts along the way. The last-generation refueling tanker, the KC-135, was commissioned during the Eisenhower administration.
Boeing estimates that the NewGen Tanker will be more cost-effective to own and operate than a larger, heavier tanker — saving U.S. taxpayers more than $10 billion in fuel costs over the plane’s 40-year service life because it burns 24 percent less fuel than the competitor’s airplane.
Boeing won the Air Force bid over EADS North America, a unit of European Aeronautic Defence & Space Co.
“For every $100,000 to $150,000 in revenue a good aerospace manufacturing company receives in orders, a job is created,” Brown said. “The tanker program will result in thousands of new jobs when you look at the financial impact — $500 million over the lifetime of the contract. — Aerospace manufacturing workers are amongst the highest paid in manufacturing.
“This is really going to help out the companies that have been getting AS9100- certified.”
One such company is Fraser-based Fairlane Tool Co., which supplies landing gear and other components to the aerospace and defense industries. The company has provided landing gear for the F-22 and F-35 planes, among others.
After months of waiting, Fairlane Tool actually received its AS9100 certification this afternoon.
Companies such as Boeing and Los Angeles-based Northrop Grumman Corp. aren’t even considering anyone without AS9100 certification to get into the aerospace industry, Brown said.
“This opens up the door for us to deal with Boeing and do contract work with them,” said Mike Gordon Jr., quality manager for the family-owned Fairlane Tool. “You don’t even get to talk to Boeing unless you have AS9100 certification … it’s very crucial. It definitely could not have happened at a better time.”
Up until now, Fairlane was dealing with the Tier 1 companies as opposed to the original manufacturers directly. The next step for Fairlane, Gordon said, is to start placing bids with Boeing. He hopes to place a bid soon.
“If we win a bid, which could take three months or so, we would add about 10 people,” he said. “And that’s just us; it doesn’t affect the other companies around us.”
Gordon said Fairlane is working with the state agency Michigan Works to start selecting employees.
“This will definitely create an influx of a whole bunch of cash into the area,” Gordon said. “It’s a trickle effect — from Boeing, to people like us, to the steel companies and truck drivers.”
The other Michigan companies to benefit from Boeing’s contract are Honeywell Aerospace in Boyne City, a division of New Jersey-based Honeywell International; Cleveland-based Eaton Corp.‘s aerospace division plant in Jackson; and the Grand Rapids plant of Evendale, Ohio-based GE Aviation Systems.