03 March 2011

Boeing contract to benefit Michigan aerospace industry

Boeing's plan to construct up to 200 refueling aircrafts for the U.S. Air Force, after being awarded a $35 billion contract, is expected to be an economic boost for Michigan's aerospace industry.

The Chicago-based airline said the state will benefit from roughly 450 new jobs and an estimated $25 million in annual economic impact from the Boeing NewGen Tanker, called the KC-X.

Currently, Boeing has connections with over 280 Michigan suppliers, contributing to about $551 million in annual economic impact.

As of now, four manufacturers in the state stand ready to supply components for Boeing's NewGen Tanker. One Livonia-based manufacturer, LaSalle Electric Supply Co., will provide electrical standards, lighting products and tie straps for the new plane.

LaSalle currently provides lamps for the airline's 767 aircraft, as well as other parts for Boeing. The company's new innovation, the NewGen Tanker, is a multi-mission aircraft based on the design of Boeing's 767 commercial airplane but offers highly advanced technology.

Jim Gatward, president of LaSalle Electric Supply, claims that there is great interest in the project. "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 noted Boeing's KC-X is hybrid of the Boeing 767, but the supplies LaSalle plans to contribute will remain the same.

"The feeling of anticipation is gone," said Gatward, "and everyone from here is excited that we can continue with the 767 platform."

The first phase of the deal, valued at $3.5 billion, calls for delivery of 18 aircraft by 2017, according to the U.S. Department of Defense. Gatward is currently unsure of whether more man power will be needed to meet the production demands.

"If that accelerates or the Department of Defense wants them sooner," he said, "we definitely could see hiring more people."

As prospective suppliers contemplate the possibility of taking on a larger workforce, the consideration of ESOP (Employee Stock Ownership Plans) services are being evaluated. Keeping workers happy with the right type of benefits is crucial to sustaining long-term success.

Even vehicle logistics providers are taking an interest in the state's aerospace progression. Auto transport companies are delivering new vehicles designed to help facilitate that manufacturing process.

Gavin Brown, executive director of the Michigan Aerospace Manufacturers Association, said that over the life of the Boeing NewGen Tanker contract, he forecasts $500 million in new business will go directly to aerospace companies in the state.

One Michigan company hoping to get into the mix is Sterling Heights-based RoboVent. The industrial company has just expanded its operations to support airplane spray booths for painting and finishing.

Brown projects the residual benefit for such suppliers to last up to 40 years due to the longevity of aircrafts and the demand for replacement components. The refueling tanker of the past, the KC-135, was commissioned all the way back to the era of the Eisenhower administration.

Boeing claims its NewGen Tanker to be more cost-effective to own and operate because it uses 24 percent less fuel than the competitor's plane. Such efficiencies could save U.S. taxpayers over $10 billion in fuel costs over the NewGen's 40-year service life.

"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."

Progression of the like will greatly aid those companies that have been working to become AS9100-certified, ranging from auto makers to suppliers of microfiber cleaning cloths.

One such company is Fraser-based Fairlane Tool Co., a supplier of aerospace landing gears and other related components. Fairlane supplies the landing gear for airplanes like the F-22 and F-35, to name a few.

Fairlane Tool, after waiting months for approval, just recently received its AS9100 certification.

Aerospace companies like Boeing and Northrop Grumman Corp., based in Los Angeles, are not even considering vendors that are not AS9100 certified, Brown added.

"This opens up the door for us to deal with Boeing and do contract work with them," said Fairlane Tool's quality manager Mike Gordon Jr. "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."

Until now, Fairlane Tool was working with the Tier 1 suppliers rather than directly with the original aerospace manufacturers. Without the middle man, the next step for Gordon and Fairlane tool is to "start placing bids with Boeing."

"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 his company is working with Michigan Works, a state agency that helps unemployed workers, to aid the recruiting process.

"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."

Several other companies in Michigan are to benefit from Boeing's contract. Some of which include Honeywell Aerospace in Boyne City, Eaton Corp.'s aerospace division plant in Jackson, and the Grand Rapids plant of Evendale (Ohio-based GE Aviation Systems).

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