News Review: RAAF signs for C-17 support, as fears grow for the production line | ADM Oct 06

1 October 2006

Boeing has signed a US$80.7 million contract with the RAAF to provide logistics support services for Australia's C-17 fleet.

At the same time, Boeing has warned that unless it receives more orders for the C-17 from the US Air Force, its assembly line at Long Beach, California will shut in 2009.

Australia is buying four C-17 Globemaster III airlifters with the first delivery planned for December.

Under the new support contract, Boeing will manage spare parts for the Australian fleet.

The RAAF will be responsible for flight line maintenance with Boeing performing heavier, depot-level maintenance.

Boeing has similar responsibilities for the US Air Force and the UK Royal Air Force C-17 fleets through the Globemaster III Sustainment Partnership (GSP).

By joining the global C-17 support network, Australia will take advantage of the economy of scale for the purchase of spare parts and materials for a fleet of nearly 200 aircraft compared to a fleet of four.

Boeing also will provide technical support, engineering services, engine maintenance and management, technical publications and support equipment management for the RAAF anywhere the aircraft are located.

The RAAF joins the existing performance-based logistics contract where Boeing is paid for an agreed upon level of aircraft availability.

Boeing shares part of the risk for maintaining the aircraft and has incentive to sustain the fleet as efficiently as possible.

"By joining the partnership, Australia is significantly reducing its costs," said Bud Matlock, Boeing director of International Product Support for the C-17.

"The advantage comes not only in the synergies gained by joining the virtual C-17 fleet, but also in Boeing's experience and infrastructure in sustaining the C-17 around the world for all our customers."

The contract to maintain the Australian C-17s mirrors Boeing's agreement with the United Kingdom. Similar partnerships are available to other export customers for the C-17.

Denmark recently signed a letter of intent to join a team of NATO nations that will share a pool of C-17s.

The Canadian Department of National Defence in early July said it intends to acquire four C-17s.

Meanwhile, with US Air Force orders for the C-17 starting to dry up, Boeing is directing suppliers to stop work on uncommitted aircraft.

This move will be the first step in an orderly shut down of the production supply chain should no further orders be received from the US government.

The stop-work orders affect long-lead items from suppliers that, in many cases, are built 34 months before a C-17 is delivered.

For over a year, Boeing has spent its own money maintaining the C-17 supplier base, the company says.

This investment was intended to keep the production line viable while the US Government and Boeing pursued international orders, and to allow time for the US Government to update its post-9/11 mobility requirements, if they chose to do so.

During that time Boeing received international orders and commitments for more than a dozen of the advanced air lifters.

Congress has added funding for up to three more as part of its recent 2007 budget deliberations.

However, there are not enough orders to sustain continued production beyond mid-2009.

Closing the C-17 line will affect the 5,500 Boeing jobs in California, Missouri, Georgia, and Arizona, directly tied to the C-17, and the program's nationwide supplier base that totals more than 25,000 people working for nearly 700 companies.