In a generational win for Boeing Co.’s north St. Louis County manufacturing operations, the U.S. Department of Defense on Thursday awarded the company a contract worth up to $9.2 billion to build the Air Force’s new training jet.
The contract, which is expected to extend until 2034, should secure the future of Boeing’s St. Louis operations and the 14,000 regional jobs they support for more than a decade. Combined with the uptick of foreign and U.S. Navy purchases of the plant’s signature fighter jet — the F/A-18 Super Hornet — the T-X Trainer contract represents a reversal of fortune for an assembly line whose future seemed tenuous only a few years ago.
“They were concerned with the numbers going down here in St. Louis off the line,” said Jeff Windau, an analyst at Des Peres-based Edward Jones who follows Boeing. “That’s a pretty significant piece of what the trainer brings here in St. Louis, just more runway from a manufacturing” standpoint.
Boeing teamed with Sweden’s Saab AB to develop a new plane for the competition, beating out Lockheed Martin Corp. and Leonardo DRS. Boeing had said last year that the T-X Trainer would be assembled at its North County campus, where it has produced the Navy’s workhorse Super Hornet fighters for 20 years.
The Air Force plans to purchase 351 of the T-X jets, and the military will be able to purchase up to 475 aircraft and 120 ground-based training systems, according to the DOD contract announcement.
The win is significant for Boeing, which reorganized its defense business more than a year ago, including moving its headquarters and top executives from St. Louis to the Washington area, in the hopes of a “franchise level” win such as the trainer.
“Today’s announcement is the culmination of years of unwavering focus by the Boeing and Saab team,” Leanne Caret, president and CEO, Boeing Defense, Space & Security said in a statement. “It is a direct result of our joint investment in developing a system centered on the unique requirements of the U.S. Air Force. We expect T-X to be a franchise program for much of this century.”
Boeing beat out Lockheed, which was offering a modified version of its T-50 training jet developed jointly with Korea Aerospace Industries Ltd. and also beat Italy’s Leonardo DRS, which offered the T-100, a modified version of the Italian aerospace company’s M-346.
“I have expected all along that Boeing was the front-runner because it had the only plane that was designed specifically for the T-X competition,” said Loren Thompson, COO of the Lexington Institute, a Washington-area think tank on security issues that counts Boeing among its contributors.
The Air Force wants to replace its aging fleet of T-38 planes, which are nearly 50 years old, and analysts have said it could eventually buy up to 600 planes.
“Missouri has had a rich history of supporting aerospace ventures, from Charles Lindbergh, to the Mercury space program, to the latest innovation represented by the T-X,” Missouri Gov. Mike Parson said in a statement following the announcement. “We look forward to working with Boeing to provide support for the training of its skilled workforce and other incentives that will allow Boeing to meet its obligations to the U.S. Air Force.”
While not initially expected to be a huge net boost to St. Louis area jobs, the contract is expected to secure the future of the company’s St. Louis assembly line, which had been passed over for new fighter and bomber contracts. Most recently, Boeing had hoped to win a major long-range bomber contract that was awarded in 2015 to rival Northrop Grumman Corp. And the wind-down of Super Hornet purchases as the Air Force and Navy looked to the new F-35 joint strike fighter made by Lockheed Martin put its future as a military jet maker in doubt.
But with a slower-than-expected adoption of the F-35 by the Navy, Boeing has continued to get Super Hornet orders, recently winning a contract to extend the flying life of older Super Hornets and upgrading their systems. The federal budget also included 24 new Super Hornets in both the 2018 and 2019 budgets, and the Navy says it wants to buy dozens more. That will keep Super Hornet production humming into the middle of next decade.
Last month, Boeing won a contract worth up to $805 million to build the MQ-25A Stingray, the Navy’s first unmanned aerial refueling drone. That work will be mostly performed here, bringing the company’s local production line into the unmanned age.
“Boeing’s had a nice resurgence in military jet production in the last few years,” said Richard Aboulafia, a military aircraft analyst for the Teal Group.
Had the St. Louis facility run out of orders, the military faced a situation where only one location — Lockheed Martin’s Texas operations — assembled fighter jets.
Winning the T-X contract became “critical” for Boeing after it missed out on big military awards in past years, said Windau, the Edward Jones analyst.
“The defense business is a smaller piece of its overall portfolio, but I think it is still a significant win for them,” he said. “Over the last year or so, things have gotten onto a more solid footing for the fighter business.”
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