Boeing Drops Out
Boeing Drops Out of C-27J Military Plane Program (Update2)
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By Gopal Ratnam
Feb. 26 (Bloomberg) -- Boeing Co., citing deteriorating economic conditions, pulled out of plans to assemble the U.S. military’s C-27J cargo planes, a $2 billion program led by New York-based L-3 Communications Holdings Inc.
Boeing had been in negotiations to assemble the planes for L-3’s partner in the program, Finmeccanica SpA’s Alenia North America unit, and decided against it because of the “current global economic climate,” the Chicago-based company said in a statement today.
“We were going to set up a production facility in Florida,” Boeing spokesman Bill Barksdale said in an interview. “Looking at the objectives, based on analysis and in the current business conditions we couldn’t satisfy our shareholders,” he said of the company’s decision to drop out. Alenia will continue with its plan to build an assembly plant in the state, spokesman Ben Stone said in an interview.
The C-27J began as a joint venture in June 2007 between L-3 and Finmeccanica’s Alenia North America to replace the Army’s and Air Force’s fleet of older transport planes. Boeing later began negotiations with Alenia to build an assembly plant in Jacksonville, Florida.
Boeing, the world’s second-biggest defense contractor as well as the No. 2 commercial-jet builder, is cutting 10,000 jobs, or about 6 percent of its workforce, as the global recession hurts airlines’ profits and could divert U.S. military spending.
78 Aircraft
L-3 won a $2.04 billion contract in June 2007 to build 78 C- 27J aircraft for the Army and Air Force, company spokesman Jason Decker said in an interview. The first two planes produced at Alenia’s Turin, Italy-plant were delivered to the Army in 2008, he said. The company plans to make 16 planes a year on average.
Under the contract, Alenia builds the airplanes and L-3 outfits it with communication and electronic equipment to meet U.S. military needs.
Alenia is moving forward with plans to build a 350,000 square feet assembly plant in Jacksonville, Stone said. “We’ll have a groundbreaking ceremony in a month,” he said.
The company plans to invest about $100 million in the factory and employ 300 people, Stone said. With an annual capacity to make 30 aircraft, the facility can meet U.S. military needs for C-27J and any potential foreign sales, he said.
To contact the reporter on this story: Gopal Ratnam in Washington at
[email protected].
Last Updated: February 26, 2009 14:21 EST