Campaigning for the C-17
Long Beach Officials Look for Ways to Lower Boeing's Costs, Hang On to Jobs

By Renae Merle
Washington Post Staff Writer
Wednesday, December 28, 2005

The C-17, a big-bellied Air Force jet that carries troops and cargo to global hot spots, is designed to navigate short, unpaved airstrips with ease. But navigating the next round of defense budget tightening could be much tougher.

The 2006 defense budget Congress passed last week included $3.5 billion for C-17s , but there are also reports that budget-sensitive Pentagon officials have decided they cannot afford to buy any more of the $200 million planes.

That uncertainty is creating angst in Long Beach, Calif., where Boeing Co. is the largest employer and 5,000 workers churn out 15 of the planes a year. To the usual lobbying campaign to preserve the jet and the jobs, community leaders have added a wrinkle: They are looking for ways to save the government money.

"We're looking at all of Boeing's costs to see how we can lower them," said Robert M. Swayze, the city's economic development bureau manager.

Southern California Edison, Long Beach's utility company, said Boeing may be eligible for a five-year, 15 percent discount on its energy bill . The city also is lobbying to have its designation as an enterprise zone extended beyond the 2007 expiration date, potentially saving Boeing more.

Even the fire department is willing to help. "Right now Boeing operates its own fire department," but the city could assume that responsibility, Swayze said .

Michael E. O'Hanlon, a senior fellow at the Brookings Institution, said Long Beach's approach is unusual. "You usually only see these types of heroics involved when a baseball stadium is at stake," he said.

Typically, members of Congress have led efforts to keep production lines open. In the past two budgets, for example, Sen. Christopher S. Bond (R-Mo.), has secured enough funds to keep the Boeing plant in St. Louis making F-15 fighter jets through at least 2008, over the objections of the Air Force.

California lawmakers, including Rep. Juanita Millender-McDonald (D), who represents Long Beach, have sent letters to Defense Secretary Donald H. Rumsfeld and Air Force Secretary Michael W. Wynne arguing the C-17's virtues. A Pentagon study to be released early next year concludes that 180 planes is enough, according to military and industry sources. Boeing said that if money is not put into the 2007 budget for the plane, it would be forced to begin shutting down the line in 2008.

"The Air Force has come to conclusion that it has other priorities," such as fighter jets, said Loren B. Thompson, a defense industry consultant and analyst for the Lexington Institute, a think tank. "It's going to take a determined delegation to save the program."

Chicago-based Boeing is privately making its own appeal to military leaders on behalf of the C-17. But it must perform a tricky balancing act. If the Air Force buys more C-17s, it may come at the expense of a program Boeing has been eagerly awaiting -- building hundreds of refueling tankers, industry analysts note. Or if the company convinces the Air Force it needs more planes to shuttle troops and equipment, the Air Force could decide to spend the money upgrading C-5 cargo planes made by Lockheed Martin Corp., instead of buying more of Boeing's planes.

"That is part of why you see somewhat restrained [company] lobbying efforts," O'Hanlon said.

Boeing has so far focused on supporting the efforts of Long Beach officials, pledging to pass on to the government any price cuts the city's campaign achieves, and providing local officials the names of suppliers spread through the country that could help lobby Congress and the Pentagon. The company decided to allow union officials representing the C-17's plant workers to outline their own lobbying strategy to employees during work hours.

Long Beach officials face an uphill battle. The Pentagon is trying to squeeze billions from its more than $400 billion annual budget. Long Beach officials acknowledge they do not know how much they will be able to save the company. Shaving $2 million from the cost of every plane, 1 percent, would be an accomplishment, but not enough to justify keeping the program, said Keith Ashdown, spokesman for Taxpayers for Common Sense, a watchdog group. Besides, the Air Force should base its decision on necessity, he said.

Jacki Harris, president of the United Aerospace Workers local that represents employees in the plant, put out a distress signal last month, after media reports that the Air Force would end the program. She said she called the "big guns," the union's national leaders, who came to Long Beach in late November to help map out a response, including establishing phone banks and starting letter-writing campaigns. "I am not willing to sit back and wait and see what happens," said Harris, who has worked at Boeing for 20 years.

The union's relationship with Boeing went from combative to becoming allies, Harris said, including her meeting with company officials twice a week. Earlier this month, Harris distributed a letter she co-signed with David M. Bowman, Boeing's C-17 program manager. It asks employees to write or call their members of Congress expressing concern about the possible termination.

On a separate track, Long Beach Mayor Beverly O'Neill led a group of local officials to the Pentagon for a meeting with Wynne, the head of the Air Force, on Nov. 29. O'Neill said the tone of the hour-long meeting was positive. So city officials were disappointed when Wynne told reporters on Dec. 13 that he was comfortable with the number of planes currently under order.

At the center of Long Beach's effort is a "red team," Swayze said, a mechanism the city usually uses to attract new businesses, not keep current ones. "It's significant in the amount of attention we're devoting to this."

Nineteen cost-saving proposals are being considered, he said, including several that would make Boeing eligible for more tax breaks. Los Angeles County could offer the company a tax rebate on its equipment. The team is also considering how to reduce Boeing's water bill and the airport fees it pays.

There are still some details to be worked out, Swayze said. The city does not know, for example, how difficult it would be to take over Boeing's in-house fire department. "There might be some requirements from DOD that we don't know about," he said.

The C-17 has been saved from extinction before. In 1990, Defense Secretary Dick Cheney reduced the number of planes the Pentagon planned to buy to 120 from 210. Developing the C-17 proved so troublesome that in 1993 the Pentagon threatened to buy even fewer, 40, if things did not get better. The plane's performance eventually improved, and the Pentagon raised the number of planes in the program, first to 120 and then to 180.

In Long Beach, lobbying for the C-17 is a fight for the future. This city at the southern tip of Los Angeles County has lost 42 percent of its manufacturing base in the past 15 years. During the past five years, Boeing's Southern California workforce, which also builds some commercial planes, has fallen by 11,444 to 31,356.

The jobs at the C-17 plant pump $1.4 billion a year into the local economy, Swayze said, with the average Boeing worker earning $65,000 a year. It would be difficult to attract firms offering comparable wages. He said, "These are real good jobs."