WASHINGTON – It may sound a little unpatriotic, but would a weaker U.S. dollar against the Euro be good for Mobile?
Mobile finds itself in a precarious position by wanting the hybrid Euro-American EADS/Northrop Grumman partnership to win the Air Force Refueling Tanker Contract over the American company Boeing.
So might this figure into currency? There’s a theory that a weak dollar might attract smaller European companies, especially with the presence of ThyssenKrupp and the possibility European suppliers may want to follow the steel giant to Mobile.
“The weak dollar does have the very general effect of making U.S. products more affordable to European buyers, and European products more expensive to U.S. buyers,” said Matt Grimison, manager of communications for the Aerospace Industries Association, a Washington-based trade association that represents aerospace manufacturers “So theoretically it would make a U.S. company more attractive than a European company if they are both providing the same product, since the European company’s Euro-purchased supplies would be more expensive.”
Local economist Dr. Semoon Chang, a professor at the University of South Alabama, had a similar take on the weak dollar also.
“I do not know whether a weak dollar helps Mobile, but I know that when the dollar is weak, foreign companies have a hard time of selling their products in the U.S. market because they become more expensive in the United States, and thus have a greater incentive to build a plant in the United States,” Chang said.
But, it is unlikely to give EADS an edge over Boeing Air Force refueling tanker contract contest.
“The aerospace and defense industry is so globalized this effect is marginalized,” Grimison said. “Large aerospace platforms in both the United States and Europe use suppliers from both continents, so costs are comparable. Companies take steps to minimize the effects of currency fluctuation, often dealing in dollars and sometimes investing in currency hedges. The weak dollar is almost certainly not an important factor in multimillion- and billion-dollar aerospace and defense purchasing decisions.”
Mobile’s Best Hope: A Split Contract, Decision Now Expected in November
Mobile’s KC-30/Brookley Field hopes took a hard hit last week when the Air Force announced it probably wouldn’t be splitting the tanker contract.
The Financial Times reported that Sue Payton, head of Air Force acquisitions, said splitting the deal for an initial 80 tankers would be too costly and the refueling contract would be awarded to one bidder. Most analysts believe this is a blow to EADS and thus dims the hopes for Mobile.
When the Republicans lost the Senate in 2006, Sen. John McCain (R-Ariz.) lost his leadership role on the Senate Armed Service Committee. In 2002, McCain had lead the charge against Boeing when it was discovered that then-Boeing chief financial officer, Michael Sears and the Air Force’s chief procurement official, Darlene Druyun conspired to deliver a leasing scheme to Boeing for KC-767 tanker aircraft, rather than simply purchasing them.
With McCain’s weakened position, the tilt seemed to go back in favor of Boeing.
Reuters reported a study by Jacques Gansler, a former defense undersecretary for acquisitions under Bill Clinton and currently a professor at the University of Maryland, showed a split contract could save the Air Force billions. However, the study was financed by EADS and only took into account acquisition cost and neglected the long-term costs.
The same Reuters report also said the Air Force had hoped to award a contract in September, but the decision appears likely to slip to November.
Bonner, Sessions and Shelby Have All Made Trips to Iraq
In our four years of combat in Iraq, every member of Mobile’s congressional delegation has made at least one trip to Iraq. But only six out of 100 U.S. Senators have made more trips than Sen. Jeff Sessions.
Session has made six visits to Iraq, a very impressive total to say the least. Rep. Jo Bonner has made two trips and Sen. Richard Shelby has made one.
All three have been very supportive of the war and more recently, the surge effort orchestrated by the Bush administration and led by Gen. David Petraeus.
Where are you going for Summer Vacation?
Washington is dead during the month of August – by tradition and by law. The tradition was spurred on by the August heat in Washington – not quite as bad as Mobile, but still unpleasant. Pre-air conditioning days, it was too hot to conduct business in Washington.
The Legislative Reorganization Act of 1970 set a congressional adjournment target of July 31 except in times of national emergency or unless waived by the House and Senate, so here we are with Mobile’s federal legislators out of town until after Labor Day.
“The senator has a busy August planned,” said Sen. Jeff Sessions’ press secretary, Emily Mathis. “His first priority is to visit his first grandchild, in Hawaii.” Sessions son-in-law is deployed on a nuclear submarine.
Sessions will also participate in a back-to-school tour, visiting Huntsville, Birmingham, Montgomery and Troy – part of an effort to promote literacy in grades 4-12.
“He’s excited about that,” Mathis added.
According to Laura Henderson, a spokeswoman for Sen. Richard Shelby’s office, Shelby will be performing a series of speaking engagements during the August recess and that included an appearance at the Mobile Downtown Alliance meeting on Aug. 13.
Highlighting Mobile congressman Jo Bonner’s recess are 20 community town hall meetings Aug. 13-17. Bonner’s press secretary, Nancy Wall, told Lagniappe he would spend the majority of the recess working from his offices in Mobile and Foley
Contact Jeff Poor at jeffreypoor@yahoo.com.
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