Strategic CIO // Executive Insights & Innovation
Commentary
3/31/2009
03:03 PM
Bob Evans
Bob Evans
Commentary
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Boeing Lands $17B Outsourcing Deal From India

Although it has a subsidiary called Boeing India and just opened an advanced technology center in Bangalore, Boeing has landed a $17 billion outsourcing deal to deliver 100 airplanes to Indian airline companies over the next several years. No comment was available from the Obama administration on the Indian economy's decision to ship some of "its jobs" overseas.

Although it has a subsidiary called Boeing India and just opened an advanced technology center in Bangalore, Boeing has landed a $17 billion outsourcing deal to deliver 100 airplanes to Indian airline companies over the next several years. No comment was available from the Obama administration on the Indian economy's decision to ship some of "its jobs" overseas.This $17 billion deal placed by Indian airlines pushes to $25 billion the total value of orders they have awarded to Boeing in the past three years. On top of that, Boeing said a much larger 20-year commitment from Indian airlines for 1,000 aircraft valued at $105 billion is still valid, according to the president of Boeing India, Dinesh Keskar.

Keskar said "we are doing very well in India compared to our competition" and also noted that the relative strength of the Indian economy has helped enable the Indian airlines to maintain those massive commitments to Boeing in spite of the global economic slowdown, according to an article in the Economic Times of India. That ongoing commitment from India stands in sharp contrast to the declining orders for aircraft in many other major markets being felt by not only Boeing but also its competitor Airbus.

In addition, the Indian airline industry is sticking with its commitment to Boeing even though Boeing has fallen behind on its timetable for delivering 37 of its new state-of-the-art 787 Dreamliner to two Indian airlines, Air India and Jet Airways. Boeing has agreed to compensate Air India and Jet Airways for those delays, the article said.

Oh yes - one other little detail: Boeing is planning to bid on defense contracts offered by the Indian government totaling $31 billion over the next decade.

I hope all the anti-outsourcing protectionists out there - and especially the ones in Congress whose knee-jerk legislative reactions could cause enormous harm to not only American industries but also the global economy - will actually think about this dynamic and consider it carefully the next time they cheer gleefully when President Obama promises to punish U.S. companies that "ship our jobs overseas."

On the other hand, if we in the U.S. go far enough with this currently fashionable protectionist folly, we just might well convince those Indian airlines that have pledged to purchase more than $100 billion worth of American technology and manufacturing excellence over the next couple of decades to take their business elsewhere. At the same time, in such a circumstance the Indian government could hardly be blamed for steering its defense contracts away from Boeing not because of anything that excellent company would have done but rather because of the U.S. government's innovation-stifling and expensive protectionist policies.

Should that ugly development come to pass, the protectionist know-nothings in Congress will have established a new standard for what it means to achieve a Pyrrhic victory.

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