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EPI Study Fuels Debate on Tanker Jobs

Fri. June 06, 2008

June 5, 2008 - A new study of the decision to award a $40 million taker contract to EADS/Airbus instead of Boeing reveals just how many jobs will not be created in the U.S. once production gets underway.

“Because roughly half of the parts and labor that go into making the NG/Airbus will come from overseas, at least 14,000 jobs that could have been generated in the United States if the contract had gone to Boeing will not be created,” said the report by the Economic Policy Institute (EPI). The number of jobs notcreated is in addition to the number of existing jobs jeopardized by foreign production of the tanker. As many as 44,000 U.S. jobs at dozens of companies in more than 30 states are directly or indirectly linked to tanker production and support.

The EPI study also notes that Air Force officials did not evaluate the impact on employment and job creation when awarding the contract. “There are few, if any other major countries that do not take into account the location of production and employment in military procurement decisions,” said the report. “The process of accounting for the promised and actual location of production under military contracts is governed in most countries under so-called ‘offset’ arrangements.”

Offsets are agreements to locate production in the purchasing country or to source products from or transfer technology to firms in that country. The loosely-governed practice has the potential to shift valuable technology, developed at U.S. taxpayer expense, to developing countries intent on competing with U.S.-built industries.

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