The U.S. Air Force recently selected a Northrop Grumman Corp./European Aeronautic Defense and Space Co. team to build its next aerial refueling tanker. The $40 billion contract may have profound consequences for the U.S. aviation industrial base.   And that doesn’t even factor in OVERRUNS.  

Boeing, which submitted its own design for the Air Force competition known as KC-X, has been the sole manufacturer of wide-body civilian airliners inside the United States since production of the McDonnell Douglas DC-10/KC-10 ceased in 1988. (McDonnell Douglas and Boeing merged in 1997.)  

The design and construction of this kind of aircraft is one of the most complex and expensive commercial undertakings in the world. Thus, the Northrop-EADS victory that necessitates the creation of this competing supply and manufacturing chain is highly significant, since such a manufacturing base is very hard to come by.

Looking on the bright side…the United States might be getting the best of both worlds: an increasingly diverse manufacturing base without the added burden of being the principal financier of design and development — an honor that still belongs to the Europeans. What’s more, with the precipitous decline of the dollar against the Euro, Airbus (despite its strongest protectionist leanings) and EADS might slowly increase the amount of production done in the United States, especially after a foothold is established in Alabama.