Northrop-Airbus team wins aerial tanker deal

Century City-based Northrop upset rival Boeing Co. in a surprising win that analysts said could alter the companies' fortunes and erode Pentagon's long-standing policy of buying weapons systems made by U.S. companies.

The award, likely to be the nation's last big Pentagon purchase for at least a decade, will have enormous economic consequences, creating thousands of jobs around Mobile, Ala., as well as in Southern California.

"Mobile has just joined Toulouse and Seattle as the world's third major aircraft manufacturing city," said Stephen Nodine, the county commission president for the Alabama city, referring to the French home of Airbus and Boeing's commercial aircraft manufacturing operations in Washington state.

But the decision to purchase a tanker based on a plane developed overseas is likely to rile "Made in America" proponents and lead to a protracted battle in Congress.

"The decision means billions of taxpayer dollars will be used to create and sustain jobs in foreign countries, rather than here in the U.S.," said Tom Buffenbarger, president of the International Assn. of Machinists and Aerospace Workers, a major union at Boeing.

News of the decision, which came after the close of the stock market, sent shares of Northrop up more than 6% in after-hours trading, while Boeing was dropping more than 3½%.

The stakes are huge. The contract, initially worth $40 billion, could grow to $100 billion with follow-on orders; the Air Force is considering acquiring more than 400 tankers over the next four decades.

"This restores Northrop to the top ranks of military aircraft suppliers in the U.S.," said Loren Thompson, a defense policy analyst for the Lexington Institute. "For Boeing, this is a blow that will significantly diminish military business prospects for decades to come."

Aerospace remains one of the largest private employers in Southern California, where Boeing has more 31,000 workers -- most of them in defense-related programs -- and Northrop has about 27,000.