Boeing Saudi Deal has Links to Hazelwood Facility

Boeing just sealed the deal on a government-to-government $30 billion arms negotiation with Saudi Arabia that promises to have a significant impact on the at the company's Defense, Space and Security sector with a base here in city limits.

The agreement calls for Boeing to build 84 new F-15 fighter jets in addition to upgrading five dozen F-15s the company delivered to the Saudi Arabia government in a 1992 transaction worth $9 billion, according to Bloomberg.

The deals means job security through at least 2020 to about 2,000 production workers not only here in Hazelwood, but throughout the Greater St. Louis Area.

Hazelwood Connection

Dennis Muilenburg, chief executive of Boeing Defense, Space and Security said the company has anticipated the finalization of the negotiations, and has been preparing its Hazelwood production facility for it. The signing of the letter of offer and acceptance between the U.S. government and the Kingdom of Saudi Arabia on the F-15 is the last official step toward completing the overall sale, which was announced in late 2010, according to a Boeing statement.

David Cox, the City of Hazelwood's economic developer was also pleased with the closure of the deal.

"After the economic difficulties of the past few years, it’s great to get some good news," Cox said. "Boeing and GKN, one of its suppliers, are two of the largest employers in Hazelwood."

Cox also eluded to what many hope, which is that the deal will cause a trickle down effect to local suppliers and small businesses. 

“People from all over the region make up the workforces of each company," he said. "The Saudi deal will keep workers here and the funds invested in planes, parts and support will turn over many times in our region."

Boeing's goal is to start filling the Saudi orders in 2015. The deal will keep about 60,000 people employed across the nation, but will likely not create any new jobs in St. Louis.

"It will sustain the numbers that are here," said Tom Pinski, spokesman for District 837 representing the St. Louis-based members of the International Association of Machinists and Aerospace Workers, in a STLtoday.com article.

The article also quotes Kevin L. Cummings, who is the president and chief executive officer of which is located in Hazelwood and is the outside supplier of the primary F-15 components. He said he expects his firm to ramp up hiring in the wake of the agreement.

"This agreement will positively impact the U.S. economy and further advance the President’s commitment to create jobs by increasing exports," said Andrew J. Shapiro, assistant secretary, Bureau of Political-Military Affairs, during a special joint press briefing on the deal on Thursday. "According to industry experts, this agreement will support more than 50,000 American jobs.

"It will engage 600 suppliers in 44 states and provide $3.5 billion in annual economic impact to the U.S. economy."

Shapiro also said this deal will support jobs not only in the aerospace sector but also in the nation's manufacturing base and support chain, which are all crucial for sustaining national defense.

Flexing Muscles

The White House announced it had finalized the transaction late Thursday morning from Hawaii, where President Obama is on a holiday vacation with his family. According to The Wall Street Journal, it's part of a broader push by Washington to counter Iranian power.

"This sale will send a strong message to countries in the region that the United States is committed to stability in the Gulf and broader Middle East," Shapiro said. "It will enhance Saudi Arabia’s ability to deter and defend against external threats to its sovereignty.

"It will advance interoperability between the air forces of our two countries through joint training and exercises."

According to Bloomberg, which also says that the announcement came just after Iran threatened to block the Strait of Hormuz, a major shipping channel for Persian Gulf oil. If economic sanctions are increased, they will be aimed at stopping the country from acquiring a nuclear bomb.

In the media

This is something headlines across the internet are ablaze about right now. Here are just a few of hundreds of headlines regarding the deal:

• U.S. sends 'strong message' with Saudi fighter deal-Calgary Herald
• US finalizes deal to sell F-15s to Saudi Arabia; part of effort to contain threats from Iran
• Saudi $29.4 billion F-15 deal confirmed by White House-Arabian Aerospace
• US Saudi fighter jet sale to help offset Iran-IBNLive.com
• US to sell fighter jets to Saudi Arabia - White House-Reuters Africa
• Special Joint Press Briefing On US Arms Sales to Saudi Arabia-US Department of State
• US announces Saudi arms deal amid tense relations with Iran-Gant Daily