Business
10:35 am
Tue September 24, 2013

St. Louis Boeing Facility Affected As S. Korea Rejects Warplane Purchase Project

Last updated 4:51 p.m. with additional information. 

South Korea says it has rejected Boeing Co.'s bid to build and supply 60 new fighter jets - even though it was the sole contender in the bidding process.

Defense Ministry spokesman Kim Min-seok said Tuesday that South Korea has decided to delay naming a winning bidder for the 8.3 trillion won ($7.7 billion) weapons purchase project.

Boeing offered its F-15 Silent Eagle, but South Korean critics say the plane lacks state-of-the-art stealth capabilities and cannot effectively cope with North Korea's increasing nuclear threats.

St. Louis' Boeing facility produces the F-15. The St. Louis Post-Dispatch says "an estimated 2,000 people work on the F-15's final assembly line and thousands more work at suppliers" here in St. Louis.

The Wall Street Journal reports on how it would impact St. Louis' production line in the future:

The F-15SE is an upgrade of one of the best-selling fighter-jet platforms in the world but Boeing has yet to secure any orders. The new model touts improvements in aerodynamics, avionics and "stealth" capabilities that make it less visible to radar. The order would have extend the life span of Boeing's St. Louis production line into the next decade, the U.S. company has said.

The announcement was big blow, according to Teal Group Vice President of Analysis Richard Aboulafia.

“I think it could be the end of the F-15s commercial life, potentially,” he said. “Thankfully they’ve got the Saudi contract to keep the line alive until about 2018, 2019, but after that, assuming this stands, this looks like that’s it.”

Aboulafia said if there is another round of bids Boeing’s best pitch to South Korea may be selling a squadron or two of the F-15 as a stop-gap while the country waits for a newer generation jet, such as Lockheed’s F-35.

Kim says South Korea must have better air power and Boeing's rejection was made in consideration of North Korea's nuclear program and other factors.

Lockheed Martin's F-35 Joint Strike Fighter and EADS' Eurofighter Typhoon earlier competed with Boeing but were eliminated for exceeding Seoul's budget cap. 

Boeing issued the following statement on the matter:

Boeing is deeply disappointed by the Republic of Korea’s Defense Acquisition Program Executive Committee decision. Boeing has rigorously followed the Defense Acquisition Program Administration’s instructions throughout the entire process. We await details from DAPA on its basis for the delay while evaluating our next options.

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