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Boeing may get $1.2 Billion contract from Korea for additional "offsets" are ensured

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posted on Jun, 2 2015 @ 11:28 AM
South Korea is in the process of deciding who to award a 1.2 Billion dollar contract for air fefueling tankers. A contract that Boeing is the rumored front runner for in the KC-46. South Korea going with the KC-46 will allow them more cross training with US forces and bring closer ties with the US Air Force. Something that Korea sees as a necessity to counter China's regional expansion aspirations and any potential threat from North Korea. Korea also flies a large number of US derived jets and the KC will allow a more seamless transition into aerial re-fueling.
However Korea wants what's called "offsets" to seal the deal. An offset is a hand, by the customer country, in part of the manufacturing process and assemble of the jets. Korea is trying to bolster and modernize their aircraft manufacturing sectors and being allowed to manufacture sub-components or final assembly of the any Korean KC jet will help in this effort.
Boeing current competition for the contract are the Airbus A330 and Israel's 767-300 tankers.

Korea might be ready to buy some Boeing (NYSE: BA) military planes. But in return, Korean aerospace contractors want in on the aerospace manufacturing action.
Korean Consul General Moon Duk-ho said during a Thursday conference at Joint Base Lewis McChord just south of Tacoma that his country is considering an estimated $1.2 billion Boeing tanker purchase in June.

But if Boeing wants to win that contract, the country wants the company to send some of its manufacturing work there as well.

During a panel on overseas military sales, Moon said he’s happy that Washington Gov. Jay Inslee will visit Korea for the first time from Aug. 29 through Sept. 2.
But he isn’t so happy about the amount of work Boeing and other aerospace companies have sent to his country, versus the amount sent to Japan.

Moon suggested the Korean government will examine U.S. support of Korea’s aerospace industry when it chooses between buying Boeing’s Everett-built flying tanker, and the competing aircraft from Airbus at the end of June.
“Boeing has many things to give us,” Moon said in a brief aside after his remarks. “We need a Boeing offset from your side.”


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