Who better than Boeing to host President Trump in St. Louis?

STLtoday.com Politics 6 months ago

There are not many better examples than Boeing Co. if President Donald Trump wants to tout the benefits of his administration’s policies.

The company’s stock more than doubled in price since the beginning of 2017, outpacing most of its peers that make up the Dow Jones Industrial Average. Corporate tax cuts enacted late last year further buoyed its shares, and the Chicago-based aircraft manufacturer’s defense unit, concentrated in the St. Louis area, has profited from increased military spending.

So perhaps its no surprise that the company’s massive north St. Louis County campus, where it makes F/A-18 Super Hornets and other fighter jets along with some commercial jet wing parts, is playing host to the president Wednesday as he touts the impact of tax cuts during a roundtable with Boeing executives and nine other Missouri companies.

Boeing President and CEO Dennis Muilenburg has called the tax cuts “the single most important thing we can do to drive innovation, support quality jobs and accelerate capital investment in our country.” He and Boeing Defense Space and Security CEO Leanne Caret are expected to attend Wednesday.

Big military budget refuels St. Louis-built Super Hornet

A few years ago, many feared the Super Hornet assembly line here would already be gone. 

“The big positive for Boeing is the tax reform that has gone through,” said Jeff Windau, an Edward Jones analyst who covers Boeing. “Of course, the overall upward momentum defense spending is positive, but I also think it’s positive President Trump has voiced support for the Super Hornet, the F/A-18s, and added some of those into his budget.”

Higher military spending, even in the face of rising deficits that Republicans have historically been averse to, has likely extended the life of Boeing’s Super Hornet line in St. Louis. The line directly employs some 2,000 people, and some expected production to have already wound down as the U.S. military moved toward the newer F-35 fighter built by Boeing rival Lockheed Martin. Instead, Congress included 24 Super Hornets in its 2018 budget, Trump’s fiscal 2019 budget includes a request for 24 more, and the the Navy wants to buy dozens more into next decade.

“The future for Super Hornet wasn’t always that bright,” Dan Gillian, vice president of Boeing’s Super Hornet program, told the Post-Dispatch last month. “Now we feel very good, very confident. We are building more airplanes, bringing on more capabilities. It’s a growing program.”

During his roundtable Wednesday, Trump is expected to discuss his budget request for more Super Hornets, which a senior administration official called “an amazing plane” in a background briefing Tuesday.

The relationship hasn’t always been so warm. Trump initially criticized the cost of the next generation Air Force One, of which Boeing is a lead contractor, tweeting out “Cancel order!” a month after his 2016 election. Talk on the campaign of a border adjustment tax and extremely high tariffs on China, a big Boeing commercial jet customer that company expects will get bigger, posed a major threat to the firm.

“He kind of terrorized them,” said Richard Aboulafia, an aircraft consultant with the Teal Group. “That really motivates you to be a great friend. And that’s what they needed to do.”

Now, Boeing faces new risks from the tariffs Trump signed on imported steel and aluminum last week. While aluminum does makes up a big portion of the material in the company’s aircraft, it’s the threat of tariff retaliation, particularly from China or other Asian counties, that worries analysts.

“They have numerous ways to try and offset some of the material costs,” Windau said. “Longer term, the concern might be some kind of trade war or retaliation.”

If it wins trainer contract, Boeing will assemble T-X in St. Louis

St. Louis assembly site was mostly expected for $16 billion trainer contract, which the Pentagon is expected to award by the end of the year. 

But Boeing has been mostly silent on the tariffs. It said Tuesday it was “watching this closely and assessing the impacts” but had no further comment.

The company, after all, is still hoping the Air Force picks it to build hundreds of new T-X training jets, a major program that would keep the defense facility pumping out planes in St. Louis. A decision from the federal government is expected on that contract this summer.

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