China plane purchase means Maryland jobs Alcore and PATS Inc. both subcontract work from Boeing

Aircraft industry

October 31, 1997|By Eric Lekus | Eric Lekus,CONTRIBUTING WRITER Bloomberg News contributed to this article.

WASHINGTON -- At an extravagant signing ceremony, Boeing Co. formally announced a $3 billion order yesterday to manufacture 50 passenger jets for the Chinese government, cementing a deal that was years in the making and that will bring an undetermined number of jobs to Maryland and other states.

The deal, China's largest purchase of airplanes ever, includes 36 737s, eight 777s, five 757s and one 747. Boeing officials had been negotiating the contract for more than three years, and senior U.S. officials, including Commerce Secretary William M. Daley, had personally lobbied the Chinese government on behalf of the Seattle-based aircraft manufacturer.

Once the deal was reached, the two sides decided to use this week's summit meeting between President Clinton and President Jiang Zemin of China to announce it, underscoring how the U.S. business community benefits from closer ties between Washington and Beijing.

"The summit between the leaders of our two countries this week signals a long-awaited warming of U.S.-Chinese relations," said Ron Woodard, president of Boeing's commercial airplane division. "This warming led to this landmark U.S.-Chinese agreement between China and Boeing."

For Maryland and most other states, the deal will provide jobs at companies that subcontract work from Boeing. Two subcontractors in Maryland that stand to benefit are Alcore Inc., based in Harford County, and PATS Inc., based in Columbia.

Alcore, which does about one-fourth of its business with Boeing, makes structural components for inclusion in aircraft floors, wings, tails and engine housing. The company hopes to add about 50 jobs to its 175-person work force over the coming year, according to Jerry Frechette, Alcore's sales and marketing director. At least 20 of those jobs, Frechette said, could result directly from Boeing's new deal with China.

"We are growing at the rate of 20-25 percent a year -- that's based a lot on the Boeing work we have," said Richard N. Orzechowski, Alcore's chief financial officer.

PATS manufactures parts for aircraft auxiliary fuel systems. Separately from yesterday's deal, PATS had recently signed a contract with Boeing that allowed it to begin expanding its work force from 160 to more than 300 employees. Stephen Huter, vice president of operations at PATS, said the China sale should lead to even more business.

"This is good for everybody," Huter said. "Not only is there an increase in employment, but there is long-term stability."

Officials from Alcore and PATS were among the dozens of subcontractors from around the country represented at the signing ceremony yesterday, which was replete with balloons and U.S., Chinese and Boeing flags.

The Boeing-China deal comes at a time when supporters of greater trade with China are at odds with some critics who want the Communist regime to be isolated for its human rights policies. Deals such as Boeing's that provide jobs in many

congressional districts can make it more difficult for lawmakers to vote against favorable trade status for China.

Some officials note that Boeing's success in forging deals with China has long been seen as a good barometer of relations between the two countries. Beijing tends to capitalize on foreign companies' interest in serving its market of 1.2 billion people to try to win concessions from governments.

"The Chinese dole out aircraft contracts as a form of political largess," said Richard Aboulafia, an aerospace expert with the Virginia-based Teal consulting group.

Boeing has recently shut down production of its 737s and 747s to catch up on a backlog of work, and analysts said Boeing would have a hard time delivering a 737 before 2000.

Pub Date: 10/31/97

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