KC-X and the Sky-high Cost of Sky-high Fuel

EADS' (Airbus' parent company's) annual report, about a week ago, contained an interesting note that slipped by many observers. It caught Lord Mandelson's attention and got a bit more ink, but still was largely ignored. That note was that EADS has pulled out of the KC-X bidding.

There's quite a story behind that, and I shall tell it as well I can remember.

The KC-X is the replacement for the old - ancient - KC-135 Stratotankers, the US military's air-to-air refuelling capability and key to global operations. They were adapted from Boeing's 707 airframe - the forerunner of the 747s, 767s and 777s that we see at airports today - and built in the 1950s and 1960s. The youngest ones are 45 years old, and some a decade more than that!

The story of the bidding process is rather unusual. The USAF issued the RFP (i.e. call for bids) in January 2007. The process began in an unusual way by stressing that this was an urgent requirement, and that delays in procurement would put lives in jeopardy. The two bids submitted were from EADS/Northrop-Grumman using a version of the Airbus A330 to be assembled in Alabama using US workers and imported parts, and from Boeing with a modified 767.

A mere 13 months after the bidding process began, in February 2008, the selection was made: EADS/NG had won. Again, in an unusual move, the USAF made a point at the press conference that, due to the age of the equipment being replaced, delays would cost lives - a not-too-subtle warning. This didn't seem to bother Boeing, though, who filed an appeal against the decision. That appeal was upheld in June 2008, bidding re-opened in July following the forced resignation of the head of the USAF - and then the project was put on hold in September. A year later, September 2009, bidding started again.

The project, particularly the un-selection and reopening of bids, has been dogged by allegations of jingoism amongst the US players: a feeling that letting a foreign company win would be unAmerican. This, despite the fact that Northrop-Grumman is at least as American as Boeing, that a significant proportion of the work would be undertaken by Americans in America, and that Boeing were - in 2003 - accused of corruption and stripped of $1bn of government contracts.

EADS has apparently realised that the deck was stacked against it, and pulled out in March this year, leaving this whole sorry mess as nothing but a historical note. KC-X is still on the drawing board. The US is still flying the creaking half-century-old tankers it was trying to replace. The UK MoD is trying to buy a couple of those rusty old KC-135s, refitted for electronic battlefield surveillance - the RC-135 'Rivet Joint'.

Hey, if you wanted a happy ending, you should have gone to a "massage parlour".

- KoW

News in Brief

Lots happening today, so just a few short notes...

Rocking the Boat

Following on from the story yesterday evening, Geoff Hoon and Patricia Hewitt have sent out a letter calling for a secret ballot on Gordon Brown's premiership. There are claims that Charles Clarke is associated with it, and rumours that Harriet Harman might be behind it - as deputy PM, a leadership challenge would make her de facto Prime Minister for a few weeks. Haven't heard anyone reporting anything from the Milibands yet...


"I'm just big-boned"

Metro (p11) this morning - 'Bone risk to diet girls' - saying "Those with higher levels of fat tended to have larger and thicker bones, Bristol University scientists found". In other words, they've proven that a fattie/big-bones correlation exists, so we can expect to hear that line a lot more now that it's been scientifically proven.


DNA F-A-I-L

Metro (p12) this morning also has a story on the DNA database. It only helps in 1 case in 150. On burglaries - a crime characterised by the culprit having buggered off by the time the homeowner returns, so theoretically ideal for tracking technology like DNA or fingerprints - the database has less than 40% success. Shouldn't we be scrapping this huge, expensive, illegal mess and spending money on solving crimes?


Flav still 'fit and proper'

Flavio Briatore's lifetime ban from F1 has been overturned, so he can keep his QPR job, and he's been awarded a paltry £13,500 in compensation. The FIA says it will appeal but, now that Max Mosley has gone, does anyone really care? Bury it with the other scandals of the last decade and move on...


Monsters from the ID

Cambridge is to be used as a testing ground for ID cards for foreign nationals, according to David Howarth MP (h/t fanf). I wonder if this is designed to wind up the local NO2ID and security research people? Or to scare off world-class academics/scholars in an anti-elitist move? Or if it's just a conveniently large location sufficiently far from London that they can expect lower press scrutiny?


Also, it's snowing. Bet the 18:23 out of King's Cross is cancelled.

- KoW

Stabby!

Lord Mandelson has finally broken cover, and talked to the Evening Standard, sticking a knife squarely between the shoulder blades of Labour's election strategy. He's spot on in his comments - Old Labour, the core voters, could never win after 1979. And that core vote has been (literally) dying off for 30 years, and defecting to the BNP ("The Labour Party your grandparents voted for"). It brought to mind a quote (paraphrased) from Full Metal Jacket:

In strategic terms, Brown's cut the country in half... the mainstream media are about to wet their pants and we've heard even Mandelson's going to say the election is now unwinnable

The story mentions rumours of a cabinet resignation, and both Guido and the New Statesman (h/t Iain Dale) have identified the minister as Tessa Jowell.

Iain has commented on this, pointing out that Lord Mandelson is too politically astute to have attacked Labour's election strategy without a clear intention - but what that intention is remains a mystery. I doubt he would act alone, or be fooled into thinking it was Game On if there wasn't support - but I don't put it past him to invent a resignation rumour knowing that the press will pounce on every cabinet minister and ask them awkward questions about their loyalty.

The resignation rumour is probably false - anyone quitting the cabinet at this stage would be an utter disaster, and I expect all sorts of carrots and sticks have been applied to ensure it doesn't happen, no matter how unhappy anyone is. Plus, we've all seen the last episode of The Thick of It, and Malcolm Tucker's solution is probably as good as it gets.

Or perhaps that's the intent - rock the boat and hope it forces an early election? Before the budget, before the tax rises from the last budget (and PBR), before the Tories have prepared, and before No.10 can cock it up any further?

Who knows? But speculating is fun!

- KoW

Degrees: Supply and Demand

Monday night's Standard/Yesterday's Metro story that the value of degrees has been slashed "by 75%" is hardly surprising, though the Department for Business, Innovation and Skills flat-out denial of it is. Interestingly, the story isn't online for Metro, and the BBC hasn't covered Lord Brown's comments - their last mention of him was a month ago when his review was announced.

The claim is that degrees add some X thousands of pounds of salary per year, and therefore graduates can afford to pay lots for their education. This was clearly true and X fairly large when 5% of the population went to university and graduates went into The Professions. Now the figure is more like 50%, and sending half of the population to university is a stated goal of the government.

As should be fairly obvious to anyone with a grasp of even the most basic economics or intuition about business, hugely increasing the number of graduates in the job market reduces the value of a degree - in fact, anecdotal evidence is that jobs now demand degrees where previously they were happy with A-levels. The simple fact is that the distribution of jobs available is broadly similar to what it's been in the past: a few % of high-paying professional jobs, a large block of office work, another block of services, and then unskilled/semi-skilled manual labour. The salaries are commensurate with the work involved and are unlikely to have changed much in real terms - after all, inflation tracks GDP reasonably closely so any increase in earning power is cancelled out by an increase in costs of living.

The inescapable conclusion is that a degree in 2009 is worth less in real terms than a degree in 1999 or 1989 or 1979. Why is DBIS denying something so obviously true?

- KoW

Snippets

So, lots of things happened yesterday, and I don't have time to post on all of them individually.

Václav Klaus, the Czech President, became the 27th and final leader to ratify the Lisbon Treaty. It will now come into effect from December 1st, creating official President and Foreign Secretary roles and changing virtually all EU-wide lawmaking from unanimous to majority decisions. This, in the language of the EU, is "simplification" rather than a ratcheting up of power. I'm anti-Europe, but I don't think this change is as catastrophic as others have made out - in particular, we now only need a majority vote to begin repatriating our sovereignty, and centre-right politics are in ascendance across the continent.

Since this is now unavoidable - unless some kind soul were to cause a general election in the next four weeks - I support David Cameron's decision to drop the referendum calls. As William Hague says, it's pointless - it can't unratify the treaty and it's too late to stop it. The idea of putting it in as a manifesto pledge is much better. Unlike a referendum which might go either way (see Ireland), a Tory victory will guarantee a mandate for action - and, if the polls are to be believed, such a victory is on the cards. I guess we'll see what Cameron has to say today.

There's been another huge bail-out of the banks by the UK government - £40bn more thrown at RBS and Lloyds. Alex was in quickly with the news, and reports on today's FT coverage. "Worlds biggest bank bailout" as Metro's front page shouted. City AM leads with the story as well, but focussing on Neelie Kroes' influence.

GM has pulled out of the Magna/Opel deal, which is probably bad news for the Vauxhall workers - GM is now going cap-in-hand to the UK and German governments. I can't see Lord Mandelson changing his stance, especially as finances are getting ever tighter, and the German promises were for a different deal and were made prior to an election that's now happened - very easy to change.

M&S are now selling other brands - I thought this was nationwide when they started the trial in April, but apparently it is now. Good. I don't buy shoddy own-brand colas. This now makes their lunch deal much more attractive as I can get a bottle of Diet Coke with the much-better-than-Boots' sandwiches.

Toyota has pulled out of F1, with immediate effect. Poor Kamui Kobayashi... I hope he can get another drive after his fantastic performance in the last two races. If not, we should support him by going and eating sushi at his family restaurant! Bridgestone are going, too, which is a shame. I was hoping there'd be tyre choice back on the strategy menu now that fuelling is off.

- KoW