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Hiding the object under a cup, Robin Longstride (played by Russell Crowe) confounds Little John (Kevin Durand) in the 2010 movie remake of “Robin Hood,” and it leads to a fight. Similarly, the Pentagon falls for the shell game of hidden foreign jobs every time it accepts bids from foreign suppliers. And it should lead to a fight.
The typical model for foreign suppliers is to find an American front company to provide the “shells” hiding the foreign jobs.
Today’s shell game is the Pentagon’s contract for the Light Air Support and Light Attack and Armed Reconnaissance programs, where the American company Hawker Beechcraft Corp. is competing against the Brazilian company Embraer. Providing the “shells” for Embraer is the Sierra Nevada Corp., an American modification company that upgrades existing aircraft.
Proposing to the Pentagon “American” jobs, Embraer plans to build the aircraft in Brazil, hiding about 1,400 overseas jobs, then fly the aircraft to America for completion at Sierra Nevada, promising 50 in-country workers.
In contrast, Hawker Beechcraft plans to build and deliver the aircraft in America, ensuring 1,400 American jobs in 29 states.
Further complicating the American supplier’s problems, the Pentagon chooses to be blind to illegal foreign startup subsidies, as well as the Brazilian Air Force’s presence subsidizing the fly-off competition for Embraer.
This unfair advantage is equal to millions of dollars, which could result in the Pentagon buying light attack aircraft from Brazil. The Pentagon’s choice will clearly show whether it falls for the shell game, outsourcing American jobs by buying a foreign-made weapons system.
Also shaded by the shell game are the long-term repercussions of placing trust in foreign good will.
When foreign contractors are subject to foreign government ownership, they are subjected to foreign policy. Vulnerability to international politics has hampered the Pentagon before. Most recently, a European company withheld critical spares during the war in Iraq over a disagreement with U.S. foreign policy.
Brazil hasn’t been with the United States on Iranian policy, Cuban policy or the global war on terror — and it holds a “Golden Share” with Embraer, providing veto power over business transactions.
For working and unemployed Americans, picking a winner is easy. They know outsourcing is contributing to the resilient unemployment problem.
When it comes to their tax dollars, they want them spent in America to provide American jobs. What the Pentagon sees as “competition” isn’t quite so competitive — this shell game needs to end.