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Crunch time at Boeing: Big decisions, deadlines loom Second 787 site selection expected in coming weeks EVERETT — The Boeing Co. has a hefty list of tasks to wrap up by year's end, including selecting the site of the company's second 787 jet assembly line.The second line race is down to two competitors: Everett and Charleston, S.C., Boeing's chief executive Jim McNerney said on Wednesday. “We are sorting through that right now and ... should expect a decision in the next couple of weeks,” he said. His comments came on a day when he announced a major drop in earnings, largely blamed on company delays for the 787 and the new 747-8 Freighter. Boeing's decision on a second line will be watched closely in Snohomish County, where the company's first 787 assembly line is located in Everett. Washington state offered Boeing and its suppliers more than $3 billion in tax incentives in 2003 to land the 787. But that hasn't kept Boeing from looking elsewhere for a second line. One reason that Boeing has its sights on South Carolina is its sparse union presence compared to the Puget Sound region. Earlier this year, Boeing bought out its 787 partner's factory in Charleston. The machinists there recently voted to decertify the union. Boeing's experienced work force here has been credited with fixing many of the problems created by the company's far-flung 787 supply chain. But McNerney played down the risks of expanding in South Carolina. “Some of the modest inefficiencies ... associated with a move to Charleston are certainly more than overcome by strikes happening every three or four years in the Puget Sound” area, he said. Boeing's McNerney noted that continued labor strikes by the company's Machinists here have had a “very negative impact to the company.” “Our balance sheet would be a lot stronger today had we not had a strike last year,” McNerney said. “Our customers would be a lot happier had we not had a strike last year. The 787 would be in better shape.” However, McNerney acknowledged that blame for the 57-day Machinists strike last fall didn't rest solely with the union. The company and union have been having “constructive” discussions on an ongoing basis with regard to the second line, McNerney said. Analyst Scott Hamilton, with Issaquah-based Leeham Co., took McNerney's description of the talks as somewhat encouraging for Everett. “I view those comments as telling us straight away that the decision has not been made,” he said. Besides the risk of relying on a less-experienced work force, Hamilton sees another risk in locating the second line in Charleston: antagonizing Boeing's labor force here. Connie Kelliher, a spokeswoman for Boeing's Machinists union, said Wednesday that the labor group maintains its position that building the 787 outside the Puget Sound region doesn't make sense. But the Machinists remain “committed to making the company successful.” Boeing will need the Machinists and its engineers union to help the company accomplish the rest of its goals by year's end. The company reiterated on Wednesday its goal of putting the much-delayed 787 in the air by Dec. 31. Because of supplier and production troubles, the 787 is running more than two years late. Most recently, Boeing called off the jet's first flight in June after discovering a structural weakness in the spot where the wings and body join. Boeing workers are wrapping up design details to fix the problem this week, McNerney said. And the company is “pleased” with modification progress on its test planes. Boeing will need to rerun several of the ground tests it already performed on the first aircraft before the 787 will be cleared for takeoff. “Flight test is still expected by the end of the year, and the first delivery remains scheduled for the fourth quarter of 2010,” he said. On Boeing's defense side, the company also faces a looming deadline as it hopes to win a lucrative contract supplying the Air Force with aerial refueling tankers. The Pentagon relaunched the contest between Boeing and duo Northrop Grumman and EADS in September with the intent of announcing a winner next summer. Boeing has been reviewing and submitting questions about the Air Force's draft requirements, so it can determine whether to bid its 767-based tanker, its 777-based tanker or both. |
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- State already raising fees and rates that restrict business growth
- Some legislators again targeting people’s initiative petition rights
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COMMENTS
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It's going to go the way of the Dodo. As a matter of fact, ALL planes will.
This stuff is so easy to predict (unfortunately I have no desire to profit off the loss of others, so I refrain from "betting" on all of this). When Boeing moved its headquarters to Chicago it was clear that they wanted to separate their corporate heads from the workers, lest, one day, the workers separate the heads from he corporate folks.
The next step, in the divide and conquer routine, is to slowly push production out from the entrenchment that is the Puget Sound. The "global" JIT manufacturing started this process (no matter that it's been a disaster), relocating plants elsewhere, out of the region, is the next step.
It's really about the bottom line. Boeing can no longer properly compete without driving down wages: well, regardless of wages they, as well as everyone else, won't be able to stay afloat.
There are two things that people need to keep in mind as we continue down the economic collapse path:
1) You can't push on a string- can't force people to buy stuff (airplanes [though governments make all sorts of pressured arrangements- this is just subsidies that will ultimately fail because they aren't sustainable] OR tickets [what, laid off workers are going to fly around? perhaps Goldman Sachs employees, but there's not, thank god, enough of them to keep Boeing and others in business]);
2) Economies of scale - increased production allows for decreased costs; this works the other way round too, as reductions in production numbers result in higher (end) costs.
The growth junket is over folks. Let's spend our energy on dumping these corporations and working with/for things that will be needed in the future (all those bright Boeing minds, unencumbered by stifling "management," surely can come up with solutions).
Mark Nagel | Oct 22, 2009 9:06 pm | 0 replies | Request removal
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I'm sure it's considered a great work of art, I am sure that for the average union member it signifies a source of great pride. But in the court of public opinion, the metal sculpture of the family on strike in front of our union headquarters would mean a lot more for our image and that which we are trying to convey if we took it down and replaced it with a depiction of two or three machinists working on an airframe, wouldn't that score us a few more points with a skeptical public and a company quick to blame us for their troubles?
DnkWink | Oct 22, 2009 2:10 pm | 0 replies | Request removal
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The main task Boing needs to accomplish immediately is to get rid of the entire sorry inept upper level of mis-management that got them where they are.
A bunch of monkeys with a few shocks of bananas could do better...and bananas are at record low price right now, go for it.
Rich Kruml | Oct 22, 2009 11:36 am | 0 replies | Request removal
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McNerney (sp)needs to wake up. His upper management team has now ****** off customers, union workers, and lately his lower management people. The latest move has lowered the earnings of his lower management team and approximately 50% of them have gone back to being union workers. The people left managing the floor and the replacements have no clue what they are doing.
The idea of having other companies do their own engineering has failed, perfect example of this is the 787 and its global partnership.
The company no longer has its expertise with engineers, they got laid off or found better paying jobs elsewhere.
This is a prime example of corporate greed in America and it trickled down to inefficient production lines and massive cost overruns.
The upper management team wanted a new work force for the 787 and when that failed they had to bring in legacy union workers to try to fix the problems.
My personal opinion is this: The new boeing "McBoeing" has drained the company down so bad it may not recover. They have lost their edge and no longer know how to produce a new aircraft or even know how to continue to run an existing production line. The money is gone and they cannot even keep up the existing lines in an efficient manner.
Go ahead and give your corporate management team their bonuses, they have done an outstanding job.
But hey this is just my opinion.
G DM | Oct 22, 2009 11:18 am | 0 replies | Request removal
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You're right, Bill. The caption had the wrong date for the rollout. It should be correct now. Thanks for pointing that out.
Elaine Helm
New Media Editor
The Herald | HeraldNet.com
Elaine Helm | Oct 22, 2009 10:40 am | 0 replies | Request removal
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This was the only strike that i know of the company just can't let it go. It's been over a year now!!!!!!! After a strike the first thing the company dose, is have a crew meeting telling evey body it's over and get back to work. WHY CAN'T THE COMPANY DO THE SAME!!!!!!!
david kirby | Oct 22, 2009 9:15 am | 0 replies | Request removal
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http://www.dailyfinance.com/2009/10/21/boeings-earnings-miss-and-lowered-guidance-means-time-for-a-ceo/
Nunya Bisniz | Oct 22, 2009 8:21 am | 0 replies | Request removal
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A strike, a negative impact? Uhm, isnt' that the point? A strike is the only leverage workers have to prevent exploitation and keep wages and benefits at the working class level. No one wants to shut down progress, but it is necessary when you have an executive team that is so far removed from the realities of the production floor, they need end up using a strike to "catch up" w/ their poor supply and management decisions.
The company has used the last strike as an excuse for everything and those in the know, realize it is simply an excuse for management's many shortcomings.
And yes, it has been the experienced workforce that not only found but has been pulling the company's butt out of the fire on 787. We want this plane to fly, but getting kicked to the curb at every turn doesn't leave any of us feeling that management has any intention of keeping a 2nd line here in Everett.
CC At the Big B | Oct 22, 2009 6:59 am | 0 replies | Request removal
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The airlines will buy 787s built in South Carolina if they're sold at a deep discount from the Everett-built 787.
neil thomson | Oct 22, 2009 6:54 am | 0 replies | Request removal
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.
They (China) seem to curtail strikes a lot better than Americans are. Gee... we could learn a thing or two, huh? Michell Dunlop would be in writer HEAVEN if she simply packed up & moved there.
Blame the Union for not giving into poverty. Yeah. Real smart ethics. You go grl.
cme everett | Oct 22, 2009 1:52 am | 2 replies | Request removal
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Mr. McNerney,
Please stop blaming all of Boeings current woes on the last strike.
You know, as well as all of the IAM Union members, that there are a lot more items contributing to Boeings current problems, but these items don't quite make it out to the media & public eye.
I won't name the problems, because its not my place to, however I just ask that you be more fair in placing the blame.
I will say for the record, that Boeing will make it over the 747-8 and 787 speed bumps and prevail. After all, I do believe that Boeing makes by far, the best and safest aircraft!
Dan Matthews | Oct 22, 2009 4:42 am | 0 replies | Request removal
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Uhhhhh.... wasn't rollout July 8, 2007 - 7/8/7? The caption on the picture says July 7, 2008.
Bill Descoteaux | Oct 22, 2009 2:09 am | 0 replies | Request removal
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