Boeing: 5 major stories of 2008

It was a year of loose ends for the Boeing Co.

The aerospace company began and ended 2008 by announcing delays to its 787 Dreamliner. In between those two events, Boeing’s hopes for winning the U.S. Air Force tanker competition waned and waxed. And the effects of the labor strike of 2008 will carry over into the new year.

As always, the county weathered the ups and downs of its largest employer. Here’s a look back at some of the big Boeing stories of 2008:

787 Dreamliner delays

The company had three separate delay announcements in 2008. A three-month setback in January gave way to a roughly six-month schedule slide in April. By December, the 787 fell a total of roughly two years behind its original delivery date.

Complications with Boeing’s global partners added fuel to the fire of the company’s unions, already angry with the amount of outsourcing on the new 787. Although orders for the 787 dipped in 2008, Boeing saw only one cancellation for its fuel-efficient Dreamliner.

Quotable: “The fundamental design and technologies of the 787 remain sound,” Scott Carson, president and CEO of Boeing Commercial Airplanes, said in a statement in January. “However, we continue to be challenged by startup issues in our factory and in our extended global supply chain.”

Tanker turmoil

In February, Boeing looked like it lost out on a multi-billion dollar aerial tanker contract with the Air Force, sparking concern about the future of the Everett-built 767 jet. But Boeing successfully protested the award to government auditors, who found flaws with the competition. By fall, the contest was suspended until 2009.

Boeing’s 787 delays have given a boost to the once-struggling 767 program. The “mighty” 767 has a backlog of about 70 unfilled requests, keeping 767 workers busy for years to come. And Boeing will get another chance at a tanker contract when the new administration takes office.

Machinists strike and aerospace jobs in Snohomish County

Analysts estimated the Machinists’ strike cost Boeing almost $100 million daily in deferred revenue from missed jet deliveries. And Donna Thompson, local labor economist, projected the county saw about $100 million less in worker paychecks each month of the strike. About 10,675 of the 24,000 striking Puget Sound region Machinists live in Snohomish County.

The strike came as the housing slump was in full force, making it difficult for economists such as Thompson to discern its full effects. Local restaurant owners and retailers, however, scaled back their hiring.

Analyst Richard Aboulafia warned the strike had a far more serious effect: “This strike, following myriad others and with little hope of improved relations, will almost certainly precipitate a BCA exit” from the Puget Sound region.

Boeing’s hiring frenzy, which began in 2004, likely hit a plateau in 2008. Since the start of 2004, Snohomish County has added roughly 14,000 aerospace jobs. But the hiring spree slowed in late summer, just before the Machinists’ strike, with the county topping out at 35,900 aerospace positions, according to a Employment Security Department report.

By November, Boeing announced it planned to cut 800 defense jobs in Kansas and warned of further reductions in employment in 2009.

Stock and incentive payments

Boeing’s stock has been on the decline since whispers of a 787 delay first popped up just after the jet’s rollout in July 2007. The company’s shares began 2008 at $87.57, still down $20 from the previous July.

Members of both Boeing’s engineers and Machinists unions were eligible for an incentive plan payout tied to the company’s stock price in June. Although Boeing’s stock started June still in the $80 range, it plummeted in the last two weeks of the month after an analyst predicted order cancellations and downgraded the company’s stock.

Fully vested Boeing workers saw their payout’s drop from more than $3,000 to less than $1,800.

Production orders

The Machinists strike and faulty parts problems meant production delays for not only Boeing’s 787 but also for its other commercial aircraft. The company pushed back first deliveries of its new 777 Freighter and 747-8. In total, Boeing likely will fall about 100 jet deliveries short of its 2008 goal.

While Boeing won far fewer orders in 2008 — 662 as of late December — than in recent years, the company still has a record backlog of roughly 3,700 unfilled requests. Although the demand for air travel is expected to decline in 2009, Boeing says its 2009 order book remains solid.