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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