updated 8/18/2006 7:20:14 PM ET 2006-08-18T23:20:14

Boeing Co. said Friday it will begin shutting down production of its C-17 cargo plane, a decision affecting nearly 700 companies and more than 25,000 people that provide parts and services that go into each aircraft.

The Chicago-based company said it told its suppliers and subcontractors to stop work on planes beyond those already on order, which will continue production through the middle of 2009. The action will ultimately affect 5,500 Boeing workers directly tied to the C-17 in California, Missouri, Georgia and Arizona.

“It’s not just the (Boeing) plant in California that’s affected, but suppliers throughout the country are affected by this,” said Mark Esper, executive vice president of the Aerospace Industries Association in Arlington, Va. “The question is, do they have sufficient other business to keep them afloat?”

Some Boeing suppliers said the shut down had long been expected and would have a minimal effect on their operations.

“The company had planned for the possibility of the cessation of C-17 production and is comfortable with its position going forward,” said Bill Reavis, spokesman for aerospace and high-tech manufacturer Honeywell International Inc. “We currently have more than a dozen products and systems on each C-17 and will continue to support our products...throughout the C-17’s operational life.”

Aluminum producer Alcoa Inc., which supplies fasteners, castings and forgings, and aluminum sheets and plates for the C-17s, also had planned for the Boeing shut down, said Kevin Lowery, a spokesman for the New York company.

“This is not new, it’s been expected. The aerospace market is in an upturn and we don’t expect this will have a lot of impact on us” in job cuts or financially, Lowery said.

AAI Corp., a subsidiary of United Industrial Corp., supplies Boeing with maintenance training devices for the C-17 line. AAI had planned for 180 aircraft the Air Force ordered and will not be adversely affected by the shut down, said Sharon Corona, spokeswoman for Hunt Valley, Md.-based company.

If the production line were restarted, AAI could accommodate further requests, but the company is not planning for that, Corona said.

An Air Force spokeswoman said Boeing had delivered 154 C-17s as of Aug.8.

Boeing has spent millions to keep its supply line active, in hopes Congress would authorize new buys. The giant cargo plane, nicknamed the Globemaster III, has been used since 1991 to airlift heavy equipment and to transport troops.

Production could start again if Congress approved funding, which could happen as early as next month. But reinstating the supply chain would be costly and add millions of dollars to the cost of the planes — about $154 million each.

Shares of Boeing fell $1.05 to $77.54 Friday afternoon, while shares of United Industrial lost 9 cents at $48.50, Alcoa dipped 8 cents to $28.43 and Honeywell rose 33 cents to $39.45 — all on the New York Stock Exchange.

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