Image: Boeing 787 plant in Everett, Wash.
Ted S. Warren  /  AP file
The Boeing 787 assembly line in Everett, Wash. At least four states are battling for a second 787 production line and the economic bonanza that comes with it.
By
msnbc.com contributor
updated 7/9/2009 12:00:01 PM ET 2009-07-09T16:00:01

Boeing's billion-dollar plan to buy the South Carolina manufacturing plant of Vought Aircraft Industries was a much-needed, defensive move to rescue Boeing's fast-sinking 787 commercial jet program.

But whether Boeing meant to or not, the purchase also triggered the starting gun on an intense race between at least four states for a crucial stake in future commercial airplane production.

While Boeing has yet to get its new 787 commercial jet off the ground, business leaders, politicians, union officials and lobbyists are abuzz over where an eventual second 787 assembly line — and the economic bonanza that comes with it — will be located.

Aerospace analyst Scott Hamilton with Leeham Co., said Boeing is considering four possible locations: Everett, Wash., where the plane is assembled now; Charleston, S.C., where the rear fuselage sections are built; San Antonio, Texas; and Long Beach, Calif., where Boeing makes the C-17 military transport jet.

To the chagrin of Washington state, South Carolina looks to be winning the unofficial contest so far. Its governor Mark Sanford said Boeing's purchase of Vought — a deal that includes $580 million in cash and $422 million in forgiveness of previous cash advances — is a testament to his state's friendly business climate.

Hamilton says all the potential sites are viable but Charleston is the logical favorite, despite having a work force that would require more training. Its union membership is younger and less militant than Boeing's main Machinists union.

Locating a second assembly line in Charleston would be more costly than keeping production in Everett but there is plenty of land available and Boeing's real estate experts have already studied the area.

“It all comes down to one thing: cost,'' Hamilton said. “Cost of a strike delay, cost of disruption from strikes, productivity from unions.... If Boeing can't get labor stability, they will look elsewhere. A corporation is going to use the tools it has on hand to get what it wants from labor or the state. That's just the way the world works.''

Boeing spokesman Jim Proulx said Thursday he can neither confirm nor deny which sites Boeing is considering for an eventual second 787 production line. He added that no specific time line has been set for such a decision.

In a prepared statement regarding the Vought purchase, Boeing Commercial Airplanes President Scott Carson said acquiring the North Charleston facility “will strengthen the 787 program by enabling us to accelerate productivity and efficiency improvements as we move toward production ramp-up.”

Boeing has racked up more than 860 orders for its technologically advanced airplane, despite two years of delivery delays. Industry analysts have said that Boeing will need a second final-assembly plant to meet its ambitious goal of producing 10 787 jets per month by the end of 2012.  

Boeing has already put Washington state on notice that more attractive business and labor climates in other states could sway the company to build their airplanes elsewhere.

Washington Gov. Chris Gregoire told a business group on Tuesday that Boeing executives have assured her Washington is still in the running for a second line and that a decision will not be made until at least this fall.

Other factors going into a decision on where to put a second line revolves around Boeing's strained relations with its biggest union. A strike last year shut down airplane production for nearly two months and cost the company an estimated $2 billion in lost revenue.

To prevent that from happening again, Boeing reportedly is pushing its union for a “no-strike” clause in future contracts. IAM District 751 President Tom Wroblewski has said his membership would first have to ratify such a proposal.

In a letter to its members Wednesday, Wroblewski said: “Boeing has not approached us with any formal proposal on this. We're open to talking about anything that will bring more jobs for our membership, and if Boeing has proposals that would ensure we'll be building Boeing airplanes here in Puget Sound for generations to come, we'll certainly listen.”

Analyst Richard Aboulafia with the Teal Group in Fairfax, Va., agreed that Charleston would be an ideal location for a second 787 assembly line, mainly because of tax incentives that would be made available and ample space for assembly lines and paint hangars.

Aboulafia predicted that over the next 10 years, Boeing's commercial airplane division will move to Southern states with weaker unions and right-to-work laws that diminish union power. “It's easier to train flexible workers than it is to work with experienced but inflexible trained workers,'' he said.

But he says talk of a second 787 production line is premature, noting that Boeing is more concerned about securing its supply chain and undoing mistakes than scouting future locations for a second assembly line.

“This is still a story about rescuing the 787,'' said Aboulafia. “Boeing is a long, long way from having the luxury of being able to consider where to place a second assembly line. I'm concerned that this is a plane we still don't know a lot about.”

Boeing's 787 program, despite record orders from airlines, has been plagued by production snafus and costly delays. The company's unprecedented plan to give wide-ranging design and production responsibilities to outside partners has proved troublesome.

By taking control of Vought's manufacturing operations, Boeing hopes to speed up unfinished 787 work and iron out ongoing production problems at the Charleston plant.

Vought, which makes sections of the 787's rear fuselage, has long been viewed as a problem partner for Boeing and has contributed to two years of costly delays on the so-called Dreamliner, which was supposed to make its first flight last month. That flight has been postponed indefinitely.

Two years ago when Vought delivered the first rear sections to Boeing, they were unfinished shells without wiring. Boeing's original plan for the 787 was to have completed sections of the airplane shipped to its massive assembly plant in Everett, where they would be snapped together like a super sophisticated Erector Set.

Boeing's purchase of the Charleston plant, comes a year after Boeing bought Vought's stake in a joint venture with Alenia Aeronautica of the adjacent mid-fuselage assembly plant. Both facilities are about 340,000 square feet and are located next to each other on a 240-acre site. Vought, based in Dallas, Texas, is owned by the Carlyle Group, a private equity firm.

Vought President and CEO Elmer Doty said his company's investment in 787 parts was far greater than expected, and that the financial demands of the program "are clearly growing beyond what a company our size can support."

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