Boeing launches hunt for 777X site
As company officials flew out to begin assessing possible alternative locations, one likely option is Long Beach, Calif., home of the former Douglas Aircraft Co.
Seattle Times aerospace reporter
The day after Machinists emphatically rejected a Boeing contract offer that would have secured the 777X for Washington state, company officials flew out to begin assessing possible alternative locations.
Long Beach, Calif., may be the most likely, raising the possibility of the resurrection there of the former Douglas Aircraft Co.
Boeing acquired the Long Beach site when it bought McDonnell Douglas in 1997. Commercial-jet production ended there in 2006. The giant C-17 military transport is still built there but will cease production in 2015.
As Boeing began serious review of an undisclosed list of sites Wednesday, a person close to the company said, “It’s not just a conversation by phone. People are in the field today, in face-to-face meetings.”
“This is something under way in earnest today,” continued the person, who is familiar with the company’s efforts. “It’s very real.”
Despite Wednesday’s vote, he said, Boeing has not written off Washington state as a potential site for 777X. “No door is being closed.”
That confirms what Gov. Jay Inslee heard Wednesday night from Tim Keating, Boeing’s senior vice president of government operations.
Inslee said late Wednesday that when he called Keating immediately after the vote result was announced, “I said: ‘Are we in contention?’ and the answer came back unequivocally, ‘Yes.’ ”
Boeing spokesman Doug Alder declined to name any prospective 777X sites but confirmed that “As of today, we are actively engaged in pursuing all options.”
“Everything is back on the table,” Alder said, including existing Boeing sites and new locations outside Boeing.
Boeing is still expected to launch the 777X program with a large order from the Middle Eastern airline Emirates on Sunday at the Dubai Air Show.
The company said the decision on where the 777X and its new advanced wing will be built will have to come later.
“We will need to complete the review of all options before any announcements regarding the location will be made,” Alder said.
Washington state’s chances are certainly dimmed by the now-toxic state of relations between Boeing and the International Association of Machinists (IAM).
Boeing said Thursday it has “no plans to re-engage with the union regarding contract negotiations” until the run-up to the current contract’s expiration in September 2016.
That stance doesn’t bar negotiation developing later, but it will clearly be very difficult to move the two sides together in time to have an impact on the decision of where the 777X should be built.
Late Wednesday night, after the outcome of the Machinist vote was announced, Wilson Ferguson — president of District 751’s Local A and the leader of a fiery Vote No rally in Everett on Monday — said he could see no way for Boeing to sweeten the rejected offer to make it acceptable.
“I don’t think this membership will be tolerant of anything but waiting for full negotiations in 2016,” Ferguson said.
Alex Pietsch, director of Inslee’s aerospace office, said the state will have discussions with both parties with an eye to bringing them together at some point.
“That’s clearly going to take some time,” said Pietsch.
Inslee said Wednesday night that the vote means “Now we go to a competition,” and he touted Washington’s competitive strengths: a skilled, experienced workforce; an $8.7 billion tax-break package already in place; and accelerated permitting for construction of Boeing 777X facilities.
Meanwhile, discussions have begun elsewhere.
Michael Sullivan, a spokesman for Utah Gov. Gary Herbert ’s Office of Economic Development, said Herbert received a call Thursday afternoon and has begun preliminary discussions with Boeing leaders, The Associated Press reported.
Salt Lake City was one of three cities named earlier this week by two sources close to the company as potential alternative 777X locations identified in an internal analysis by Boeing.
In a nonunion facility there, Boeing produces the 787 Dreamliner’s horizontal stabilizer, made from carbon-fiber reinforced-plastic composites.
However, Salt Lake is landlocked. At present, Boeing transports the 777’s huge fuselage panels by sea from Japan to Everett. Figuring out alternative logistics to Salt Lake would be expensive.
Huntsville, Ala., which has an extensive space-rocket industry and was also identified in the internal Boeing analysis, has the same problem.
That makes Long Beach the most likely of the three sites named internally as initial targets.
As a West Coast port, it offers a similar supply route for the fuselage panels as Everett.
The 5,000-strong Boeing workforce in Long Beach has long experience building airplanes.
And the United Auto Workers (UAW) union that represents the workforce will likely accept the terms of any Boeing contract that offers life beyond 2015.
In addition, California Gov. Jerry Brown could be expected to come up with significant incentives.
“He would love to start bringing back aviation to Southern California,” said Adam Pilarski, an industry analyst with aviation-consulting firm Avitas and the former chief economist and director of strategic planning at Douglas Aircraft.
“Long Beach has many positives,” Pilarski said. “You have people who have been in aviation manufacturing for a long time. You also have many small suppliers. Years ago, aviation was huge in Southern California and remnants of that are still there.”
The weather is conducive to flying all year long. The universities nearby are good. And Boeing has a pool of engineering talent in the area.
The main drawback at Long Beach may be the state’s business climate, which in 2003 is what ruled out the state as the site for final assembly of the Dreamliner. Permitting and regulations are not business friendly.
And though Boeing doesn’t like the potential water-quality “fish-consumption” rule in Washington state, dealing with California on environmental regulations won’t be easier.
Still, said Pilarski, Gov. Brown “is a very take-charge guy who ... could give Boeing a bunch of exceptions” to whatever tax burdens or regulations might give it pause.
Beyond the Long Beach option, Boeing’s existing airplane-assembly site in North Charleston, S.C., and its big airplane-maintenance site in San Antonio, Texas, have been mentioned as likely contenders.
San Antonio doesn’t have the port that makes logistics easy.
As for Boeing South Carolina, it’s struggling to produce 787s at the rate planned and, according to multiple sources, is still rife with quality problems.
“I would be surprised if South Carolina is chosen,” said Pilarski. “They didn’t prove themselves yet. Maybe in six years (when the 777X would be started) it will be much better, but it’s a big risk.”
Because the 777 is currently made on a very efficient assembly line in Everett at a high production rate of 100 jets per year, deciding to make the new 777X someplace other than Everett would mean introducing a new workforce and adding some risk to the program.
But Pilarski thinks the least risk after Everett is clearly in Long Beach.
“It’s not easy to do,” he said about starting up a new aircraft-production facility. “It’s easier with people who have experience building planes.”
Dominic Gates: (206) 464-2963 or email@example.com