Boeing confirms it may sell Wichita plant

By Dominic Gates
Seattle Times aerospace reporter

E-mail this article Print this article Search archive

Boeing confirmed yesterday that it is actively exploring a sale of its huge plant in Wichita, Kan.

In a message to employees, Boeing said the commercial-aviation facility there and a companywide support-services unit would be up for sale; the military operation in Wichita would not be affected.

A sale would affect about 8,500 of Boeing's 12,000 workers in Wichita. Boeing employees fear a sale could lead to layoffs or reductions in wages and benefits.

Two smaller Oklahoma plants — in Tulsa and McAlester — also may be sold, Boeing said. Those plants employ 900 and 170 workers, respectively.

The move is part of a dramatic reshaping of Boeing, in which the company shifts from fabrication work to focus on overall design and quick, final assembly.

Wichita's aviation history • Self-proclaimed "Air Capital of the World" and home to Boeing's second-largest plant (after Everett). • Largest concentration of makers of business jets and private planes. • Home to McConnell Air Force Base, where the 184th Air Refueling Wing flies the aging KC-135 air tankers, a version of Boeing's first jet, the 707. • Airbus has a team of 160 engineers working on wing-design projects, including the wing of the forthcoming superjumbo jet, the A380. All of that aviation activity grew from seeds planted a few years after the Wright brothers' first flight. In 1920, aviation pioneers Lloyd Stearman, Clyde Cessna and Walter Beech worked at Laird Airplane here. Later, all three set up their own companies to build airplanes. In 1962, Bill Lear, the modern pioneer of business jets, set up shop here. The direct legacy of those four men is a city with four aircraft-manufacturing plants: • Boeing bought Stearman's company in 1929. It became Boeing Wichita. • Cessna makes Citation business jets and private planes. • Raytheon Aircraft inherited Beech's operation and now makes Hawker business jets and Beechcraft airplanes. • Bombardier bought Lear's company and makes Learjets. As of October 2003, according to Boeing, the Wichita area employed 33,000 people directly in aviation, with 113,000 more doing related ancillary jobs. Add an estimate for all of the service jobs that grow out of the aviation employment, and a total of 371,000 regional jobs are supported by the industry.

Although final assembly will be centered in Everett, the shift troubles employees here, too, because Boeing has major fabrication facilities in Auburn and in Frederickson, Pierce County.

The machinists union is concerned that, on the planned 7E7 line in particular, too little of the hands-on work would be done by Boeing employees.

If sold, the Kansas and Oklahoma facilities would continue to produce parts for Boeing, but as external suppliers.

"It's been no secret that we've been studying options for the future of Commercial Airplanes' operations in Wichita, Tulsa and McAlester," Boeing said in an e-mail message to employees. "We've now reached the point where the next logical step is to see whether there is market interest in these operations and, if so, how they might be valued. This stage is under way and will be continuing for a number of months."

The message — sent by Jeff Turner, vice president and general manager of Boeing Wichita, and heads of the Boeing Wichita military facility, the Tulsa facility and the Wichita support-services group — added that no firm decision to sell has been made.

"None of us can predict the future," the message said. "We can tell you, though, that the Wichita/Tulsa division will remain a critical supplier to Boeing under any of the scenarios under study."

The Wall Street Journal reported on its Web site yesterday that Boeing has hired Goldman Sachs to handle the possible divestments, and that the investment bank this week began distributing a "pitch book" to prospective buyers.

There has been no firm indication of possible buyers for plants in Wichita or Tulsa.

A Jan. 25 report in The Seattle Times that Boeing was exploring a sale of the Wichita and Tulsa operations caused a furor in Wichita. Boeing rushed to downplay the story without denying it.

Boeing Chief Executive Harry Stonecipher said at the time he had had "absolutely zero conversations with anybody about buying Wichita and, to my knowledge, no one else has."

Yesterday, political reaction in Kansas to the company's latest message was swift.

"This deeply troubling turn of events strengthens my concern regarding the long-term strategy of Boeing," Sen. Sam Brownback, R-Kan., said in a statement. "The Boeing corporate strategy has proven to be bad for Boeing, bad for Wichita, and bad for America. I implore the board to seriously reconsider the current course of action that has led to declining market share and employment."

Brownback called for Senate Commerce Committee hearings to investigate Boeing practices.

"I am disappointed," said Rep. Todd Tiahrt, a Kansas Republican and former Boeing employee. "I have done everything within my power to secure and maintain high-quality, high-paying jobs at Boeing Wichita. However, I cannot control what the Boeing Company does."

Boeing Wichita at a glance Employees: Boeing is the largest private employer in Kansas. The Wichita plant, including both commercial and military operations, employs about 12,300 workers. (For comparison, Everett employs about 17,000.) About 7,000 employees work in Wichita's commercial airplane facility. Another 1600 work in a support-services unit. The rest work in a military airplane facility that would not be affected by a sale. Indirect jobs: 42,000 ancillary jobs are dependent on Boeing Wichita. Employment accounts for 15 percent of Wichita's jobs and 17 percent of the city's earnings. 2002 payroll: About $1 billion. 2002 business with suppliers in Kansas: $193 million. Key commercial-airplane products: • 737 and 757 fuselages. • 737, 747, 757, 767, 777 and (proposed) 7E7 nose-and-cockpit sections. • 737, 747, 767, 777 struts, which fasten the engines to the wings. • 737, 747, 757, 767, 777 engine casings. All these subassemblies go by rail to Renton or Everett. Source: Boeing

Despite Boeing's caveat that no firm decisions had been made, many read the company's message as evidence of a firm intention.

"Have they ever performed these studies and not made a sale?" asked Bob Brewer, Wichita director of the Society of Professional Engineering Employees in Aerospace (SPEEA).

"We know what Boeing's future holds," he said. "They want to put big airplane parts together in Seattle. They are not interested in some other parts of the business, and apparently this is one of them."

Brewer was referring to the company's long-range vision, which focuses on designing, assembling and selling airplanes. At the same time, it would omit much of the hands-on, labor-intensive building of parts.

Rather than build most of a plane from start to finish, Boeing would do only quick, final assembly of large structural components. Outside suppliers would build the bulk of those structures.

The sale of the Wichita and Tulsa operations — two of the largest chunks left of aircraft-component manufacturing within Boeing — would be a significant move in that direction.

Since 2001, the company has sold three of its component-manufacturing factories: its military jet fabrication plant in St. Louis; a floor-panel and ducting factory in Spokane; and a wiring plant in Corinth, Texas. In addition, its commercial avionics plant in Irving, Texas, is now on the market.

In an interview last month, Mark Blondin, district president of the International Association of Machinists, said the union would focus on retaining fabrication work in Auburn and elsewhere in the next contract negotiations, due next year.

"We're happy about the 7E7," Blondin said. "We're not happy about the fabrication end of it.

"I'm not sure this is going to work out for Boeing, this flowing to just final assembly," he said. "We're not going to walk away from our fabrication roots."

Texas-based Vought, owned by the Carlyle Group and already a major Boeing supplier, is known to be interested in acquisitions, but Boeing Wichita would be a big move for a company that now employs only 6,000 people.

In January, Jay Fitzsimmons, president and CEO of GKN Aerospace North America-East, told the St. Louis Post-Dispatch he was interested in Boeing Wichita if it were for sale.

GKN, a subsidiary of a British company, bought the fabrication division of Boeing's military jet plant in St. Louis in 2001.

After the company sold its Spokane plant to Triumph Group in 2003, some workers were laid off and wages of others were cut by 15 percent.

SPEEA executive director Charles Bofferding said he thought offering the plant for sale would make it more urgent for Boeing to reach an amicable agreement on a contract, which is under negotiation now.

"If you're trying to sell a place," Bofferding said, "labor unrest is a liability."

The union will push to participate in any discussion of a sale to protect the interests of employees.

Hoyt Hillman, SPEEA council treasurer, said he expects the news to boost membership in the union, which in February narrowly survived a vote to oust it from the Boeing facility.

When he got the news yesterday, Hillman said, "I reached into my desk and got out a bunch of (union) membership cards."

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

Copyright © 2004 The Seattle Times Company