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Thursday, August 4, 2005 - Page updated at 04:56 PM

Boeing sells fabrication plant

Seattle Times aerospace reporter

Pursuing its strategy of divesting units that make smaller parts, Boeing yesterday announced the sale of its sheet-metal fabrication plant in Arnprior, Ontario.

The buyer — Consolidated Industries — agreed to honor all the terms of the current Machinists union contract, thus avoiding the acrimony around forced wage and benefit concessions that accompanied the recent sale of Boeing's much larger factory in Wichita, Kan.

"It's a complete shift sideways from Boeing to the new company, without any takeaways," said Gary Scholl, president of the local lodge of the International Association of Machinists, which represents 90 percent of the 370 employees at the Arnprior plant.

"Boeing has treated us very well over the years. They did the best they could for us under the circumstances."

The price was not disclosed.

About 40 percent of the Arnprior plant's output consists of metal trays and shelves that hold the electronics boxes on all Boeing airplanes, with miscellaneous sheet-metal work accounting for the rest.

Boeing wants to divest such relatively low-tech work and focus instead on assembly and integration of large-scale systems. For more than four years, it has been divesting fabrication units across the country, from Spokane to Missouri.

Boeing Commercial plants sold


Arnprior, Ontario. Announced yesterday

Consolidated Industries will buy this plant, which makes machined metal trays, shelves and other parts. About 370 Boeing employees affected. Price undisclosed.

Wichita, Kan., and Tulsa, Okla., sold June 2005

Onex, a Canadian investment firm, bought the major assembly plant in Wichita for commercial-airplane fuselage and nose-and-cockpit sections, as well as the smaller commercial-parts plant in Tulsa. About 9,000 Boeing employees at time of transaction. $1.2 billion.

Irving, Texas, June 2004

BAE Systems of the United Kingdom bought the Commercial Electronics unit. It produces avionics equipment, mostly in Irving, though with some employees also in the Puget Sound area. About 800 employees at time of transaction. Price undisclosed.

Corinth, Texas, June 2003

Labinal, a division of Snecma Group of France, bought this plant, which produces wiring for military and commercial aircraft. About 900 employees at time of transaction. Price undisclosed.

Spokane, January 2003

Triumph Group of Wayne, Pa., bought this plant, which produces floor panels, air ducts and other components. About 400 Boeing employees at time of transaction. $42 million.

St. Louis fabrication division, January 2001

GKN Aerospace of the United Kingdom bought this plant, which manufactures metal and composites for military aircraft such as the F/A-18 and C-17. About 1,200 employees at time of transaction. $61 million.

Source: Boeing and Seattle Times research

Dominic Gates

That has raised fears about the future of the major parts-fabrication plant in Auburn, a subject Machinists District 751 President Mark Blondin has made a priority in the ongoing contract talks with Boeing.

Yesterday, Boeing spokeswoman Deborah Dustman reiterated there are no plans to sell Auburn, in whole or in part.

"There are no current plans to [sell] any other sites in Boeing Fabrication," she said. "There's no plan in the works to part out Auburn."

The Auburn plant currently has 4,200 workers.

In a conference call yesterday with journalists, Consolidated President John Wilbur said the company has a long-term contract to continue to supply Boeing through 2011 and plans to grow the business by seeking work from other big aerospace manufacturers.

Consolidated makes aerospace forgings for customers such as Lockheed Martin, Raytheon and Sikorksy. Wilbur said he'd try to sell the capabilities of Arnprior to those clients, expanding the business base to include military aircraft, helicopters and business and regional jets.

"We are going to pursue every potential avenue for the growth of Arnprior," Wilbur said. "We intend to go to Airbus and try to do business with them also."

Scholl said Wilbur told union representatives yesterday that he hopes to double the size of the Arnprior plant in the next four to five years.

Consolidated Industries is a unit of American Industrial Acquisition, a privately owned holding company that has bought up manufacturing businesses in seven U.S. states, Canada, France, United Kingdom, the Netherlands and Sweden.

American Industrial's 2004 revenue was about $170 million, with about 10 percent from Consolidated. Wilbur said the Boeing Arnprior plant, which last year had the equivalent of $40 million in revenue, is the second-largest purchase American Industrial has made.

Jon Kutler, chief executive of Jefferies Quarterdeck, an investment banking firm that worked on the sale of Boeing plants in Spokane and Corinth, Texas, said commercial aerospace is seeing a wave of supplier mergers and acquisitions. The sharp industry upturn and planned production-rate increases by aircraft manufacturers make parts plants newly attractive investment targets.

"I see [the commercial-aerospace sector] globalizing more, consolidating more," Kutler said.

Boeing's commercial business is humming right now, with orders rolling in. That gives Consolidated, with its long-term supplier agreement, a virtual guarantee of work and revenue for the next few years.

Still, cutting the ties to Boeing is not easy for the work force. Machinists leader Scholl said that being a standalone unit selling to the world, rather than an in-house Boeing supplier, means the plant will have to face competitive realities.

"If we quote a price of $2 to build a part, we have to build it for $2. Before, if it cost $2.10, senior management had to answer for the 10 cents, but we kept building them," said Scholl. "We were under Mother Boeing. ... We didn't have to worry about whether we met our commitments.

"Today we do," he added. "Now we are in the real world."

That's precisely the sort of efficiency edge that Boeing says it's aiming for in divesting.

The Machinists contract is up for renewal in Arnprior in March. Scholl said there is no guarantee the new owner won't seek labor concessions then.

"We don't know what that brings," said Scholl. "But then we didn't know what it brought with Boeing either."

Boeing said the transaction is expected to close this fall. The plant will be renamed Arnprior Aerospace.

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

Rocketdyne sale wrapped up

Boeing announced yesterday completion of the sale of its Rocketdyne propulsion division to Pratt & Whitney, the engine-making unit of United Technologies.

Boeing announced the sale agreement in February, with a price tag of about $700 million. In its earnings report at the end of July, Boeing said its net pre-tax gain would be $360 million.

Rocketdyne, which employs some 3,000 people, develops and builds rocket engines. It provides the main engines for the space shuttle and the Delta rocket family, as well as propulsion systems for missile-defense systems. Headquartered in Canoga Park, Calif., it also has smaller facilities in Alabama, Mississippi and Florida.

Boeing buying headquarters towers

Boeing has a deal to buy its downtown Chicago riverfront headquarters, four years after the aerospace giant moved from Seattle.

Boeing is the largest tenant at the 36-story tower, with more than a third of the 770,300 square feet. The company, which signed a 15-year lease in 2001, made an unsolicited offer to buy the building from the Florida state pension fund. The price is roughly $200 million, sources said.

Boeing is one of the country's largest owners of real estate, with a portfolio that has a net book value of nearly $5 billion.

In the past, Boeing has shown a strong preference toward owning its facilities. The company leases just 15 percent of its roughly 100 million-square-foot portfolio.

Chicago Tribune

Copyright © 2005 The Seattle Times Company


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