Boeing soars, local economy wins
Boeing said Wednesday it has piled up a stunning sales backlog of $250 billion, a fattened order book that should keep the factories humming...
Seattle Times aerospace reporter
Boeing said Wednesday it has piled up a stunning sales backlog of $250 billion, a fattened order book that should keep the factories humming at an accelerated pace in coming years even when new orders slow from their recent record levels.
The strong performance means about 40,000 local Boeing workers will get an extra 12 days' pay this month, and it suggests the company will keep on hiring — a boost for the local economy.
Boeing boosted its projections, forecasting that by next year airplane production in this region will be higher than at any point since 2001.
The 787 Dreamliner is to begin production next year, and existing jet programs in Renton and Everett are ramping up.
The company is likely to continue hiring to match those production demands. Boeing hired just over 6,000 people in Washington state in 2006, and employed 68,170 at the end of the year.
"This is more than skin deep," said Howard Rubel, an analyst with Jefferies Group. "They are pretty strong through and through."
In a bullish conference call with Wall Street analysts and reporters, Boeing Chief Executive Jim McNerney said his focus "is on executing that quarter-trillion-dollar backlog."
The sales backlog — $250 billion of combined commercial-jet and defense-side orders booked for future delivery — is equal to more than four solid years of sales at the current pace.
Orders can be canceled, of course, if the industry nose-dives like it did after Sept. 11. But barring a market catastrophe, the backlog guarantees Boeing will stay busy here and across the country even when the airliner and defense markets enter expected cyclical downturns.
Because of the new way of building the 787 Dreamliner — huge sections will be fabricated and partially assembled across the globe before they come to Everett for completion — the jobs boost will be spread around much more than in previous airplane programs, diluting the impact here.
But across all jet programs, the projections are sky-high.
Upping its forecast of commercial-jet deliveries, Boeing projected that after delivering 398 commercial jetliners last year, it will deliver as many as 445 jets this year and 520 jets in 2008.
To make that possible, one analyst estimates, the Renton plant would have to ramp up production of the smaller 737 jet from 28 per month now to at least 30 per month.
In Everett, 777 production would have to jump from five per month to seven, while the new 787 Dreamliner must roll out at a steady six per month from the first delivery in mid-2008.
This month many Boeing workers will reap the benefit of their productivity.
Worldwide, 113,000 people will be eligible for the incentive plan that pays out based on undisclosed internal financial targets set at the beginning of the year.
Meeting those targets merits 10 days' extra pay. Exceeding them can bring up to 20 extra days.
The beneficiaries will include engineers and technical staff — but not Machinists union members, who negotiated a different incentive package with the company.
Last year, the payout was even better — 14 days, averaging just over $4,000 for about 45,000 current and former employees in the Puget Sound region. Boeing spokesman Peter Conte said about the same number will receive this year's performance award.
Boeing's white-collar engineering union, the Society of Professional Engineering Employees in Aerospace, joined the incentive plan for the first time in its 2005 contract.
Machinists are not eligible for these payments, since their union opted instead for lump-sum payouts and guaranteed wage increases.
During the conference call, an analyst asked McNerney how he'd keep Boeing's sales force motivated, given the massive backlog of orders already booked.
"They have a lot to do out there as they work with airlines and work with other customers," McNerney responded. "They're not taking Wednesdays off."
McNerney also firmly reiterated that the new 787 program is on schedule, despite one analyst's report to the contrary last week.
McNerney said Boeing engineers are helping the company's three Japanese suppliers and Alenia of Italy to catch up to the planned production schedule.
Boeing is putting money and teams of people into contingency plans, McNerney said, to ensure it has "stand-by capability ... in the state of Washington" to handle work that suppliers haven't done.
Last month, 787 center-fuselage sections built in Japan arrived in Charleston, S.C., without the wiring, hydraulics and many of the fasteners that should have been pre-installed. McNerney said Fuji and Mitsubishi sent people to Charleston "to add some of the innards that didn't get added in Japan."
But he insisted the global supply chain Boeing has created for the 787 doesn't complicate the problem when work "travels" from one supplier to another down the chain. Indeed, he portrayed the parceling out of production as a plus that avoided a single bottleneck in Everett.
"Because the fundamental work is spread out a little bit, because there is an interim step in South Carolina on the way to Seattle, there is a little more flex in the system to handle traveled work, quite frankly," he said. "In the days where everything showed up in Washington ... there was a huge geographically-centered 'Oh, my God,' where the number of people and the amount of work all came together at one time."
Dominic Gates: 206-464-2963 or email@example.com
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