Boeing's buy of 787 plant will cost $1B
Boeing's purchase of the 787 rear fuselage plant in Charleston, S.C. from Texas-based Vought Aircraft Industries will cost $1 billion.
Seattle Times aerospace reporter
787 production in North Charleston
Aft fuselage manufacturing: Boeing said Tuesday it will buy this plant from Vought Aircraft Industries for $580 million in cash and forgiveness of $422 million in advance payments from Boeing that Vought was due to repay. The facility builds the two rear fuselage sections of the 787. Production workers at the plant voted narrowly last year to join the Machinists union.
Fuselage integration and testing: Known as Global Aeronautica, this plant puts together the fuselage sections built next door by Vought, and also joins the two midfuselage sections built in Italy by Alenia to a fuselage section built by Kawasaki in Japan. The two resulting cylindrical assemblies then are flown to the 787 final-assembly plant in Everett. Vought sold its 50 percent stake in this plant to Boeing in June 2008 for $55 million, making it a Boeing-Alenia joint venture.
Source: Seattle Times archives, company reports
Boeing's purchase of the 787 rear fuselage plant in Charleston, S.C. from Texas-based Vought Aircraft Industries will cost $1 billion. In addition to $580 million in cash, Boeing is forgiving $422 million of advance payments it made to Vought.
Removing a major Dreamliner partner and taking over the operation is a dramatic move forced by Vought's inability to fund the further substantial investment needed for the troubled new jet program.
Following the acquisition a year ago of Vought's share of the adjacent mid-fuselage assembly plant in Charleston, a sizeable part of Boeing's strategic plan to outsource much of the Dreamliner production work is now reversed.
Yet however unplanned, the upshot is that Boeing Commercial Airplanes now for the first time in its history owns substantial aircraft assembly facilities on the East Coast of the United States.
That raises the specter of future final assembly work — either for a second 787 production line or for the next new airplane after the 787 — potentially going there instead of to the company's factories in Everett or Renton.
Business and political leaders in the Puget Sound region reacted accordingly.
"Unless things change, Boeing's future will be outside the Northwest and that will be devastating to the Washington economy," warned John Stanton, chair of the Washington Roundtable, a business group.
"My father worked 25 years for Boeing and I know firsthand just how skilled the workforce is, but Boeing customers are telling the company that workers need to be reliable as well as skilled. Airlines simply can't make billion-dollar decisions on new aircraft and then face the prospect of delivery delays because of labor disputes."
Gov. Chris Gregoire said in a statement that the deal "underscores that Boeing wants to ensure that it manufactures the 787 Dreamliner as efficiently as possible."
But she added that when Boeing Commercial Airplanes CEO Scott Carson informed her of the Vought purchase yesterday, "he assured that no decision has been made on a potential second line for the 787, and that today's announcement doesn't have anything to do with that."
Vought's part of the 787 program has been fraught with problems both technical and financial. The Dallas-based aerospace supplier is owned by the Carlyle Group, a private equity firm, which declined to put further money into the company and has been seeking to sell all or part of Vought for at least a year.
Vought chief executive Elmer Doty said in a statement Tuesday that "the financial demands of this program are clearly growing beyond what a company our size can support."
The 787 rear fuselage plant in Charleston was shopped around unsuccessfully to other potential buyers, including another major 787 partner, Spirit AeroSystems. Spirit operates the former Boeing parts plant in Wichita, Kan., where it manufactures the 787's front fuselage section.
The plant makes sections of the 787's fuselage between its wings and tail that are made primarily from lightweight carbon composites.
The next-generation aircraft that has been hampered by repeated delays due to production problems that have cost Boeing billions of dollars in anticipated expenses and penalties.
After the transaction, Boeing said, Vought will continue its work on many Boeing programs, including other components of the 787, as well as parts of the 737, 747, 767, 777, C-17 and V-22 through operations located elsewhere.
As part of the deal, expected to close in the third quarter, Vought will be released from obligations to repay money that had been advanced earlier by Boeing.
It remains unclear when Chicago-based Boeing will conduct the first test flight of the 787, previously scheduled for the second quarter of this year. Deliveries of the new jet were lagging nearly two years behind schedule before the latest 787 program delay was announced last month.
With the 787, Boeing has taken a new approach to building airplanes, relying on suppliers around the world to build huge sections of the plane that are later assembled at the company's commercial aircraft plant near Seattle. Ill-fitting parts and other problems have hampered production.
Despite those problems, Boeing spokesman Jim Proulx said Tuesday the company has no plans to change its production strategy for the 787.
"We remain committed to the business model and the global strategy for the 787," he said.
Boeing shares were down 3.8 percent to $39.01 near the end of the trading day. Aerospace companies Northrop Grumman, Lockheed Martin, and Spirit Aerospace also were down more 3 percent each.
The Associated Press contributed to this report.
Dominic Gates: 206-464-2963 or email@example.com
Copyright © 2009 The Seattle Times Company
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