SEATTLE (Reuters) – Boeing Co said on Thursday that it will transfer the rest of its 787 Dreamliner production to South Carolina in 2021, a cost-cutting strategy that raises questions about the future of its giant Everett plant, north of Seattle.
Reuters first reported on September 21 that Boeing was close to a decision to move production of the Dreamliner to South Carolina, as its strategy of supporting two factories has been severely tested by the fall of the coronavirus on international travel, in addition to of a cyclical decline in demand for large jets.
Last year, Boeing was producing record numbers of 787s at its Everett hub north of Seattle and – since 2012 – a second plant in North Charleston, South Carolina.
Boeing said the only location would improve operational efficiency as the U.S. aircraft maker adjusted to the center of the market and positioned itself for recovery.
But industry officials say it raises the prospect of another battle between the U.S. aircraft maker and unions that have tried unsuccessfully to organize themselves at the South Carolina plant.
Boeing also said production of the 787 will continue at the Everett site until a previously announced rate cut for six planes per month in 2021.
Boeing estimated it would consolidate production at its North Charleston facility beginning in mid-2021.
A revision of its 787 production strategy, announced in July along with radical cuts in the rates for its widebody programs, had already shaken unions and politicians in Washington state, who see Boeing hesitating in its commitment to its hometown in the area of Seattle, something the company denies.
Washington State Governor Jay Inslee called the decision “an insult” to the more than 1,000 workers who built the 787 jet here and said it calls for a review of “the company’s favorable tax treatment”.
The previous decision to move part of production to the non-union state of South Carolina was the culmination of a strategy led by the board for years to reduce dependence on the state of Washington, where Boeing has had stormy relations with unions in the past.
John Holden, president of a local chapter of the International Association of Machinists, said the loss of the 787’s production capacity at Everett “puts the company, our members and our community at risk”.
Ray Goforth, Executive Director of the SPEEA Engineers Union, said his “immediate focus is on supporting members who will be fired. In the long term, we will partner with community stakeholders to attract new aerospace jobs to the state (Washington), promoting the aerospace talent pool that Boeing is moving away from. “
Boeing Commercial Airplanes Chief Executive Stan Deal said: “We recognize that production decisions can impact our teammates, the industry and our community partners.”
South Carolina offers cheaper labor and the largest variant of the 787-10 cannot easily be built elsewhere due to its size.
But doubling in the south of the state is not without cost.
Boeing plans to return at a rate of 10 to 11 787s per month at some point. The enforcement of these fees in South Carolina would require investments to expand the facilities.
Boeing currently builds the 747, 767, 777 and some 787s there. After 2022, only the 767 / KC-46 and 777 / 777X would remain, with Boeing launching no more than five jets a month – about three times less than a year ago.
After Boeing canceled plans for a new midsize jet, there is no obvious fill to the 787’s unoccupied space, meaning that the remaining low-fare programs would absorb a larger share of the factory’s overhead.
Eric M. Johnson reporting in Seattle; Nick Zieminski’s Edition