1:06 PM: South Carolina Governor Mark Sanford today issued the following statement on Boeing's announcement that they will purchase Vought Aircraft Industries' North Charleston facility:
"Boeing's announcement today is a real testament to the dedicated work of our economic development teams at the state and local levels, and it's also a testament to the workforce and business climate of South Carolina that a world-class company like this is choosing to expand its presence here," Gov. Sanford said.
"This in many ways has been a project years in the making, and accordingly I would give credit to former Secretary of Commerce Bob Faith and his team for their pursuit of the original $560 million investment. In that same vein, I'd give real credit to Joe Taylor and his current team at Commerce for the way they've continued to cultivate this business relationship."
"Our administration is equally committed to doing whatever we can to help Boeing succeed and grow in our state," Gov. Sanford said.
12:42 PM: Statement from IAM District 751 President Tom Wroblewski in Response to Boeing's Purchase of Vought Operations in South Carolina:
"The Machinists Union is encouraged to see Boeing take tighter control over the 787 airplane and their partners' work packages. The Machinists Union and our members are committed to making this new airplane successful. Our focus remains on getting the 787 flying and certified, which will show this is where the plane needs to be built.
The success of the 787 will ultimately depend on the expertise of all Boeing employees in Puget Sound who are going above and beyond the call of duty. Every day Machinists Union leaders and our members are stepping forward and offering ideas to help get the program on track and applying their skills and expertise. Keep in mind the initial production of composite fuselage barrels was developed, perfected and built here before Boeing sent it to suppliers around the world.
Boeing has noted this is not a statement of where the second 787 line is going to be located. When that issue is discussed, we will do everything in our power to ensure that Puget Sound is at the top of the list and highlight all the advantages that have made this region the largest aerospace center and Boeing the premiere aircraft manufacturer in the world - one that other cities are trying to emulate. Currently, Machinists Union leaders are working closely on various fronts with business, community, labor and government leaders to unite to keep production of all Boeing aircraft in this state. It is an effort we will continue to pursue aggressively."
12:40 PM: A quick first thought on this: If ever there was a clearer starting gun on the race to win the second 787 line, this is it. Boeing has signaled their willingness to invest outside of Puget Sound for aerostructure fabrication and integration. Boeing chose to cut out the middle man between itself and Vought's supply chain, but the company could have just as easily seen the Charleston site divested to a more financially stable third party.
11:46 AM: Just completed a podcast with Addison Schonland and Scott Hamilton on the Boeing/Vought deal. We take a closer look at the deal and bore down on its potential implications for the placement of a second 787 final assembly line. Factors we discuss include the possible result of the USAF Tanker contract and local Washington politics.
11:30 AM: Flashback: Will Boeing Buy Out Vought on the 787? - December 11, 2007
A buy out of Vought makes the most sense moving forward. It would eliminate the middle-man in what the Wall Street Journal called a "new bureaucratic ladder." This allows Boeing to more effectively work with its global suppliers by retaking the reins on manufacture and assembly of 787 structures.
Overall, this is not a rejection of the fundamental principles upon which the 787 was built. Without Vought, the 787 is still very much an aircraft program that has a global scope. Reassuming control which was previously outsourced is not a rejection of outsourcing, it's an acknowledgment that good business is done with good partners - a tenet which has never changed.
An amicable end to a tumultuous relationship allows Vought to walk away from the 787 program with its financial house in order while giving Boeing the best opportunity to meet the only goal that really matters:
10:53 AM: Boeing announces completion of ZA001's final gauntlet. The company says the tests lastest 18-hours and were completed on the evening of July 2nd. Anyone in Everett seeing 787 rolling around Paine Field this morning?
10:43 AM: Seattle Post-Intelligencer aerospace journalist/blogger Andrea James reports on statements from Washington Governor Chris Gregoire and Everett Mayor Ray Stephanson:
"Yesterday, I spoke with Scott Carson, who informed me of Boeing's decision to purchase the Vought facility in South Carolina," Gov. Chris Gregoire said Tuesday morning via an e-mailed statement. "I recognize that this announcement underscores that Boeing wants to ensure that it manufactures the 787 Dreamliner as efficiently as possible, thus they have made the decision to buy Vought. In my conversation with Scott, 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. Washington state is proud to be home of the world's best airplane manufacturer and most skilled aerospace workforce."
"Boeing's announcement today of its purchase of Vought in South Carolina gives Boeing greater assurance and predictability in the production of the 787," Everett Mayor Ray Stephanson said in a statement. "This appears to be a critical step in reaching Boeing's priority of delivering the 787s to its customers. The 787 is assembled in Everett by some of the world's most skilled machinists - the successful delivery of this aircraft is crucial."
10:36 AM: Fort Worth Star-Telegram reporter Bob Cox spoke with Vought CEO Elmer Doty who discussed the sale of the North Charleston site to Boeing:
"At the end of the day, this is the best way to protect the company, preserve our capability and set the company up for growth in the next two or three years," Doty said in an interview with the Star-Telegram.
10:18 AM: Scott Hamilton has some additional information on the future of the second 787 line. He says that there are four sites being considered for the second line, citing a source with "some knowledge of the situation." Everett, WA, Charleston, SC, San Antonio, TX and an unknown fourth site, thought to be Long Beach, California.
9:46 AM: From Flight: Boeing confirms deal for Vought's 787 role
8:53 AM: Statement from Snohomish County Executive Aaron Reardon:
"The Boeing Company's purchase of the Vought facility and a significant portion of adjacent undeveloped property in South Carolina is clearly a bold business decision, and one which signals that Washington state is truly in a competition for the second line of the 787 and all future generations of commercial aircraft.
"We must do all that is necessary to permanently improve the competitive climate of Washington state and encourage the Boeing Company and their unions to work together to reestablish the effective and successful partnership that has made Boeing Commercial Airplanes a leader throughout the world."
8:15 AM: Boeing Announces Agreement to Acquire Vought Operations in South Carolina
SEATTLE, July 7 /PRNewswire-FirstCall/ -- Boeing (NYSE: BA) announced today that it has agreed to acquire the business and operations conducted by Vought Aircraft Industries at its South Carolina facility, where Vought builds a key structure for Boeing's 787 Dreamliner airplane.
The Vought facility, located in North Charleston, performs fabrication and assembly of structures and systems installation of 787 aft fuselage sections, which are made primarily of composite materials. After the transaction, Vought will continue its work on many Boeing programs, including other components of the 787, as well as structures and components on the 737, 747, 767, 777, C-17 and V-22 through operations located elsewhere.
on July 7, 2009 9:37 AM | Reply
Hmm. Sell Wichita (money spinner) and buy Charlston (Money loser).
Sounds pretty stupid to me. Even if necessary.
Not getting much for 580 mil IMO. I wonder how much BA wrote off in deposits to Vought. The market isn't impressed. BA down .26@40.30 currently.
on July 7, 2009 10:17 AM | Reply
This is just one of many moves that needs to happen. Gaining control of the Boeing 787 supply chain is a key to the success of the 787.
Having a second line in a place so far away from the influence of the Washington IAM is a true blessing.
Right to work states are the future of American Manufacturing. WELCOME TO THE FUTURE Washington! The IAM screwed up Washington so it's yours to keep. 57 days off will seem like nothing in the future!
So many things the IAM thought it would never see... Well it is happening! Wake up and see the future. Now all we need to do is keep the IAM out of South Carolina.
on July 7, 2009 10:19 AM | Reply
Losing Wichita was stupid. It mainly enriched Turner, Onex, Goldman Sachs, and others. Many are holding the bag (current stock holders who didn't get to sell (like Turner and many others did, at the right time, I might add). Love it, SPR at 12 and lower.
Is Onex bleeding on this?
So, Boeing, that lovely company - except, Jim M beating on Washington State about labor sounds like some thug (is he unlike the ayatollah?) -- screwed a whole bunch of people, trashed their careers, ruined some lives.
Jim M wasn't there yet, but Bell (CFO) was.
So, is this a move to get square again?
on July 7, 2009 11:33 AM | Reply
It seems as if there was no other choice but to firm up the finances and qualifications of Vought and acquisition was that solution.
Boeing must solve and control their supply chain tightly if they are to produce the 787 efficiently and effectively.
Whatever the past history and decisionmaking , it is now the future and this seems to be a sensible solution towards accomplishing what is necessary. Whether this is part of a second line or a domestic production center will be determined in time. But there are now options and Boeing and the Union now recognize this possibility
on July 7, 2009 12:16 PM | Reply
Boeing outsourced all fabrication because they didn't want to be competing with their own contractors. Now they have that situation again. Don't be shocked if they turn around and respin the old Vought operation to Spirit.
I'd guess their next step would be to buy out the rest of Global Aeronautica and transform that assembly operation into a complete line.
Maybe fly individual sections to Everett for that line instead of prassembling the middle in Charleston. That would give them much needed flexibility to shift production between lines if needed.
on July 7, 2009 2:07 PM | Reply
@JR: The IAM can try to unionize the Charleston facility all it wants. They are free to do so, and the workers there are free to certify them. Or not. And if the IAM is certified to represent the machinists there, those machinists are free to join the union. Or not. That is the beauty of a right-to-work state.
The choice to join or not join the union doesn't exist in the State of Washington. You want the job? You pay your dues. Here's your union card. Be ready to strike.
on July 7, 2009 2:30 PM | Reply
I am getting a chuckle out of the statement by Tom Wroblewski, IAM 751 pres. Before this announcement Boeing couldn't wake up in the morning correctly in his estimation. Now the IAM is all commitment to the 787 success. But in the second last sentence ol' Tom reverted to his true self. Note how the IAM leaders "are working closely with business, community, labor and government leaders" but nowhere does it say with Boeing. And the IAM wonders why the company might be looking elsewhere to establish a second 787 line? Dah!
on July 7, 2009 2:42 PM | Reply
Great job scooping this last week, Jon.
on July 7, 2009 5:23 PM | Reply
JR, fyi, the workers at the Vought SC plant, are Union and also IAM.....
on July 8, 2009 11:39 AM | Reply
Another FYI: only half of the Vought workers are union. The rest aren't under the wrangle of union membership and dues. Ahhh the beauty of right to work state.
on July 9, 2009 10:51 AM | Reply
Does anyone know if the workers who are already unionized at Vought will remain in the Union after the sale or is there another vote to reestablish membership following the acquisition.
If not, it appears to me that the best thing that Boeing can achieve from the Union in Washington is an extended contract..one beyond the 4 year period in exchange for it remaining in Washington.
The quality of the worker will demand experienced management and I do not think that cheaper labor will solve the problem. It was not the pay scale that created the problem but work methods and the cantakerous Union strike willingness.They fought outsourcing and Boeing is committed to it for reasons other than Labor costs.
Countries now demand part of the work being done in their backyard before they arrange for orders . Look at EADS. England says it will LEND them monies for the A350 but the amount depends on the work produced in England. This is just the way the world is.
The Union does not wish to accept this and claims it is only with their skills that planes can be built successfully