Boeing is set to announce its intention to acquire the 787 operations currently run by Vought Aircraft Industries in North Charleston, SC in a major shake up of the supply chain for its new flagship product.According to multiple sources familiar with the plan, Vought Aircraft Industries 787 arm is to be divested from parent company The Carlyle Group and sold to The Boeing Company.
"It's a done deal," says a source close to the agreement.
The same sources indicate that the sale of the Charleston 787 operations unit, known as the Advanced Aerosolutions (AAD) branch of Dallas-based Vought, will likely be the first key step to establishing a second production site for the mid-size widebody aircraft.
Both Boeing and Vought are adhering to their respective policies to not comment on rumors or speculation regarding mergers and acquisitions.
However, Boeing added that it has "long said that a second line is an issue we will consider in due course, and we have, and will continue to evaluate the many factors that will be a part of any decision. Our primary focus right now is getting the 787 into flight test and getting the existing production system running smoothly."
Boeing announced last week that a delay in first flight was necessary to reinforce the side-of-body of the 787, indefinitely grounding the fleet until the company can develop, test and install a remedial modification.
INSIDE:
- What's Next?
- The Campus
- A Second 787 Line?
- Protecting The Supply Chain
Photo Credit Vought Aircraft Industries (Left - Global Aeronautica, Right - Vought)
WHAT'S NEXT?
Though the Carlyle divestment and Boeing acquisition has not been officially revealed, sources tell FlightBlogger that the first ceremonial announcement is rapidly approaching.
The public announcement will be the kick off a week-long transition to shift operational control of the Vought facility to Boeing. Sources indicate that after the signing, Boeing will begin to transition Vought employees at a "job event" that will address the human resources component of the acquisition.
The transition will draw on the lessons learned by Boeing during the sale of the Wichita site in 2005 to the Canadian Onex corporation, which later became the flagship site for Spirit Aerosystems, another first tier 787 partner.
Boeing has been building toward this plan of action for quite a while, steadily increasing its staffing presence at the Charleston site.
At the Paris Air Show, Boeing's vice president of airplane programs, Pat Shanahan, discussed the role Boeing has played, separate from any proposed acquisition, in assisting Vought over the last several years:
"We've had people, whether its supervision helping them with incorporating [design] changes back in Charleston or whether its been folks helping them with their supply chain, that's been ongoing for a better part of the start up of the program [since 2006]. More recently we just had a higher influx of people into Charleston because you compare the capability and capacity, the limitation is there, it's not at Spirit, it's not at MHI or KHI or FHI. That's seems to have the biggest payoff."
THE CAMPUS
The North Charleston campus is made up of two facilities that sit on 240-acres of land at Charleston Air Force Base. The larger of the two sites is currently controlled by Vought and is responsible for the fabrication and integration of the composite barrels of Section 47 and Section 48 which make up the aft fuselage of the 787.
The second facility, Global Aeronautica, a smaller building to the north of Vought, is a 50-50 joint venture between Boeing and Alenia Aeronautica that sees the delivery of four structural sections, two from Italy (Sections 44 and 46) and two from Japan (Sections 45/11 and 43), that are integrated to become the center fuselage of the 787. The Global Aeronautical facility also includes a paintshop for shipsets heading to Everett.
Global Aeronautica opened its doors in December 2006 as a joint venture between Alenia and Vought, though Boeing acquired Vought's 50% share of the facility in March 2008 after Boeing sought to regain oversight of its supply chain through more direct control at the Charleston site.
A SECOND 787 LINE?
Several sources close to the decision making process indicate that the Carlyle divestment and Boeing acquisition of the Vought facility is likely to mark the commencement of a strategic initiative to launch a second 787 final assembly representing the first time a new Boeing commercial aircraft final assembly line has been established outside of Puget Sound.
The divestment of Vought's 787 operations may mark the precursor for a fundamental realignment of Boeing's commercial assembly strategy if it proceeds with placing a second 787 line in Charleston.
Every Boeing commercial aircraft in the jet age, with the exception of the 717, which was a holdover from the 1997 McDonnell Douglas merger, has undergone final assembly in Washington state.
The establishment of a second line in the southeastern United States would be the further manifestation of a trend away from states like Washington and California that have a strong labor presence, to Right to Work states like South Carolina and Alabama.
Boeing's chief competitor Airbus, which has partnered with Northrop Grumman, has said if it wins the protracted and controversial US Air Force tanker contract, it will conduct final assembly operations on the modified A330-200 aircraft in Mobile, Alabama.
Pat Shanahan said at the Paris Air Show that his company's decision on a second line is "more mature and advanced than it was a year ago," emphasizing that Boeing is "not going to ponder [a decision on a second line] a long time."
Aviation Week reported on June 21st that Industry Officials "expect the company to announce shortly that North Charleston, S.C., is its preferred location and to establish the line next year."
The report indicated that production would be launched at the second line in Charleston with the 787-9, which is expected to begin major assembly work in the fourth quarter of 2010.
The sources directly familiar with the manufacturing plans tell FlightBlogger that Boeing has found that it cannot meet a 10 aircraft per month ramp up by mid-2012 without a second assembly line.
Industry watchers add that the imperative to set up a final line has grown with the announcement of the latest program delay. As a result, a second line would be essential to making up what is expected to be significant lost ground after a revised first flight, certification and delivery schedule is announced to minimize further impact to customers waiting for their 787s.
Were Boeing to place a second 787 line in Charleston, the facility would be the manifestation of the once mused-about 'supersite' that former 787 program manager Mike Bair discussed in November 2007 as a potential solution for the company's supply chain woes. The supersite would manufacturer and integrate not only the individual aircraft structures, but deliver them to an on-site final assembly line that would see the aircraft completed and delivered to customers.
A Charleston assembly line would immediately benefit from a significant reduction in required flights by the Dreamlifter to move both structure and tooling between partner sites and final assembly operations in Everett, WA. Currently, the center and aft fuselage sections are flown to Everett from Charleston. In addition, the Italian Alenia-built horizontal stabilizer is delivered by way of the South Carolina site where the Dreamlifter refuels before continuing on to Everett.
However, Boeing has found significant challenges in Charleston as it has worked to begin production on 787 facing workmanship and experience issues at a greenfield site that has little historical aerospace manufacturing experience.
By contrast, Boeing's Everett and Renton, Washington final assembly facilities have almost a combined century of aerospace manufacturing experience.
Though, Boeing's Shanahan recently outlined the key factors surrounding any decision for a second line. "The real options," he said "are around 'how do you secure assurance of delivery?' And I think that's been a discussion topic around some of the disruption we've realized...at Boeing."
Shanahan was directly referencing the 57-day Machinists strike during September and October of 2008 that grounded jetliner production to a halt, drawing the ire of both Wall Street and Boeing customers.
Shanahan also cited "functional logistics" and access to "skilled labor...and high tech skills" as additional key criteria in any decision.
PROTECTING THE SUPPLY CHAIN
Vought Aircraft Industries has found itself at a convergence zone of declining production output by airframers that is likely to cause significant financial pain to the company in 2010.
Cuts in production on Boeing products like the 777, the Gulfstream G450 and G550 business jets, Airbus A330/A340 reduced output, slowing ramp ups on 767 and 747-8, an uncertain budget on the C-17, and Cessna's decision to suspend the Cessna Citation Columbus program are sources of worry for Vought.
"While decreases in production are inherent to the cyclical nature of our business each announcement has had an impact to our plan, mostly impacting 2010 and we continue to adjust our resource allocation accordingly. While we remain optimistic on the industry's long term fundamentals we are nonetheless prepared with additional contingency plans should things deteriorate further as some analysts suggest may happen," said Elmer Doty, Vought's CEO at his company's first quarter 2009 earnings presentation.
Vought had already been struggling financially while the industry had been thriving and the economic downturn only served to stifle that rebound.
In the wake of the nearly two years of delayed incurred by the 787 program as a result of the challenging logistical requirements, Boeing began 2009 examining how to rebalance its supply chain to apply its lessons learnt and push ahead with further development and production without similar disruption.
Boeing had already moved significant 787-9 engineering work back in house for the development of the first Dreamliner variant.
Recently at Boeing's yearly investor day in May, 787 program manager and vice president, Scott Fancher discussed generally the possibility of acquiring portions of the supply chain to strengthen its stability:
"You know, you get into a situation where either some of the first tiers, or their sub-tiers simply aren't able to perform, now there could be a lot of reasons for that, could be that their in financial stress...Now, it does happen and clearly as we go forward we'll look at some re-balancing of work scope as we sort through where work is most efficiently and cost effectively done, but by and large the focus is on helping our supply chain succeed, not moving the work in a rapid fashion [with travelled work]," said Fancher.
Though the Carlyle divestment and Boeing acquisition has not been officially revealed, sources tell FlightBlogger that the first ceremonial announcement is rapidly approaching.
The public announcement will be the kick off a week-long transition to shift operational control of the Vought facility to Boeing. Sources indicate that after the signing, Boeing will begin to transition Vought employees at a "job event" that will address the human resources component of the acquisition.
The transition will draw on the lessons learned by Boeing during the sale of the Wichita site in 2005 to the Canadian Onex corporation, which later became the flagship site for Spirit Aerosystems, another first tier 787 partner.
Boeing has been building toward this plan of action for quite a while, steadily increasing its staffing presence at the Charleston site.
At the Paris Air Show, Boeing's vice president of airplane programs, Pat Shanahan, discussed the role Boeing has played, separate from any proposed acquisition, in assisting Vought over the last several years:
"We've had people, whether its supervision helping them with incorporating [design] changes back in Charleston or whether its been folks helping them with their supply chain, that's been ongoing for a better part of the start up of the program [since 2006]. More recently we just had a higher influx of people into Charleston because you compare the capability and capacity, the limitation is there, it's not at Spirit, it's not at MHI or KHI or FHI. That's seems to have the biggest payoff."
The North Charleston campus is made up of two facilities that sit on 240-acres of land at Charleston Air Force Base. The larger of the two sites is currently controlled by Vought and is responsible for the fabrication and integration of the composite barrels of Section 47 and Section 48 which make up the aft fuselage of the 787.
The second facility, Global Aeronautica, a smaller building to the north of Vought, is a 50-50 joint venture between Boeing and Alenia Aeronautica that sees the delivery of four structural sections, two from Italy (Sections 44 and 46) and two from Japan (Sections 45/11 and 43), that are integrated to become the center fuselage of the 787. The Global Aeronautical facility also includes a paintshop for shipsets heading to Everett.
Global Aeronautica opened its doors in December 2006 as a joint venture between Alenia and Vought, though Boeing acquired Vought's 50% share of the facility in March 2008 after Boeing sought to regain oversight of its supply chain through more direct control at the Charleston site.
A SECOND 787 LINE?
Several sources close to the decision making process indicate that the Carlyle divestment and Boeing acquisition of the Vought facility is likely to mark the commencement of a strategic initiative to launch a second 787 final assembly representing the first time a new Boeing commercial aircraft final assembly line has been established outside of Puget Sound.
The divestment of Vought's 787 operations may mark the precursor for a fundamental realignment of Boeing's commercial assembly strategy if it proceeds with placing a second 787 line in Charleston.
Every Boeing commercial aircraft in the jet age, with the exception of the 717, which was a holdover from the 1997 McDonnell Douglas merger, has undergone final assembly in Washington state.
The establishment of a second line in the southeastern United States would be the further manifestation of a trend away from states like Washington and California that have a strong labor presence, to Right to Work states like South Carolina and Alabama.
Boeing's chief competitor Airbus, which has partnered with Northrop Grumman, has said if it wins the protracted and controversial US Air Force tanker contract, it will conduct final assembly operations on the modified A330-200 aircraft in Mobile, Alabama.
Pat Shanahan said at the Paris Air Show that his company's decision on a second line is "more mature and advanced than it was a year ago," emphasizing that Boeing is "not going to ponder [a decision on a second line] a long time."
Aviation Week reported on June 21st that Industry Officials "expect the company to announce shortly that North Charleston, S.C., is its preferred location and to establish the line next year."
The report indicated that production would be launched at the second line in Charleston with the 787-9, which is expected to begin major assembly work in the fourth quarter of 2010.
The sources directly familiar with the manufacturing plans tell FlightBlogger that Boeing has found that it cannot meet a 10 aircraft per month ramp up by mid-2012 without a second assembly line.
Industry watchers add that the imperative to set up a final line has grown with the announcement of the latest program delay. As a result, a second line would be essential to making up what is expected to be significant lost ground after a revised first flight, certification and delivery schedule is announced to minimize further impact to customers waiting for their 787s.
Were Boeing to place a second 787 line in Charleston, the facility would be the manifestation of the once mused-about 'supersite' that former 787 program manager Mike Bair discussed in November 2007 as a potential solution for the company's supply chain woes. The supersite would manufacturer and integrate not only the individual aircraft structures, but deliver them to an on-site final assembly line that would see the aircraft completed and delivered to customers.
A Charleston assembly line would immediately benefit from a significant reduction in required flights by the Dreamlifter to move both structure and tooling between partner sites and final assembly operations in Everett, WA. Currently, the center and aft fuselage sections are flown to Everett from Charleston. In addition, the Italian Alenia-built horizontal stabilizer is delivered by way of the South Carolina site where the Dreamlifter refuels before continuing on to Everett.
However, Boeing has found significant challenges in Charleston as it has worked to begin production on 787 facing workmanship and experience issues at a greenfield site that has little historical aerospace manufacturing experience.
By contrast, Boeing's Everett and Renton, Washington final assembly facilities have almost a combined century of aerospace manufacturing experience.
Though, Boeing's Shanahan recently outlined the key factors surrounding any decision for a second line. "The real options," he said "are around 'how do you secure assurance of delivery?' And I think that's been a discussion topic around some of the disruption we've realized...at Boeing."
Shanahan was directly referencing the 57-day Machinists strike during September and October of 2008 that grounded jetliner production to a halt, drawing the ire of both Wall Street and Boeing customers.
Shanahan also cited "functional logistics" and access to "skilled labor...and high tech skills" as additional key criteria in any decision.
PROTECTING THE SUPPLY CHAIN
Vought Aircraft Industries has found itself at a convergence zone of declining production output by airframers that is likely to cause significant financial pain to the company in 2010.
Cuts in production on Boeing products like the 777, the Gulfstream G450 and G550 business jets, Airbus A330/A340 reduced output, slowing ramp ups on 767 and 747-8, an uncertain budget on the C-17, and Cessna's decision to suspend the Cessna Citation Columbus program are sources of worry for Vought.
"While decreases in production are inherent to the cyclical nature of our business each announcement has had an impact to our plan, mostly impacting 2010 and we continue to adjust our resource allocation accordingly. While we remain optimistic on the industry's long term fundamentals we are nonetheless prepared with additional contingency plans should things deteriorate further as some analysts suggest may happen," said Elmer Doty, Vought's CEO at his company's first quarter 2009 earnings presentation.
Vought had already been struggling financially while the industry had been thriving and the economic downturn only served to stifle that rebound.
In the wake of the nearly two years of delayed incurred by the 787 program as a result of the challenging logistical requirements, Boeing began 2009 examining how to rebalance its supply chain to apply its lessons learnt and push ahead with further development and production without similar disruption.
Boeing had already moved significant 787-9 engineering work back in house for the development of the first Dreamliner variant.
Recently at Boeing's yearly investor day in May, 787 program manager and vice president, Scott Fancher discussed generally the possibility of acquiring portions of the supply chain to strengthen its stability:
"You know, you get into a situation where either some of the first tiers, or their sub-tiers simply aren't able to perform, now there could be a lot of reasons for that, could be that their in financial stress...Now, it does happen and clearly as we go forward we'll look at some re-balancing of work scope as we sort through where work is most efficiently and cost effectively done, but by and large the focus is on helping our supply chain succeed, not moving the work in a rapid fashion [with travelled work]," said Fancher.
on July 1, 2009 11:52 AM | Reply
Jon - Once again, your reporting is second to none.
on July 1, 2009 12:42 PM | Reply
Maybe a smart way to develop new products. Outsource everything and then buy the companies that aren't performing well enough. If you prepare for it the risks should be pretty low.
on July 1, 2009 12:48 PM | Reply
This development can be seen as the second sign of a reversal in the Boeing corporate strategy that was established during the Condit/Stonecipher regime (the first sign being the pullback of engineering work on the 787-9).
Back then, Boeing was reinventing itself as a Large Scale Systems Integrator. The major manifestation of this strategy was the Dreamliner business model. Following, Boeing sold off a huge chunk of its manufacturing capacity (Wichita).
Now, we see Boeing buying up manufacturing capacity (Charleston).
The State of Washington may have a much larger pool of experienced aerospace workers, but what good are they if they go on strike every three years? The IAM has signed its own death warrant.
on July 1, 2009 1:29 PM | Reply
Vought is owned by a venture capital company. These companies exist for one reason only, to suck the profit out of a company and eventually sell the husk to a "sucker". I guess Carlyle found a suitable "sucker".
on July 1, 2009 1:36 PM | Reply
Jon - Thank you very much for your report, very concise!
Regards
on July 1, 2009 1:40 PM | Reply
Any word on what might happen with Alenia's portion of Global Aeronautica??
on July 1, 2009 1:46 PM | Reply
This is another very good report Jon. I learn a lot from your papers, many thanks.
Now on the matter itself, this is another reason why I believe that at the end of the day, Boeing will strike back and recover much of the 787 delay. Also as a collateral comment, I appreciate the fact that Boeing is being transparent on the problems and striving to fix it properly. That's good for all who have to fly.
on July 1, 2009 2:09 PM | Reply
This is one of the most expensive outsourcing exercises by corporate America. Just shows what happens when executives who blindly bought into the concept without due diligence. Hopefully they learned their lessons.
This is a good move to ensure the survival of the company. As mentioned by WingBender earlier, the unions definitely killed off their own jobs. No one to blame but themselves.
on July 1, 2009 2:09 PM | Reply
This is one of the most expensive outsourcing exercises by corporate America. Just shows what happens when executives who blindly bought into the concept without due diligence. Hopefully they learned their lessons.
This is a good move to ensure the survival of the company. As mentioned by WingBender earlier, the unions definitely killed off their own jobs. No one to blame but themselves.
on July 1, 2009 2:18 PM | Reply
It should be noted that when Boeing started the 787 final assembly line in Everett many of the MT (manufacturing techs) were new hires who did not have direct aerospace manufacturing experience but who had skill sets that would be of use on the final assembly line after undergoing an intensive period of training and testing before being hired to work on the 787 final assembly line. I do think that Boeing will set up a similar education and training facility to train 787 MTs in South Carolina for the 2nd assembly line similar to what they did for the 787 line in Everett.
on July 1, 2009 2:19 PM | Reply
"Vought is owned by a venture capital company. These companies exist for one reason only, to suck the profit out of a company and eventually sell the husk to a "sucker"
Howard, with the trouble that Vought has had plus the cost of buildup of Charleston I can't believe there have been any profits to "suck" off of that facility. I would venture to say that Carlyle is cutting their losses. Other than Carlyle's hedge fund, which only worked in mortgaged backed securities, they have not been working the business model you have suggested.
on July 1, 2009 2:23 PM | Reply
I don't think Howard's criticism of venture capital companies fits the Carlyle Group at all. Sure they're out to make money. But at least with Vought their approach has not been to buy companies at fire sale prices and sell off the assets. They've held Vought for quite a while and instead have been growing the company by buying up other aerostructures companies and giving Vought support to be one of Boeing's major subcontractors for the 787. Their approach seems to be buying up companies at an opportunity price, help them grow or otherwise improve their profitibility, then sell them or spin them off and take their profit that way. I believe this is true of many of Carlyle's other holdings, but haven't looked into it.
I believe this potential sale of one of Vought's divisions is laregely due to the economic circumstances, and they can get a good price from Boeing which will reduce or eliminate a big sinkhole of Vought debt. That will place the remaining part of Vought in better shape to ride out the temporary downturn in other products and be more profitable. At some point Carlyle would consider selling Vought at a good price or spinning it off in an IPO.
This is all good business - building up businesses and selling them. Not the same thing as some other private firms do - buying up businesses to get their cash and sell off pieces for more than the whole.
on July 1, 2009 2:24 PM | Reply
Any idea how much Boeing is paying for this acquisition?
on July 1, 2009 3:03 PM | Reply
Its not the strike that caused the delays on the 787 program its the management. The SC buyout proves that management has still not learned the lesson of hiring unskilled labor.
on July 1, 2009 3:09 PM | Reply
So let me get this right. Boeing sold off Spirit a well run profitable division of Boeing for pennies (we may have actually paid in the end).
Now Boeing is buying a crappy, poorly managed part of Vought.
I think this may be part of a greater effort to hide the true costs of the 787.
on July 1, 2009 3:09 PM | Reply
Jon,
Seems like a great move by Boeing, as Vought was part of the reason for the initial 787 delays. They seem to have been lacking the material expertise required to be a true partner with Boeing on this project. I wonder, if in order to get the plane "right", they will end having to acquire other "partners" as well.....
on July 1, 2009 3:32 PM | Reply
To: Boeing Union and liberal state politicians:
The squeaky wheel may get the grease, but when it squeaks too much, it gets replaced.
Like non-union labor? Go eat your SC airplane.
on July 1, 2009 3:34 PM | Reply
Very good work, well done!
A second line, yes and well done. That is a natural move that should repair a major strategic error.
But what about this line being the first one delivering the modified 787?
on July 1, 2009 6:05 PM | Reply
What Wingbender might not know...is that the IAM snuck a union member in, to plant pro union information and now Charleston is a union plant. Could this change if Boeing does purchase the plant? Hopefully.
on July 1, 2009 7:09 PM | Reply
I think the comments that 'the unions killed off their production lines' is perhaps a bit simplistic and overstated. I will not argue that the IAM has been incredibly shortsighted in their approach to worker-management relations. However, Boeing and their management geniuses have been plotting the removal of business from the northwest for far longer than just the last strike. The move of headquarters to Chicago wasn't an experiment, it was the bellweather of things to come. The rest of the actions over the years have simply followed the formula.
I'm curious, when Boeing does announce the second (non-union) line in South Carolina, what will be the IAM's response? Will they wildcat and shut everything down? They still have power to hurt Boeing severely. If I recall correctly, it was using this leverage that influenced Boeing's decision to assemble the 787 in Seattle in the first place...
on July 1, 2009 7:09 PM | Reply
I think the comments that 'the unions killed off their production lines' is perhaps a bit simplistic and overstated. I will not argue that the IAM has been incredibly shortsighted in their approach to worker-management relations. However, Boeing and their management geniuses have been plotting the removal of business from the northwest for far longer than just the last strike. The move of headquarters to Chicago wasn't an experiment, it was the bellweather of things to come. The rest of the actions over the years have simply followed the formula.
I'm curious, when Boeing does announce the second (non-union) line in South Carolina, what will be the IAM's response? Will they wildcat and shut everything down? They still have power to hurt Boeing severely. If I recall correctly, it was using this leverage that influenced Boeing's decision to assemble the 787 in Seattle in the first place...
on July 1, 2009 7:09 PM | Reply
I think the comments that 'the unions killed off their production lines' is perhaps a bit simplistic and overstated. I will not argue that the IAM has been incredibly shortsighted in their approach to worker-management relations. However, Boeing and their management geniuses have been plotting the removal of business from the northwest for far longer than just the last strike. The move of headquarters to Chicago wasn't an experiment, it was the bellweather of things to come. The rest of the actions over the years have simply followed the formula.
I'm curious, when Boeing does announce the second (non-union) line in South Carolina, what will be the IAM's response? Will they wildcat and shut everything down? They still have power to hurt Boeing severely. If I recall correctly, it was using this leverage that influenced Boeing's decision to assemble the 787 in Seattle in the first place...
on July 1, 2009 7:09 PM | Reply
I think the comments that 'the unions killed off their production lines' is perhaps a bit simplistic and overstated. I will not argue that the IAM has been incredibly shortsighted in their approach to worker-management relations. However, Boeing and their management geniuses have been plotting the removal of business from the northwest for far longer than just the last strike. The move of headquarters to Chicago wasn't an experiment, it was the bellweather of things to come. The rest of the actions over the years have simply followed the formula.
I'm curious, when Boeing does announce the second (non-union) line in South Carolina, what will be the IAM's response? Will they wildcat and shut everything down? They still have power to hurt Boeing severely. If I recall correctly, it was using this leverage that influenced Boeing's decision to assemble the 787 in Seattle in the first place...
on July 1, 2009 7:11 PM | Reply
I think the comments that 'the unions killed off their production lines' is perhaps a bit simplistic and overstated. I will not argue that the IAM has been incredibly shortsighted in their approach to worker-management relations. However, Boeing and their management geniuses have been plotting the removal of business from the northwest for far longer than just the last strike. The move of headquarters to Chicago wasn't an experiment, it was the bellweather of things to come. The rest of the actions over the years have simply followed the formula.
I'm curious, when Boeing does announce the second (non-union) line in South Carolina, what will be the IAM's response? Will they wildcat and shut everything down? They still have power to hurt Boeing severely. If I recall correctly, it was using this leverage that influenced Boeing's decision to assemble the 787 in Seattle in the first place...
on July 1, 2009 7:26 PM | Reply
I think the comments that 'the unions killed off their production lines' is perhaps a bit simplistic and overstated. I will not argue that the IAM has been incredibly shortsighted in their approach to worker-management relations. However, Boeing and their management geniuses have been plotting the removal of business from the northwest for far longer than just the last strike. The move of headquarters to Chicago wasn't an experiment, it was the bellweather of things to come. The rest of the actions over the years have simply followed the formula.
I'm curious, when Boeing does announce the second (non-union) line in South Carolina, what will be the IAM's response? Will they wildcat and shut everything down? They still have power to hurt Boeing severely. If I recall correctly, it was using this leverage that influenced Boeing's decision to assemble the 787 in Seattle in the first place...
on July 1, 2009 7:27 PM | Reply
I think the comments that 'the unions killed off their production lines' is perhaps a bit simplistic and overstated. I will not argue that the IAM has been incredibly shortsighted in their approach to worker-management relations. However, Boeing and their management geniuses have been plotting the removal of business from the northwest for far longer than just the last strike. The move of headquarters to Chicago wasn't an experiment, it was the bellweather of things to come. The rest of the actions over the years have simply followed the formula.
I'm curious, when Boeing does announce the second (non-union) line in South Carolina, what will be the IAM's response? Will they wildcat and shut everything down? They still have power to hurt Boeing severely. If I recall correctly, it was using this leverage that influenced Boeing's decision to assemble the 787 in Seattle in the first place...
on July 1, 2009 8:50 PM | Reply
Tony S.,
IAM should see the writing on the wall and negotiate by putting a real value on their skill-set rather than by testing Boeing's pain threshold. The tanker contract nearly going to Alabama should prove to them that there are other regions that are hungry for their plate of lunch.
Boeing's 787 missteps will probably be saved by the recession absorbing much of the pain of the delays for the airlines (which is probably why they're not screaming too loudly at the latest one), but the fact that it even tried to outsource when introducing new technology should signal to IAM that it can't dictate terms.
on July 1, 2009 9:38 PM | Reply
Great! Now, the "green jobs" can fill this future
void left by Boeing. Good job, Washington State!
SC should send a fruit basket and a thank you note
to the people of Washington state for electing such
wonderfully intelligent politicians and union leaders.
But don't forget Stoneciper and his tightwad ways
from MD in developing the 787 and Mulally way smart
outsourcing model to support this. I am pretty sure that the cost savings evaporated with 2 years delay in
launching the 787. But hey, who is keeping track?
Thank God that Airbus is being run by a bunch of
CFs also, so kind of even things out.
on July 1, 2009 9:59 PM | Reply
good boeing strategy
specially with the tanker contest coming in
boeing can speed up 787 delivery and cash inflow
reduce order hemorrhage to 330 and 350
and lessen southern opposition
to the kc 764er
on July 1, 2009 10:01 PM | Reply
good boeing strategy
specially with the tanker contest coming in
boeing can speed up 787 delivery and cash inflow
reduce order hemorrhage to 330 and 350
and lessen southern opposition
to the kc 764er
on July 1, 2009 10:02 PM | Reply
good boeing strategy
specially with the tanker contest coming in
boeing can speed up 787 delivery and cash inflow
reduce order hemorrhage to 330 and 350
and lessen southern opposition
to the kc 764er
on July 2, 2009 12:39 AM | Reply
Great strategy. In essence we are trading Spirit which we paid to sell with Vought. That is an excellent strategy!
I wonder if this purchase was more about hiding the true 787 costs?
on July 2, 2009 1:13 AM | Reply
All you need to know about this acquisition is that Boeing met Vought management and saw immediately that they were dealing with the most unprofessional and untalented bunch of hacks in modern aviation. The total lack of any planning, ethics, insight, job knowledge or any other leadership skills is just breathtaking. The Boeing leadership cannot believe that anyone would allow these trolls to run anything bigger than a ice cream truck. The greatest asset of the Vought leadership team is that they are too lazy to come out on the floor and can be counted on to take off work frequently so that their idiocy is minimized.
on July 2, 2009 6:07 AM | Reply
Incidentally, anyone notice that ANA ordered 5 more 787s...?
Boeing seems lucky to have such a loyal launch customer...
on July 2, 2009 6:12 AM | Reply
Incidentally, anyone notice that ANA ordered 5 more 787s...?
Boeing seems lucky to have such a loyal launch customer...
on July 2, 2009 6:27 AM | Reply
Incidentally, anyone notice that ANA ordered 5 more 787s...?
Boeing seems lucky to have such a loyal launch customer...
on July 2, 2009 7:11 AM | Reply
Did anyone notice that ANA recently ordered five more 787s?
Boeing seems lucky to have such a loyal launch customer...
on July 2, 2009 7:12 AM | Reply
argh... what's with the @#$! blog software...
on July 2, 2009 9:03 AM | Reply
Perhaps Boeing may have been better off to open a second line in Long Beach, CA where some aviation and assembly expertise actually exists.
on July 2, 2009 1:26 PM | Reply
It would be a big mistake to move a second production line to South Carolina. It is a racially polarized state, with one of the worst educational systems in the nation.
It also has a notoriously dysfunctional state government, which has been more than apparent the past few weeks. There is maybe one Fortune 500 company in SC, and very little industry for a very good reason.
It is a state with beautiful beaches, a port, and Charleston is an historic city, but the confederate flag still flies on SC's Statehouse lawn.
It is a right to work state, but the savings and incentives will not balance out long term considering the quality of life issues. It really does not align with the values of Boeing, and I think they would eventually regret the decision.
on July 2, 2009 2:07 PM | Reply
Mark_G, instead of slamming South Carolina, perhaps you should inform yourself first. You let your political bent enter into the equation.
BMW has an enormous plant in Spartanburg, SC, which they have expanded since opening it. If South Carolina was such an ignorant backwater, I wonder why BMW would invest so much there?
And really, do you think Boeing is so ignorant, that they do not research things like this? There are two plants at the airport already in Vought and Alenia...do you think they were stupid, and chose South Carolina from a hat, and did no research?
I am guessing that the "savings and incentives" Boeing will benefit from are not having to deal with union strikes every few years, which cripples the company's capacity and costs them hundreds of millions to billions of dollars.
on July 2, 2009 3:06 PM | Reply
Greedy, greedy, greedy, shouldn't have gone on strike. BMW has been reaping the benefits for years now for moving a production facility to SC.
on July 2, 2009 3:17 PM | Reply
Another thing. Everyone keeps on saying "what about the skilled labor issue in SC". That wasn't a factor in the beginning. The 787 is a whole different ball game for everyone, including Boeing. The 787 isn’t your regular aluminum aircraft that Boeing has been putting together.
on July 2, 2009 4:43 PM | Reply
The only way Boeing is going to be remotely successful is to remove all Vought Charleston Executive Mangement and imbed management personnel that know how to manage people and build an airplane. Vought has proven that management by program longevity in lieu of experience does not lead to successful program and assembly operations. Am assuming Vought allowed the operations and technical management staff to stay in place through their failures because they knew Boeing would ultimately be dealing with it.
on July 2, 2009 4:44 PM | Reply
THe thing is that most people do not relise if there was no unions the non-union workers would get nothing. the unions are keeping up the pay of us non-union workers. we do not get the same benifits as union workers but becuase of the unions we get sick leave, paid holidays and vacation time and raises. I wish i was in a union and I would have at least received a cost of living raise. ours was not even close to what cost of living has gone. up. My pay is to low. I say bring unions everywere. for people saying unions are bad then are you willig to give up your medical, vaction, pay raise, 401K. THINK THINK THINK.
on July 3, 2009 3:57 PM | Reply
Who untied Jon from the Nose Wheel of ZA001? He is probably already celebrating the fourth of July. Have a good long week end Jon, you certainly deserve it.
on July 4, 2009 10:17 AM | Reply
Some have beat on Mark_G. Hey, the guy is right!!
Except for one thing. He mentioned 'values' of Boeing. Hah!!
From what we've seen, what values are there? Potemkin events? Hubris?
I was surprised to see that Boeing engineers organized. This was awhile ago. SPEEA, as we know. As, one would think that professionals would not need a union. Yet, the engineers had to do this in order to get respect. Sheesh.
You see, fat cats are fat cats. They cannot even wipe their own behinds. Yet, they want workers to put their noses to the grindstones, do so 24/7, more or less lose their integrity, sell their souls for the company with the chance always of being sold out, ... It's a long and sorry list, people.
Happy Fourth, everyone, including Jim M and Scott C.
on July 4, 2009 4:17 PM | Reply
"I say bring unions everywere. for people saying unions are bad then are you willig to give up your medical, vaction, pay raise, 401K. THINK THINK THINK.
Dear Mad,
In fact unions are not all bad. They were the savior of the working man in the 1930's. Union's problem arose when they took a "we vs. them", "get all you can" approach to negotiations and the featherbedding practices to enlarge membership even though they weren't needed. As for the above listed benefits, the unions initiated SOME of them but they are now realized by non-union workers also. Had unions worked with companies and realized the mutual need one for the other, the UAW and IAM wouldn't be in the situation they find themselves today. The UAW is the biggest fool of all. The handwriting was on the wall for years and they wouldn't back down when they were so far out on line with competitors costs. Well Northrup Grumman, BMW, Toyota and Honda all get along quite well without unions in the United States. They provide a living competitive wage with reasonable benefits to their workers and Boeing will also when they move to So. Carolina.
on July 5, 2009 8:04 PM | Reply
Amercian Politicians, Corporations, and their Unions better take a deep breath and look to the future. China is coming on like a tsunami. Their skill sets and technology is advancing and it won't be long until they compete against Airbus & Boeing. At the opposite ends are Vought's Failure to produce quality work along with the IAM's over-priced workers at Boeing and it will catch up with them. In a decade our autos will be produced in China and maybe many of our airplanes.
The Chinese ARJ-21 should send shockwaves through the idustry
on July 7, 2009 4:25 PM | Reply
It's Funny how the Union Members are always to blame for a Strike.The Fact is Boeing has been mismanaged by Greed at the top.They had and still have a Very Valuable Workforce that has always put their Heart into building a Great Aircraft.The Trouble being Management could never recognize that fact.The Top was Always concerned more about the Profit they could pocket,rather than keeping a Great Workforce and showing their Value to the Company.The last Strike was another way of Taking from the Employee.Upper Management goes out of it's way to Blame the Employee,Look to the Top,There lies the Problem.