Flurry of international sales not enough to keep airlifter production line open unless USAF buys more aircraft
Boeing has issued a stark warning that it may have to start closing down the C-17 production line as early as next month unless it receives a clear indication from the US Air Force that it is interested in taking more aircraft.
"We've seen no indication that they want any more," says Boeing Integrated Defense Systems president and chief executive Jim Albaugh, who adds that unless it hears something positive "we will begin having to lay off 31,000 people who are working on this in 30 states. Once we begin to shut down the line, it's going to be difficult to reconstitute it."
Boeing's warning comes despite a late flurry of international sales activity covering up to four aircraft each for Australia and Canada, a fifth C-17 for the UK and negotiations "with NATO countries for three or four", says Albaugh. The US Congress also added three more aircraft into the 2007 budget, bringing in a total additional sales tally of around 15 aircraft.
The bulk of these were spurred on by the looming threat of closure, which was first flagged up by the company in early 2005. However, John Lockard, president, precision engagement and mobility systems, says that even with this fillip to the current production run, Boeing is being forced to protect its long-lead suppliers.
The current build rate of 15 a year allows it to offer the airlifter at around $220 million, but this would reportedly rise by around 25% if Boeing is forced to go to slower rates such as eight a year. The "build cycle is 34 months, and we've been protecting that cycle based on our current production rate. We would like to have some indication from the USAF that they'd like more, otherwise we're healthy. But we are facing a very difficult business decision in August as to how much longer we, as a company, should keep it open. That's what we've told them," says Lockard.
Boeing has internally funded long-lead items for an additional 22 airframes beyond its mid-2006 firm orderbook, and is now weighing up whether to continue supporting on-going production at these suppliers as they reach the end of this additional batch.
Only 12 of these aircraft are "spoken for", leaving 10 for which Boeing must find customers. Including the 180 on firm order for the USAF, the 153rd of which was delivered on 18 July, total planned production now stands at 202 aircraft.
"The last review of requirements pre-9/11 stated a need for 222, and now with all these extra demands on airlift the intent is to take 180. It just doesn't make sense," says C-17 programme manager Dave Bowman.
Source: Flight International
