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Supply chain capacity key to expanding 737 production

Deciding whether to boost 737 output beyond 35 per month hinges on supply chain capacity, Boeing's top executive told analysts today.

Boeing already plans to increase the annual 737 production rate from 31 to 35, but is continuing to study options to build even more. The decision should happen by late September or October, says Boeing chief executive officer, president and chairman James McNerney.

Market studies have made it clear there is "some upside" to increasing the production rate beyond 35, McNerney says.

"The supply chain is the key question," he adds. "We have better clarity on the market right now than the supply chain's capability to go higher than they've already committed."

McNerney notes that many 737 suppliers are also ramping up output for increasing Airbus A320 production rates, as well as supporting new entrants in the narrowbody market such as the Bombardier CSeries and Comac C919.

"If the supply chain is committed and capable [to build more 737s] you will see further movement," McNerney says.

Boeing's analysts are working through a number of scenarios. Some suppliers need to invest in tooling or facilities, others need more training for employees, and some require new contracts with Boeing to go beyond 35 737s per year, McNerney says.

Adding more 737s to Boeing's pace of deliveries should not cause problems in other programmes, such as the 787, which also plans to start ramping up production next year.

"There could be an incidence of tradeoff capacity but by and large they tend to be separate issues," McNerney says.

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