After much speculation and behind the scenes lobbying, Boeing announced today that the commercial aerospace manufacturer will end 787 Dreamliner production at its Everett, Washington production complex. All 787 production will be transitioned into the existing 787 Dreamliner North Charleston South Carolina production complex.
The South Carolina production facility reportedly employs upwards of 7000 workers.
Initially, there were indications from Boeing senior management that the decision would be made by the end of this year. That timetable has obviously changed.
Earlier this week, The Wall Street Journal, citing people familiar with the matter had reported that this decision was essentially made and would be announced sometime this week.
In a Supply Chain Matters update published in early September, we alerted readers that amid significant cost and profitability challenges as a result of the ongoing grounding of multiple operational or completed single-aisle 737 MAX aircraft, coupled with dramatically reduced international air travel because of the ongoing global pandemic, 787 Dreamliner production and delivery levels have had to be scaled back.
The obvious backdrop to this decision is that production workers at the Everett Washington complex are unionized whereas as South Carolina is a right-to-work state.
As we noted in our last update, a related backdrop was that the South Carolina facility has been the center of reports of recent production and quality lapses, causing the specific grounding of four aircraft. Reports had indicated that the manufacturer had identified four different manufacturing flaws related to 787 manufacturing process that are identified and being reviewed with regulators and airline customers.
Yesterday, The Seattle Times referenced the WSJ report as indicating that choice of South Carolina facility was all but sealed and outlined the magnitude of this decision to the Puget Sound region where Boeing’ s west coast production facilities reside.
Specifically noted: “With the 787 gone and the 747 jumbo jet production set to end in 2022, the Everett wide body jet final assembly building- long touted by Boeing as the largest building by volume in the world- will be left a giant, half-empty box.”
Washington state governor Jay Inslee in a statement estimated that the consolidation decision would mean direct local job losses of around a 1000 workers. The Governor further warned the move could motivate the state to take a hard look at Boeing’s favorable tax treatments.
The stakes were indeed enormous and now Boeing’s internal and external supply network partners will have to deal with the consequences. Moving forward, Boeing has indicated a monthly production plan of six 787 aircraft monthly beginning next year, down from the current level of 14 per month split among two facilities.
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