Could Boeing face new NLRB complaint over 777X site search?

Could Boeing face a new complaint with the National Labor Relations Board, this time over where the 777X assembly site will be placed? A Cornell University labor professor thinks it possible.

The union-backed publication In These Times wrote on November 25 that Boeing’s shopping the assembly site around following the rejection of a contract offer by IAM 751 November 13 is reminiscent of the 2009 decision to locate the second 787 assembly line in South Carolina in the aftermath of a 57-day751  strike in 2008. The 751 District filed a complaint with the NLRB that that decision was an illegal retaliation and the staff agreed, filing a formal complaint against Boeing and demanding that the assembly line be relocated to Everett (WA). The complaint was dismissed in 2011 when 751 and Boeing agreed to locate the 737 MAX line in Renton (WA) in exchange for a four year extension of the 2008 contract. The secret negotiations took place a year before the 2008 contract was to expire.

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Airbus exec outlines goals for Washington State supply chain effort

Washington State suppliers who want to do business with Airbus don’t have to open new shops in Alabama or elsewhere globally to support the European company, its top supply official in the US said last week.

We sat down with David L. Williams, vice president of procurement for Airbus Americas, following presentations of the first Airbus Suppliers Fair in this state, in a conversation in which he outlined Airbus’ goals to increase the State’s supplier business with Airbus. The fair was the culmination of more than three years of efforts by the Pacific Northwest Aerospace Alliance (PNAA), the Washington State Department of Commerce and this writer to arrange a fair.

This is part of a Beyond Boeing aerospace strategy we outlined in October 2009 before the Governor’s Aerospace Summit in Spokane (WA), a plan adopted by Gov. Christine Gregoire and the Commerce Department. Spurred by Boeing’s pending decision to put the second 787 assembly line in South Carolina and a clear strategy by Boeing to compete future airplane programs and supporting work outside Washington, it was obvious the State had to move Beyond Boeing in order to maintain a healthy and growing aerospace industry.

It’s been gratifying to see Commerce, Gregoire and her successor Gov. Jay Inslee ramp up efforts to broaden Washington’s aerospace reliance on Boeing to a more global view.

Washington is Airbus’ No. 2 US supplier by companies count and No. 6 by dollar volume, and it’s within a few hundred thousand dollars of becoming #5. Williams told us that Airbus uses around 25 Tier 1 suppliers in Washington and many more Tier 2 and 3 suppliers.

“Washington State is a huge aerospace hub, so for us as we look at the opportunities, as we look at the suppliers, the technologies of interest and the R&T (research and technology) office, clearly Washington State is going to be one of those strong focuses,” Williams told us. “We’ve come here every year, six or seven times, at the annual PNAA conference. We were at the Aerospace Defense and Suppliers Summit last year and we’re here today.

“I think I’ve been a bit more to Washington State than to any other part of the country.”

Airbus has a goal of doubling its US dollar-based cost structure to mitigate against the Euro-Dollar exchange rate.

“[We] have the plan to increase the spend to $20bn. When I first came here, it was $10bn,” Williams says. The creation of the A320 family final assembly line in Mobile (AL) is part of this plan, but it hardly stops there. And while Mobile will become an aerospace cluster supporting the FAL, suppliers don’t have to locate there.

“There is a need for certain supplier requirements around the FAL…but there isn’t a need for the machine shop to be 50 yards away, there isn’t a need for the composites to be on site. The vision is there will be an aerospace park providing the needs of the final assembly line, and if suppliers are looking to open up a shop in Alabama, it is an option but it certainly isn’t a necessity,” Williams told us. “We wouldn’t expect to, and we’re not telling suppliers, that if you want to do business with Airbus you have to be in Alabama. We’re looking for suppliers in Washington State who can support the business globally.”

What kind of suppliers is Airbus looking for on its sojourn to Washington?

“Areas of interest changes over time,” Williams says. “Areas of opportunities could be a whole new program, it could be a neo program, it could be the end of a contract, it could be the natural end of a contract or it could be brought to a halt because of poor performance. So far we have been focusing on machining very strongly. We can look at composite. We’ve been doing some work around super-plastic forming. More recently we’ve been looking at…aerostructures supplies. Maybe not the huge aerostructures assemblies like Spirit Aerosystems on the A350, but significant aerostructures suppliers who could add value to the supply chain. We looked for commodities.”

Dual sourcing—a topic of some sensitivity to Boeing’s labor unions and to Washington State, who want all the jobs and companies that go with production—is an emerging goal of Airbus.

“As the [production] rates go up, we’ve come to the realization that, No. 1, the single source policy we’ve had maybe needs to be re-thinked, particularly on the single-aisle, obviously. No. 2, the dollarization drive is still huge,” Williams says. “We’ve still got some room to go globally to get to where we want to be. No. 3 is a final assembly line that brings in the opportunity for more local suppliers to support that final assembly line. Why not, if they are going to support rate four into Alabama, or a rate four into China or 10 into Europe? You get your dual sourcing and there is a geographic logic to it as well. You take the risk out of it and you get the dollarization as well. You get the three legs of the strategy.”

Airbus Americas Chairman Allan McArtor raised the prospect of opening an engineering center in Washington State within 10 years. This is good news for Boeing engineers and IT personnel who have been laid off by Boeing as the Chicago-based company moves some of these jobs out of Washington to non-union locations. Airbus has taken advantage of Boeing’s similar actions in Wichita (KS), and has a growing engineer center there. But the bad news is, don’t expect an Airbus engineering center here any time in the immediate future.

“There aren’t any plans I’m aware of to move in sooner than later,” Williams said.

Odds and Ends: How Alabama won Airbus; ANA 787 test flights

How Alabama won Airbus: Bloomberg News has this story detailing how Alabama persuaded Airbus to located an A320 plant in Mobile, after losing the tanker competition.

ANA to conduct 787 test flights: The Japanese airline, which currently has more Boeing 787s than any other carrier, will conduct up to 200 test flights before returning the 787 to service, according to this Reuters report.

Odds and Ends: Air France v Rolls-Royce for A350; Virgin America rejigs; Last A340s sold; Heading South with SPEEA

Air France v Rollsr-Royce: The saga continues-see this Bloomberg story. We understand there is more to it than just maintenance. Rolls wants AF to order the Trent 1000 for the 787 order, too.

Virgin America: This airline, headquartered in San Francisco, has been an airline in search of a business plan. Its operations don’t have a niche and didn’t fill a void (like jetBlue created and filled at NY-JFK). It’s lost hundreds of millions of dollars. And, finally, the losses have caught up. Bloomberg has this story about aircraft order deferrals and cancellations. The deferrals are Airbus A320neos (note to Alabama: VA was going to take the first neos from the new Airbus Mobile plant in 2016).

Virgin is seeking to restructure aircraft leases, according to two industry sources. Failing to do so could lead to a Chapter 11 filing, the sources say.

Last A340s Sold: The remaining two Airbus A340-500s, originally destined for ailing Kingfisher Airlines, have been sold.

SPEEA and Boeing: Things appear to be heading south with SPEEA. This could affect Boeing’s year-end push to deliver as many as 50 787s as well as the other 7-Series.

Odds and Ends: Assessing the MAX; Airbus and Mobile; skilled labor in the supply chain

It’s a slow August for news, but here are two items we’ll bring to your attention:

Assessing the MAX: Over at AirInsight, we have this post assessing the Boeing 737 MAX, written shortly after the Farnborough Air Show.

Airbus and Mobile: This story discusses how the Airbus plant at Mobile (AL) will add to the aerospace cluster there. The comparison with Seattle, which we make, highlights a real challenge we see for Airbus and the aerospace cluster in Mobile. The supply chain here is struggling under the weight of the high demand for airplanes (not just at Boeing, but all the OEMs), both in terms of product and skilled help. As a member of the Board of Pacific Northwest Aerospace Alliance, we hear of the manpower shortage all the time and the efforts by the State and others to boost training and education to meet demand.

The shortage of skilled labor, and of engineers, is a major challenge for Boeing, and (like it or not) one reason for outsourcing. But the impact on the supply chain is equally great. The lower Tier suppliers in effect become the training ground for the upper Tier and Boeing. This means there is a continuous skill-churn that these small businesses really can’t afford.

Washington State is not the only place where this problem exists; it’s a national problem. What we hear at PNAA is story after story of foreign students (notably Chinese) coming to this country for engineering education then taking their skills home rather than emigrating here. Nationally, there is a wide imbalance between education and training and demand. The shortage of our education institutions in graduating the skills in STEM and touch labor is large. Even high schools have cut back on vocational training of all kinds.

In this State, budget cuts have severely impacted the community colleges and high-ed schools. The aerospace industry is but one of those hurt by these cuts.

Odds and Ends: Coverage on Airbus’ Mobile move and other thoughts

Randy Tinseth, VPO of Marketing for Boeing, is always fast with the quip–via Flight Global’s Twitter: “Market is about product, people and customers, not the address on your business card.”

Mobile Press-Register: general overview.

Reuters: Unions aren’t happy–but guess what, it’s US unions.

Chicago Tribune: Boeing’s home-town paper has this about Boeing losing a tactical edge–according to Airbus.

The Economist: Slaps Boeing and Airbus for their continued bickering over trade. Hear, hear.

Airbus-Mobile press conference

Fabrice Bregier, CEO: Customers were asking, why don’t you come closer to us? Currently more than 200 aircraft a year for US, Canada. Capacity for more than 400. Expect to build A320neo to at least 2030.

Christian Scherer, head of strategy: An assembly line is not just an assembly line but a whole compound. 116 acres of industrial complex. Seven buildings. Shipped to deep sea port of Mobile and trucked to the facility. From shipment to roll-out, about 2 1/2 months. Expansion beyond 116 acres possible. It is pretty much a carbon copy of Europe. Reducing industrial risk by copying it.

Q&A

Scherer: This is limited to A320. We have negotiated option for land expansion, but no plans for that now. Could have support facilities.

Bregier: This is a strategy move first. We considered that despite procuring $12bn from suppliers in US, we needed to be visible. There is a wave of replacement aircraft needed, and we have the right product in A320neo and producing this in America will be an advantage. Our lines in Europe are competitive [but are costed in Euros]. We avoid transporting suppliers, engines to Europe for reimport to US; these will go directly to Mobile.

Scherer: Proximity to a very, very large market and international footprint for the company are strategic drivers. It is as simple as that.

Airbus official: More than half the value of A320 already comes from America (driven mostly by engines).

Alan McArtor, Chairman Airbus Americas: Typically there is a halo affect that will attract suppliers to the region.

Bregier: Right now struggling to achieve rate 42 in October this year due to supply chain. We need to first stabilize supply chain. First deliveries here in 2016. We know that if we could deliver much more than 42 NEOs a month from 2016, there is a huge potential. It’s premature to say we’ll ramp up beyond 42 a month but with NEO there is huge potential.

Bregier: Already have 220 Airbus engineers in Mobile.

Scherer: Incentives in excess of $100m.

Bregier: Euro-dollar exchange rate not a consideration to a long-term investment. Unions: every9one prefers to have investments in-country but we have invested $14bn Euros in Europe, so it’s time to invest in the US.

McArtor: Having an industrial citizenship in the US can’t hurt for future DOD contracts. It’s not the reason we’re doing it right now but the answer to the potential is yes.

Scherer: There are no plans to convert passenger-to-cargo planes here. If and when [our other facilities] have exhausted their capacity, then it would make sense to consider here.

Separate from the press conference, we asked about CEO and NEO production: CEO will be assembled first at Mobile.

 

Airbus makes it official: A320 FAL comes to Mobile

Via Airbus

Via Mobile TV Station

Farbrice Bregier, CEO Airbus: We operate state-of-the-art factory, will create jobs, invest and grow the economy here in Mobile. We are proud to call an American town ‘home.’

We have more than 1,000 aircraft with 12 aircraft operating in America.

We invest more than $12bn a year in US economy, 250,000 jobs in more than 40 states. We are the largest export customer in US aerospace.

Why now? We’ve been talking about building aircraft here for seven years but pieces never came together. [Now they have.] Sourcing the best talent is a global challenge. A320neo is the best selling aircraft in its category. It would be foolish not to seize the opportunity.

Gov. Robert Bentley: Because of the groundwork laid…on the tanker project, we succeed today. The Airbus project will indeed accelerate Alabama’s [economic progress]. We’ve created a business-friendly environment in Alabama. I believe Alabama has the opportunity to build a major aerospace center just like we did with the automobile industry. By 2018 40-50 aircraft a year, first delivery in 2016.

The full press release:

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Airbus and Mobile: Implications and analysis

Before getting to the meat of things, a couple of key stories:

Mobile Press-Register, June 30. Details of the plan.

Wall Street Journal: Boeing complains.

It’s now one of the worst-kept industrial secrets: Airbus will announce at 10am CDT July 2 that it will construct a $600m A320 Family Final Assembly Line (FAL) in Mobile (AL).

This is a major strategic and tactical move in the intense, often bitter competition between Airbus and Boeing.

Even before the plans became official, Boeing issued a pissy slam, harking back to the World Trade Organization dispute, rather than stating that it is in a position to compete against Airbus and its A320 with what Boeing otherwise routinely characterizes a better airplane with the best workers in the world.

Perhaps the pissy statement was chosen because in many respects, Airbus has mouse-trapped Boeing—and there is very little the company can do about it.

Before explaining, here are some facts to keep in mind. Click on the graphic to enlarge.

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