787 Line 2 decision near/Updated

Update, June 19: Air Transport World’s Geoffrey Thomas (the 2008 Aerospace Journalist of the Year) spoke with Boeing’s CEO Jim McNerney on the 787 Line 2, and it’s more warning to the IAM. Here is the full ATW Online report:

McNerney: ‘My nerve’ to launch new aircraft programs is ‘spectacularly strong’

“No, No, No!” was the short and emphatic answer from Boeing Chairman, President and CEO Jim McNerney when ATWOnline asked him whether the manufacturer has lost its nerve to launch a new aircraft program after the battering the company took from 787 production glitches. “My nerve remains spectacularly strong,” he said during a conversation this week in Paris. “We did not do the job on the 787 supply chain execution. But we are fools if we do not learn from it. There are things we are going to do very differently going forward.”

He added, “If you don’t convert failure into success you don’t stay in business too long. Fortunately we have had more successes than failures and we have learned from those failures. It’s my job to make sure the institution learns from this and to ensure that the people in charge next time have learned.”

McNerney noted that a second 787 production line may not be started until after introduction of the 787-9 in 2012. The Dreamliner will hit a production rate of 10 per month by the last quarter of 2012. He explained that program execution is “now a religion” and “we don’t want to jeopardize the 787-9 introduction” by moving people to support a second line.

He also issued a blunt warning to Boeing’s Seattle-based unions: “We have had serious delivery delays over the years because we could not get a timely settlement with the union and we can’t keep letting our customers down. The union problem is a Seattle problem.” He was referring to the International Assn. of Machinists and Aerospace Workers District 751. Last year it struck for 58 days but the impact of the strike was far greater as many of the 27,000 workers involved were required to requalify on tasks before returning to work. (Emphasis added.)
by Geoffrey Thomas

Update, June 18:

Dominic Gates has this excellent, long piece about the challenges of ramping up production beyond seven a month (Boeing has already said it wants to go to 10/mo by the end of 2012; and Gates also has a response from Boeing to Ostrower’s story below saying no Line 2 decision is “imminent.”

Original Post:

This is the fifth is a series of reports from the EADS media day and the Paris Air Show.

We hadn’t planned to be on-line today since we’re traveling back to Seattle, but as we were at Charles de Gaulle Airport, Jon Ostrower published an exclusive interview with Boeing’s VP of Products and Services, Pat Shanahan, who hinted a decision on the location for the 787 Line 2 production is very near. So while we’re at Copenhagen waiting for our connecting flight on SAS (a great airline that unfortunately discontinues service to Seattle next month), we added this important story.

The interview isn’t good news for the unions or, by extension, Seattle. Read the article here.

In our speech in April before the Snohomish County Economic Development Council, we predicted that Boeing would make a decision late this year or in 2010 to locate Line 2 somewhere other than Seattle, citing among other reasons the poor labor relations with the IAM. Shanahan addresses this in Ostrower’s article.

It looks like a decision may be coming a lot sooner than we thought. Nothing we’ve heard since our speech leads us to believe Line 2 will be in Everett.

5 Comments on “787 Line 2 decision near/Updated

  1. IF so, it shows just what a fools errand the aerospace council or whatever they call it, really is.

    The chairs are hardly warm.

    The thing working in Everett’s favor seems to be the lack of active competition. Unless Boeing have been very sneakily cutting deals with other states and municipalities. That would be a hard secret to keep, and I just can’t see Boeing not taking the opportunity to squeze every dime out of a Charlston/Mobile/FtWorth etc. a new location might be.

    Nevertheless, if they do go, It’s time to sell BA and never look back. I expect the hit to earnings to be catastrophic for years.

  2. Leeham writes:
    … nothing we’ve heard since our speech leads us to believe Line 2 will be in Everett. …

    IF in the near future a second 787 assembly line ever will come into existence, nota bene …

  3. The goal is labor peace. If Boeing, IAM, and SPEEA can work out an agreement that will avoid strikes, I suspect that the 2nd line for the 787 will stay in the state. If they can’t, and a second line is opened somewhere else, it could become the only 787 line.

  4. Boing will never escape labor unless in moves to chine. Anyone that thinks a move south will do it is kidding themselves. Anyone who thinks a union can’t strike effectivley in a right leaning right to work state is deluded.


    Take a look at the current Bell Helicopter strike in Texas.

    History notes sucessful labor actions in shipyards in Mississippi and Alabama shipyards as well.

    The touch labor cost canard is overplayed as well. It’s a tiny fraction of Boeing’s end product.

  5. Wouldn’t a second final assembly line imply that Boeing has dropped the objective to achieve a six-day factory flow with LN100, not to mention the ultimate objective of a 3-day factory flow?

    What’s the use of having two final assembly lines as long as the supply chain cannot deliver shipsets at that rate?

    What would perhaps make sense is a second pre-final assembly line that mirrors Global Aeronautica, because that’s where one of the major bottlenecks is – unless the problem really is with their respective sub-suppliers, then the capacity needs to be doubled there or the design revised to something more producible.

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