Risks to 787 Line 2 in Charleston

Here are some thoughts about the risks Boeing faces about establishing 787 Line 2 in Charleston vs. Everett. An understanding of Washington State politics is at the core of these musings.

  • Federal politics. Certain members of the Washington Congressional delegation, notably Sen. Patty Murray and Rep. Norm Dicks, along with Sen. Maria Cantwell and Rep. Jay Inslee, are very vocal about keeping Line 2 in Everett, which lies in Inslee’s district. Dicks and Murray are powerful members of their respective appropriations committees. How pissed off will they be if Boeing puts Line 2 in Charleston, and will this affect their advocacy of Boeing interests in Congress, notably the….
  • KC-X tanker impact. In an unfortunate coincidence of timing, Boeing’s decision on locating Line 2 (set for year-end) will come shortly after the new Draft Request for Proposals is issued (expected in September) for Round Three of the KC-X competition. Murray and Dicks are hyper-vocal advocates for Boeing’s tanker and opposing Northrop’s tanker. Nobody expects these two to reverse themselves, but they certainly could mute their opposition to Northrop as a pressure point on Boeing or in retaliation for a Charleston decision.
  • Local politics: The prospect of Line 2 going to Charleston strikes terror in the hearts of local politicians. The presumption here is that if Line 2 goes to Charleston, the 737 and 777 replacements will leave Puget Sound as well, if not for Charleston then for somewhere else. There is probably solid reason to fear this, but the locals are way too short-sighted. Even if Line 2 stays here, Boeing will consider located the replacement airplanes somewhere else. There is no guarantee these will stay here if Line 2 stays here.
  • Line 2 and Washington State’s ‘business climate.’ Boeing didn’t get what it wanted in the most recent Legislative session, and that’s relief on the rates charged by the state for unemployment insurance and workman’s compensation. The Legislature is out of session now and won’t be back before Boeing decides on Line 2, unless the governor calls a Special Session–and we’ve heard nothing to suggest she might. So there’s nothing the state politicians can do on this issue before a decision is made. As an aside, while the rate reductions have been a Boeing priority, the rates affect all businesses in the state, especially small business. Our view is that the Legislature needs to tackle this for all business, and not just Boeing.
  • Is putting a fully assembly line in Charleston a risky move? Given the program risks to date, a good argument is being made that establishing Line 2 there only adds to the program risk, rather than reducing the risk. Boeing would have to build a new building, hire workers and train workers. The training/learning curve adds risk to a program already fraught with risks, the argument goes–which also happens to be the same argument Boeing IDS makes to diss the Northrop/Airbus KC-30 business plan for Mobile, AL, construction and in favor of doing the work at the IAM-dominated Everett plant for the KC-767.

4 Comments on “Risks to 787 Line 2 in Charleston

  1. Dang. Nothing to disagree with there.

    A more or less perfect analysis of the situation.

  2. Doesn’t having two lines a couple of thousand miles apart add complexity and at least some extra expense to the production process? I get they want to avoid labor trouble and Washington State labor laws, but the time for that was back when they set up the initial 787 line.

  3. A good and accurate analysis. It appears that Boeing has to play its second line card for as much as it can but, ultimately, they will have to fold and build in Washington.

    Will be an interesting card game.

  4. Note that the 787 assembly line is supposed to be a short period of final assembly and full test – don’t structural assemblies come already fitted out with everything that can be fitted (as Airbus does?) and pre-tested as much as can be? Granted, that’s when the mismtaches between sysems and vendors that are less easily caught in test labs will show up so require expertise.

    Albaugh told the Governor of WA state that there was nothing the state could do to to keep the 787 second line in WA state, that Boeing to have labor-management discussions (Seattle Times of September 9, 2009 quoting the Governor).

    Seems to me that a second line would be better put in a different continent, the UK, AUZ and Japan being candidates, to even out currency fluctuations and produce closer to customers. Airbus is in effect proposing that for the USAF tanker as a secondary consequence of the need to have US security for final equipment fit and for political reasons but they would include all A330 freighter production. Isn’t Airbus trying a narrow-body line in Communist China (who failed with Douglas some years ago)? The automobile industry produces much the same design of popular models in many places (e.g. Toyota produces Corollas in NA as well as Japan – yes, a quite different industry but relatively sophisticated these days). Might make more sense to move the 767 line to Wichita to make tankers.

    Boeing has a difficult decision to make, hopefully both management and workers (who elect the union officials) can get into win-win mode regardless of decision instead of playing bureaucrats versus neo-Marxists instead of attending to Job 1.

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