Boeing announced today that it will increase the production rate of the 737 to 42 a month from the first half of 2014. This is on top of consecutive rate increases from 31.5 to 35 to 38 a month, which haven’t even been implemented yet. The 38/mo is due to be effective in 2013 and 35/mo next year.
This compares to an announced rate of 42/mo for the Airbus A320, although 737 Program Vice President and General Manager Beverly Wyse said during the Boeing pre-Paris Air Show briefing that because Airbus shuts down production in August for the month, the 42/mo really equals 40/mo. (With the announced rate increase, Boeing lifted the news embargo on Wyse’s presentation; embargoes on other briefings remain until June 19 Paris time.)
Wyse acknowledge that the supply chain, some of which also serves the A320 family, closely studied the return on investment and duration of this unprecedented rate level. A small number of suppliers need to expand facilities to meet the rates. Boeing wants to sustain any such rate increase for at least two years, Wyse said.
Key to providing comfort to the suppliers, Wyse said, was Boeing’s ability to manage the backlog during the most recent recession. Despite calls by some lessors and some aerospace analysts for Airbus and Boeing to cut rates by as much as 30%, Airbus reduced rates at a lower percentage while Boeing maintained its rate of 31.5 per month. The company achieved this by shifting delivery positions, delaying planes for customers wanting to delay them and trading these positions for customers who wanted earlier positions.
The Renton (WA) plant, where the 737s are assembled, has two commercial 737 lines each capable of 21 per month. One line currently is at the maximum. There is a third line, for the 737-based P-8A Poseidon, in another building producing one per month, which could be dramatically increased to accommodate additional commercial demand.
Boeing had a backlog of 2,101 737s at May 31, a 5.5 year backlog at the rate of 31.5/mo. Boeing officials have said publicly that they expect to produce the 737 to at least 2026.