4.6 earthquake in possible 737 MAX site

San Antonio (TX), a potential assembly site for the 737 MAX, was hit yesterday with a 4.6 earthquake.

The city is also the location for 787 finishing work.

Readers will recall that on the second quarter earnings call, CEO Jim McNerney stunned Washington State interests when he said 737 MAX work is not guaranteed for Renton (WA), where the 737 has been assembled since shortly after the program was launched. (The 737 initially was assembled at Boeing Field and moved to Renton.)

KING 5 TV in Seattle reports that a state study concludes Renton is well positioned to retain MAX but other sites, including San Antonio, are under consideration.

We are hearing increasingly–but entirely without solid evidence or confirmation–that it is entirely possible a second 737 assembly site is becoming more likely, and that San Antonio is a leading candidate for the site.

The scenario that has been painted to us by two sources is that the second assembly site eventually supersedes the MAX. As the 737 NG winds down and ceases to exist around 2019, the Renton factory site is sold off by Boeing to commercial development, continuing a trend that began with the “Move to the Lake.” By this time, the scenario continues, the 787 surge line at Everett is gone (May 2014 is the current end-date target, but given the demand, delays and program challenges, it could stick around longer). Termination of the surge line opens space in Everett for the New Small Airplane, thus clearing the way for the closure of Renton and the creation of two lines for the NSA.

The scenario is but one of many that Boeing is considering and there is a strong opinion within Boeing that Renton should get the MAX. But McNerney is determined to de-risk Boeing from Puget Sound from (first) the unions and (second) natural disasters.

The prospect of establishing another “greenfield” site for another airplane program sends shivers through a lot of stakeholders, but Boeing’s San Antonio is unlike Charleston. San Antonio has experienced Boeing employees in place in contrast to Charleston. To be sure, many more would have to be hired and Texas has a thriving aerospace industry. Having lived in Dallas for nearly 12 years, we can tell you San Antonio is one of the nicer places in Texas.

We still think the MAX should be assembled in Renton, where only a small investment would be required and you have an experienced workforce second to none. But we can also make a case for San Antonio.

A decision is expected to be announced around the second quarter–right about the time contract negotiations begin with the lead union McNerney considers the most troublesome, IAM 751.

Does anyone thing there is not a connection?

18 Comments on “4.6 earthquake in possible 737 MAX site

  1. Of course there is a connection- just like the phony media pundits on both sides of the IAM NLRB issue.

    MY favorite for a site which would avoid the natural disaster issue and be reasonably close to existing rail and transportation lines, etc would be Moses lake.

    That being said, having spent a year Arlington texas in the 70;s working for LTV , from the company view, texas would be cheaper place to be, etc. Re Dallas-fort worth area although the people were friendly, the temperature and humidity issues were more than we could take, and I would not expect San Antonio to be an improvement. If the world needed an enema . . .

  2. Scott, I have lived in the DFW area for 21 years, and if Boeing chose to build the B-737MAX in San Antonio, TX, that would be great. You probibly know Texas is a “right to work” state. Yes, TX does have several places I would not want to live in, but then again, most other states do too. Every state has something going for it, and something against it.

    As far as earthquakes go in Texas, any shake will get lots of local headlines, Texans just don’t understand them. The DFW area has had several “major” (by Texas standards) earthquakes in recent years, all in the 3.4 range and lower. So the 4.6 quake that was centered some 50 miles southeast of San Antonio is major news here.

    TX earthquakes cannot hold a candle to those Washington state has suffered. The SEA-TAC area has hundreds of real faults running through it. The Cascadia fault/subdustion zone, as I understand it ripes open about every 500 years, or so. The last major earthquake and tsunami caused by the Cascadia Fault was in 1700, or close to that year, so you guys are getting close to another “big one”.

    Like I said, everyplace has something, SC has hurricanes, TX has tornados, wildfires, and floods, and WA has earthquakes, floods, wildfires, and volcanos.

  3. a380 :You can not stop mother nature.

    Correct, nor can you predict, with accuracy, when, where, and what type of disaster Mother Nature will throw at you.

    If the “super-volcano” at Yellowstone were to blow (erupt?), it wouldn’t matter where Boeing was building airplanes. As a matter of fact, it wouldn’t matter where Airbus was building airplanes, either.

    We have had these disaster discussions about Boeing building this in North Charleston or San Antonio, but I don’t ever remember anyone saying that if Airbus had built the Mobile plant hurricanes might interupt production of A-330MRTTs or A-330Fs.

  4. I am a structural engineer in the Puget Sound. This area has a higher potential for earthquakes than most of CA, also a lot of lowlands with poor soil. A serious event could stop production for 6 months to a year. Outside of that this area has a relatively low risk for disasters.

    I think San Antonio has primarily tornado hazard. As a 5.0 earthquake is only 10% of the energy of a 6.0, and 1% of a 7.0 there seems to be almost no risk to a properly designed building there.

    BA will be very careful this time for it to be business climate and diversification of risk when it selects a 2nd 737 site, probably with a lot of space for added lines. Not one work about Right to Work, Strikes, and the like. But the process will be either made or in process when they negotiate the contract this time.

  5. KDX125 :
    There’ll be no second final assembly site for 737MAX.

    While I suspect you’re right. What makes you so certain?

    • Simple logic. A new FAL is a cost of somewhere between 1 billion and 3 billion depending on if you need to just modify facilities already existing, or if you have to start from “green field”. For a derivative program, with maybe a 10 year life span, spending that kind of money when you don’t need to is the height of either stupidity or arrogance. Either way, if they do make the decision to build the MAX somewhere other than the current FAL, it is time to short sell BA stock, because it will show that the company is truly run by idiots.

      • But if it is a precursor of where 737NG replacement will be assembled it makes a lot more sense.

        Essentially it creates an experienced work force for when it is time to do the transition with minimum disruption to the 737MAX. AND minimum disruption in starting up the new model.

    • There’s a host of small suppliers around Renton. It is economically unviable for them to move or duplicate their services. Besides that, I’m questioning that there is a need to increase production beyond 42/month to begin with.

  6. in other headlines, meteor strikes and Ebola outbreaks can not be proven to be impossible either…

    Seriously – I don’t know if a second 737 line would make sense. I think it would make more sense than a second 787 line – higher production volume, so based on that I should say I expect Boeing to diversify it’s production sites further.
    However, despite the dreams of most upper management, we are not in the automobile industry. even 50 a month is very low, let alone if you distribute it over 2 sites – just 25 a month.

    I don’t know.

  7. Gee, it made sense for an A320 plant in China, but it doesn’t make sense for a 2nd line in Texas?

    • I think that is a case of business, politics and diplomacy all working together. As a business case alone, I don’t think it makes sense either.

      On the other hand, how much money did Airbus have to invest in this line in China?

  8. Falcon :
    Can’t be that hard to arrange transportation of those items to wherever the new line is.

    But transportation has a cost cost per mile and time and reliability etc. The longer the supply chain, the greater the cost and problems. sometimes, the extra costs exceed the labor savings.

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