The prospect that Boeing may launch the so-called Middle of the Market (MOM) airplane seems to be gaining ground.
We’ve reported previously that our Market Intelligence suggests the MOM would be launched in 2017 or 2018 with an entry into service seven years later.
In an interview with Air Lease Corp president John Plueger, he outlined why Boeing has to proceed with the MOM–the response to the 737-9 MAX has been disappointing. We also reported in our interview with Airbus CEO Fabrice Bregier he doesn’t believe a MOM is needed, that the A321neo and A321LR fill the bill. Clearly he is looking at this from a different perspective than from Boeing’s current dilemma.
On the eve of the Paris Air Show, Jon Ostrower of The Wall Street Journal reported that Boeing sees a demand for MOM.
The prospect of a launch of what we’ll for now call the “7M7” (for MOM, obviously), presents opportunities all around the US. And potential anguish for Washington State and Boeing’s local unions.
We fully expect Boeing to compete the assembly site for the 7M7.
Depending on a lot of moving parts surrounding Boeing’s aircraft manufacturing (no pun intended), Boeing may not have room at its Everett plant for the 7M7. Will the 747-8 program be winding down, making room for a 7M7? It all depends on whether the global cargo market makes that recovery Boeing has touted for so long. If not, we don’t see that Washington has any chance of winning an assembly site. A new, “greenfield” plant in Eastern Washington is unlikely.
Washington would certainly compete in a national contest.But after giving Boeing an $8.7bn set of tax breaks to win the 777X, does Washington have any more to give? These already extend to 2040. They could be extended well beyond that, in theory. In fact, these breaks were an extension of the Boeing 787 tax breaks granted ion 2003 and the World Trade Organization found those breaks to be illegal. WTO is pondering whether to open a new trade dispute over the additional breaks.
Boeing is expected to demand new concessions and a contract extension from its touch-labor union, the IAM 751 (a District of the International Association of Machinists) as a condition for any siting of a 7M7 assembly plant in Washington. The current contract runs to 2024 and was extended, with concessions, after a bitter, bitter campaign and vote in January 2014 that pitted 751 against the parent IAM and member against member.
Would Boeing automatically locate the 7M7 at its Charleston (SC) plant? Boeing has more land there than it needs, a lot more. But the IAM is trying to organize the plant, and while it is an uphill battle (and in our view, unlikely to succeed), Boeing surely wouldn’t want to dramatically expand to another unionized facility.
Boeing has facilities in Alabama (Huntsville) and Texas (San Antonio), which are non-union and where there is embedded experience. And, of course, Boeing could seek to put a plant anywhere with an entirely new workforce. This didn’t work out so well at Charleston, where quality control, turnover and a slow learning curve has hurt. Lessons learned will be important should Boeing go to another greenfield site.