|By Scott Hamilton
Oct. 1, 2020, © Leeham News: Nobody, but nobody, should be surprised that Boeing is going to consolidate 787 production in Charleston (SC).
This die was cast Oct. 28, 2009, when Boeing announced that the second 787 Final Assembly Line would be placed in Charleston instead of Everett.
It was only a matter of time.
Demand for every airplane program eventually wanes. Supporting two production lines is a finite proposition, especially for a widebody airplane.
When this inevitably happened for the 787, LNA and a plethora of others predicted that the Everett Line 1 FAL would disappear and Charleston Line 2 FAL would become the only production line. The timing was generally forecast to be around 2025.
The COVID-19 pandemic accelerated the timing. But not the result.
Charleston has less expensive labor costs. South Carolina has a less expensive business climate. The 787-10 is only assembly in Charleston, not Everett. The fuselage sections are too long to transport to Everett.
Charleston is a production site of fuselages. Everett isn’t.
Charleston is closer to Italy, where the tail section is produced. This is flown to Charleston and Everett in the Dreamlifter. Cutting Everett cuts transportation costs.
Only the 787 is assembled in Charleston. The plant and automation are newer than Everett. Advanced manufacturing processes on the MQ25 were tested at Charleston. Boeing has a couple of billion dollars invested in Charleston.
There was no way Boeing would mothball Charleston.
Washington State’s tax incentives were found to be illegal by the World Trade Organization. In February, Boeing asked Washington to cancel them. It claimed this would resolve the WTO issue. (This remains to be seen.) But was it a forebearer of consolidation to come?
South Carolina’s ~$1bn in tax breaks weren’t part of the WTO case. Are there new tax breaks to assure Charleston retained the only 787 FAL? These could be offered free and clear of the WTO. Washington couldn’t match.
Boeing previously announced that the 787 production rate will fall to 6/mo in 2022. This is when consolidation will happen unless Boeing reduces the rate to six next year.
Don’t look for Everett to see 787 production ever again. Boeing will work to increase the through put of the Charleston plant to accommodate more than its current maximum of 7/mo, should demand return after COVID is over.
The inevitable that was so clear Oct. 28, 2009, is here now. A little early. But it shouldn’t surprise anyone.