Retrospective-1, 10/28/09: Boeing to Charleston for 787 FAL #2

DownloadOct. 1, 2Oct. 1, 2020, (c) Leeham News: 10 years, 11 months and 27 days ago, Boeing announced it selected its production plant in Charleston (SC) for the site of its second 787 assembly line.
The decision came after an intense battle with its touch labor union, IAM 751, over concessions demanded by Boeing and offers made by the union.
Boeing told Washington State there were no incentives that could be offered to persuade Boeing to locate Line 2 in Everett (WA). The issue, Boeing said, was entirely about the union. However, it was later learned South Carolina state and local governments provided Boeing with nearly $1bn in tax breaks and other incentives to locate Line 2 there. State and local Washington officials felt flimflammed by Boeing officials.
Last month, Gov. Jay Inslee of Washington asked Boeing if there was anything the state could do to persuade Boeing do keep Line 1 in Everett.
The company is meeting today to decide whether to consolidate the two lines into one to save money because of the COVID-19 crisis. When CEO David Calhoun announced a study during the 2Q2020 earnings call July 29, it was considered a foregone conclusion that Charleston would be selected for the site.
LNA provided extensive coverage in 2009 about the decision. We’re publishing several articles in a Retrospective look about the decision then to locate Line 2 in Charleston.

Boeing to Place Second 787 Assembly Line in North Charleston, SC
  • Press Release
  • Source: Boeing
  • On 5:03 pm EDT, Wednesday October 28, 2009

SEATTLE, Oct. 28 /PRNewswire-FirstCall/ — Boeing (NYSE: BANews) today announced that it has chosen its North Charleston, S.C., facility as the location for a second final assembly site for the 787 Dreamliner program. Boeing evaluated criteria that were designed to find the final assembly location within the company that would best support the 787 business plan as the program increases production rates. In addition to serving as a location for final assembly of 787 Dreamliners, the facility also will have the capability to support the testing and delivery of the airplanes.

“Establishing a second 787 assembly line in Charleston will expand our production capability to meet the market demand for the airplane,” said Jim Albaugh, president and CEO of Boeing Commercial Airplanes. “This decision allows us to continue building on the synergies we have established in South Carolina with Boeing Charleston and Global Aeronautica,” he said, adding that this move will strengthen the company’s competitiveness and sustainability and help it grow for the long term.

Boeing Charleston performs fabrication, assembly and systems installation for the 787 aft fuselage sections. Across the street, Global Aeronautica, which is 50 percent owned by Boeing, is responsible for joining and integrating 787 fuselage sections from other structural partners.

Until the second 787 assembly line is brought on line in North Charleston, Boeing will establish transitional surge capability at its Everett, Wash., location to ensure the successful introduction of the 787-9, the first derivative model of the 787. When the second line in Charleston is up and operating, the surge capability in Everett will be phased out.

“We’re taking prudent steps to protect the interests of our customers as we introduce the 787-9 and ramp up overall production to 10 twin-aisle 787 jets per month,” said Albaugh.

“While we welcome the development of this expanded capability at Boeing Charleston, the Puget Sound region is the headquarters of Boeing Commercial Airplanes. Everett will continue to design and produce airplanes, including the 787, and there is tremendous opportunity for our current and future products here,” Albaugh emphasized. “We remain committed to Puget Sound.”

Approximately 55 airlines have ordered around 840 787 airplanes since the program was launched in 2003. The 787 family of airplanes will carry 200 to 250 passengers on flights up to 8,200 nautical miles (15,200 km). The 787 will be more efficient, quieter and have lower emissions than other airplanes while offering passengers greater comfort and the convenience of direct, nonstop flights between more cities around the world.

“The 787 will provide airlines with unprecedented operating economics and efficiencies. It also will take passengers where they want to go, when they want to go, and do it more comfortably and affordably than ever before,” Albaugh said. “This airplane will allow us to continue to set the standard for commercial aviation in the second century of flight.”

SPEEA Statement in Reaction:

SEATTLE – The Boeing Company’s decision to place the second 787 production line in South Carolina will hurt a program that is already stretched to its limit, according to the head of the labor union representing the company’s engineers and technical workers.

“We are astounded that Boeing has chosen to compound the problems of the 787 program by further fragmenting the supply chain,” said Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace (SPEEA), IFPTE Local 2001. “There is no credible business case for this decision.”

A local of the International Federation of Professional and Technical Engineers (IFPTE), SPEEA represents 24,600 aerospace professionals at Boeing, Spirit AeroSystems in Wichita, Triumph Composite Systems, Inc., in Spokane, Wash., and BAE Systems, Inc., in Irving, Texas.

# # #

Jim Albaugh’s message to employees:

Charleston selected as home of second 787 line

Today Boeing’s Board of Directors approved the selection of North Charleston, S.C., as the location for a second final assembly site for the 787 Dreamliner. Boeing will shortly issue a news release announcing this decision. In addition to serving as a location for final assembly, Boeing Charleston will also have the capability to support the testing and delivery of the airplanes. The second assembly line for the 787 in Charleston will help us deliver more of these great airplanes to our customers who want and need them. This decision allows us to build on the foundation we have already established in South Carolina, and it will make Boeing more competitive in the future.

Until the Charleston facility is brought on line, we will establish a temporary surge capacity in Everett to ensure the successful introduction of the 787-9, the first derivative of the 787. This action protects our customers as we introduce the 787-9 and ramp up overall production to 10 twin-aisle 787 jets per month. When the second line in Charleston and the line in Everett reach the 10-per-month rate between the two sites, the Everett surge capability will be phased out.

I know this decision may be of concern to some in Puget Sound, and I ask everyone to focus on the larger picture. Establishing a second 787 assembly line in Charleston will expand our production capability, diversify our manufacturing base and ultimately drive down the cost of the 787 — sustaining our competitiveness. We are adding jobs in South Carolina, not taking them away from Puget Sound — which is and will continue to be—our center for design, flight test and manufacturing. We have exciting programs to work on here, including the majority of the production for the 787, and we see increased production rates in the future across all programs in Puget Sound.

The 787 is an airplane that will improve the way airlines operate and people travel, providing airlines with unprecedented operating economics and efficiencies. It also will take passengers where they want to go and do it more affordably and more comfortably than ever before. I am counting on the men and women of Boeing — in Everett and in Charleston — to fulfill this promise to our customers. With the outstanding work force at Everett and the second assembly line for the 787 in Charleston, we will more cost-effectively deliver these great airplanes to our customers who want and need them and once again take the lead in commercial aviation…JIM

Snohomish County Executive Aaron Reardon:

Reardon: We must fight to keep our aerospace jobs

Snohomish County Executive Aaron Reardon’s statement on The Boeing Company’s decision to build a second 787 line in South Carolina:

“The Boeing Company’s announcement to locate a second 787 line in North Charleston, S.C., signals that other states want what we have – a strong manufacturing base. We must all work together and fight to keep it. Washington state must make a conscious decision to do whatever is reasonably necessary to aggressively compete to keep the jobs we have and grow our economy or risk more losses.

“The loss of the second line of the 787 will most certainly result in finger pointing. I urge all parties to resist that temptation as it is counterproductive and does nothing to further our objective to be the most competitive state in the country.

“What’s important moving forward is that we all understand why these two parties could not reach an agreement so that we may play a role in rebuilding this relationship. In addition, we must bring all the necessary parties together in Olympia to reach agreement on removing the barriers that prevent new investment and job creation.”

###

Statement from IAM 751:

October 28, 2009 – “Boeing has betrayed our loyalty once again, walking away from our discussions just like they walked away from Seattle eight years ago to move to Chicago,” said Tom Wroblewski, president of IAM 751.

“We tried very hard to reach an extended agreement with Boeing. We listened closely to what executives said, and suggested ideas to meet their needs. We offered concrete, real-world solutions.

“But I can tell you now, no matter what Boeing says or implies, the truth is this: We did offer Boeing a 10-year contract, and even offered to go longer than that. And when we did, they seemed stunned, and stopped talking.

“It was obvious to me that Boeing wasn’t really interested in working with us. They didn’t take our proposals seriously and they never offered any proposals of their own. Most of the time, they didn’t even take notes.

“It’s now clear that Boeing was only using our talks as a smoke screen, and as a bargaining chip to extort a bigger tax handout from South Carolina.

“I haven’t reported this before — not to our members and certainly not to the media — because Boeing had asked for confidential talks. My word means something, so I said nothing, even while the company was leaking half-truths to reporters.

“When our team asked Boeing if 10 years was going to be enough for them, they didn’t respond. And when I asked them to confirm that the extended contract would secure the second 787 line for Washington state, their reply was only: “Well, it would be helpful.” But they would not commit to anything.

“Still, we tried to get a deal, because I know that’s what our members and our community wanted. To do that, we were willing to discuss any issue to get a deal that we could recommend to our members. We floated ideas on health care costs, wages, pensions and lump sums.

“None of this mattered to Boeing. They didn’t want solutions, but only a scapegoat.

“Our seven-week strike last year is not the reason the 787 is already more than 120 weeks behind schedule.

“Instead of investing in our shared future and a highly talented workforce in a region ideally suited for aerospace, Boeing has decided to double-down on its failed 787 strategy and place an ill-advised, billion-dollar bet on a strategy that’s a proven loser.”

More political reaction, from The Seattle PI website:

Washington Gov. Chris Gregoire

“I’m angry, I hurt for the workers, I think the company made the wrong decision.”

On the question of additional incentives to the company: “I have to tell you, they’ve never raised that issue. Never, they’ve got over $3 billion sitting on the table and what’s the incentive for every 787 – they get more money in incentives. So the state, and the Legislature, I think, with (former Gov.) Gary (Locke), stood up to the question and the challenge. And it’s unmatched by anybody in the country. And the amount of money (from South Caroline) $170 million versus $3 billion. It has never been raised to me by (Boeing Vice President) Jim Albagh, or by (Boeing Vice President) Scott Carson. Scott Carson after the last legislative session when I said is there anything else the state can do with respect to the 787 line. He said, ‘don’t take away what you have on the table for us right now. Don’t take it away.’ And I said I will fight takeaways. Then when Jim Albaugh came I asked the same question of him, and I’ve asked it on numerous occasions, and today he made it very clear to me. ‘This is not about workers compensation, this is not about taxes from the state of Washington, this is not about you and your efforts or the Legislature and their efforts, because in fact they’ve been good efforts and we appreciate them…this is about negotiations with labor.”

Sen. Patty Murray, D-Wash.

“I am most disappointed, I really believed that the two sides could’ve come together and had a good deal for both Boeing and the Pacific Northwest, and unfortunately we can’t reach that now,” she told KING5 news.

“Very clearly, they were a stone’s throw apart in providing some real job stability, which Boeing has been telling us a long time that’s what they wanted. I thought there was time…to make that agreement and unfortunately Boeing saw it differently.

“We have 80,000 families today, who are supported by Boeing, who go to work every day and build the best planes ever. We’ve had a lot of bad news in the region about Boeing over my lifetime … and we’ve always come together afterwards..We’re going to keep building planes in the Pacifc Northwest.”

Everett Mayor Ray Stephanson

“I am deeply disappointed by this turn of events. I had hoped for a different outcome.

“This decision will have an adverse impact on many loyal and dedicated workers, suppliers and sub contractors here in Puget Sound. The effect of today’s decision will be widely felt in families, schools, local small businesses and community services.

“While I hold out hope that the Company and the Union may still find a path to compromise, our task now is to demonstrate beyond a shadow of doubt our expertise by securing the Air Force tanker contract. Washington State still hosts an established, experienced, and knowledgeable manufacturing nucleus of 80,000 aerospace workers and 650 suppliers who have built the best airplanes in the world.

We need to pull together as never before to ensure Washington State remains the center of aerospace manufacturing nationally and internationally.”

Statement from the office of Sen. Maria Cantwell, D-Wash.

“Senator Cantwell received a call at 4:30 p.m. today from Jim Albaugh, President of Boeing Commercial Airplanes, that a decision was to be announced moving the second line of the Boeing 787 to South Carolina and that production would not take place until 2013.

“Albaugh said this would mean no immediate jobs lost in Puget Sound and that ultimately it would produce more jobs in the Northwest.

“Senator Cantwell expressed concern and disappointment about the loss of a second line in Puget Sound. And she expressed concern about Boeing’s continued business loss and the potential risk of starting up a second line in South Carolina, a state with limited aerospace engineering experience.”

State Sen. Majority Leader Lisa Brown, D-Spokane:

“Of course we’re very disappointed in the decision…I think companies like Boeing make these decisions in the context of a global enviroment…We’ve given some very favorable tax treatment to the aerospace industry, and that includes Boeing…I think that taxes and tax breaks are not the only issue here.”

From the Aerospace Futures Alliance:
Boeing Moves Second 787 Line To South Carolina

This is a very sad day for Washington State and a huge wake up call to all of us in the aerospace industry.  It is time for us to come together and work to maintain a strong, competitive aerospace industry in Washington.  Our efforts must be tireless and united if we are to ensure a better future for aerospace companies and workers in Washington.

 

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