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Boeing Co will move the rest of its 787 Dreamliner production to the US state of South Carolina in 2021, a cost-cutting strategy that raises questions over the future of its giant plant north of Seattle, Washington state.
As recently as last year, Boeing was making record numbers of 787s at its Everett widebody hub north of Seattle and – since 2012 – at the second plant in North Charleston, South Carolina.
But the company’s strategy of supporting two plants has been severely tested by the coronavirus slump in international travel, on top of a cyclical downturn in demand for big jets. Boeing announced the move to South Carolina on Thursday.
Boeing said the single site would improve operational efficiency as the company adjusts to the market downturn and positions itself for recovery.
But industry officials say it raises the prospect of another battle between the US planemaker and unions that have unsuccessfully tried to organise in the South Carolina plant.
Boeing also said 787 production would continue at the Everett site until a previously-announced rate cut to six aeroplanes a month in 2021.
Boeing estimated it would consolidate production at its North Charleston facility starting mid-2021.
A review of its 787 production strategy, announced in July along with sweeping rate cuts across its widebody programmes, had already rattled unions and politicians in Washington state, who see Boeing wavering on its commitment to its Seattle-area birthplace, something the company denies.
Washington Governor Jay Inslee called the decision “an insult” to the more than 1,000 workers who build the 787 jets in the state and said it requires a review of the “company’s favourable tax treatment”.
The earlier decision to move some production to the non-union state of South Carolina was the culmination of a years-old, board-led strategy to reduce reliance on production in Washington state, where Boeing has had stormy relations with unions in the past.
John Holden, president of a local chapter of the International Association of Machinists, said losing 787 production capacity in Everett “puts the company, our members and our community in jeopardy”.
Ray Goforth, executive director of the SPEEA engineers union, said its “immediate focus is supporting the members who will be laid-off. Long-term, we will partner with community stakeholders to attract new aerospace jobs to [Washington] state by marketing the aerospace talent pool Boeing is walking away from”.
South Carolina offers cheaper labour, and the largest 787-10 variant cannot easily be built elsewhere due to its size.
“We recognize that production decisions can impact our teammates, industry and our community partners,” Boeing Commercial Airplanes chief executive Stan Deal said.
But doubling down on production in South Carolina is not without cost.
Boeing aims to return to a rate of 10 to 11 787s monthly at some point. Running such rates at South Carolina would require investment to expand the facility.
Currently, Boeing builds the 747, 767, 777, and some 787s there. After 2022, only the 767/KC-46 and 777/777X would remain, with Boeing putting out no more than five jets monthly – roughly three times fewer than a year ago.
After Boeing cancelled plans for a new mid-market jet, there is no obvious backfill for the vacated 787 space, which means the remaining low-rate programs would absorb a bigger share of factory overhead.