BA Boeing Co

By Andrew Tangel 

Boeing Co. said it is ending production of its 787 Dreamliner in the Seattle area after more than a decade and plans to consolidate assembly of the popular wide-body jet to its factory in South Carolina next year.

The Chicago-based aerospace giant's decision Thursday follows a sharp drop in demand for passenger jets as the coronavirus pandemic has sapped demand for global air travel. Boeing had previously slashed Dreamliner production and said in July it would study consolidating production.

"I know this isn't easy, and I appreciate how we have supported each other and stayed nimble while we look at every opportunity to adapt, preserve our liquidity and be more competitive in a very different commercial market," Stan Deal, Boeing's commercial division chief, said in a memo to employees Thursday morning.

The announcement comes amid criticism from elected officials in Washington state. The Wall Street Journal reported late Tuesday that Boeing's decision to consolidate Dreamliner production in North Charleston, S.C., was expected as soon as this week.

Rep. Rick Larsen, a Democrat who represents the Seattle area in Congress, earlier this week called Boeing's decision "shortsighted and misplaced."

"As the economy comes back and air travel returns, I will fight to bring 787 production back to Everett," said Mr. Larsen, who is chairman of a House aviation subcommittee.

Boeing has been producing smaller 787-8 and -9 models in Everett, Wash., near Seattle since 2007. In 2010, the plane maker opened a second line in North Charleston, S.C. But only the South Carolina plant is set up to produce Boeing's larger 787-10 model, the plane maker said Thursday.

It wasn't immediately clear how relocating production for all the 787 models to South Carolina would affect Boeing's heavily unionized workforce in the Puget Sound region and the Seattle area economy. Boeing said it was assessing potential fallout on its workforces in both Everett and North Charleston. Efforts to unionize Boeing's workforce in South Carolina, a right-to-work state, haven't succeeded. Right-to-work laws allow workers in unionized workplaces to opt out of paying union dues, effectively diminishing the power of organized labor.

As part of its study, Boeing said it evaluated how a consolidation would affect suppliers and customers. In the end, the company said, the move will make producing the Dreamliner more efficient and help it better target factory improvements.

Earlier this year, production problems at the South Carolina plant prompted the Federal Aviation Administration to undertake a broader review of quality-control lapses. It couldn't immediately be learned whether such lapses played any role in Boeing's production decision. A Boeing spokesman has previously said the plane maker was reviewing the problems and taking steps to prevent them from recurring.

Boeing said earlier this year it would slash production of passenger jets and cut its workforce by about 10%. As the pandemic worsened in the U.S. and air-travel demand remained depressed, Boeing has said it was weighing cuts beyond the 19,000 it had already flagged.

Boeing employs more than 7,000 workers in North Charleston, where it also has an engine-research facility. That compares with almost 70,000 employees in Washington, including around 30,000 at the sprawling Everett plant.

The Everett facility also produces wide-body 767s, 777s and 747s. It produced around 15 wide-body jets a month at its peak, which would drop to around six and fall further with the 747 program set to end in 2022 and with output of the new 777X reduced as Boeing delayed first deliveries until 2022.

Boeing's narrow-body 737 MAX, which has been grounded following two fatal crashes, is produced at a separate Boeing factory in Renton, Wash., south of Seattle. Mr. Deal said the consolidation didn't change Boeing's commitment to Washington state.

After boosting Dreamliner production last year to 14 a month -- split evenly between Everett and South Carolina -- Boeing has reduced output to 10 and plans to make six a month next year.

Boeing said Thursday it would continue making Dreamliners in Everett until it cuts its production rate as planned in 2021.

Write to Andrew Tangel at Andrew.Tangel@wsj.com

(END) Dow Jones Newswires

October 01, 2020 12:57 ET (16:57 GMT)

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