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Boeing airplanes are the U.S.'s single most valuable export. Boeing manufactures its narrow-body airplanes in Renton, Washington, which is a suburb of Seattle. Narrow-body planes are used for domestic travel and include the single-aisle 737 MAX which was was grounded in March 2019 due to two fatal crashes.
In June 2020, the plane completed its re-certification flights and is expected to be cleared to fly in either September 2020 or later in the year. Currently, 450 787 Max jets are being stored at facilities all across the world.
Boeing builds all its wide-body jets, which are used for international flying, at its massive plant in Everett, Washington, 29 miles (47 km) north of Seattle. These planes include the 747, which is being phased out in 2022, and the 767, 777, and 787 airplanes.
SEE ALSO: US INVESTIGATION OF BOEING 737 MAX HAS NOW EXPANDED TO THE 787 DREAMLINER
The 787 comes in three sizes: the 787-8, the 787-9 and the 787-10, and according to an article in aviation industry publication The Air Current, they are Boeing's "most important source of cash ..."
Dueling assembly lines
Boeing currently has two separate assembly lines for its 787 Dreamliner, one in Everett, and one in North Charleston, South Carolina. Boeing has said that in September 2020, it will announce a decision on whether it will consolidate those two lines in a single location.
If Boeing chooses to consolidate at the North Charleston plant, that could mean very bad news for Everett. Besides the 30,000 people employed at the plant, the town is also home to an aerospace supplier network that employs up to 10,000 additional people.
What might factor into Boeing's decision is that in March 2020, Boeing asked Washington state lawmakers to roll back a preferential business-and-occupation tax rate in order to comply with World Trade Organization rules. A recent Seattle Times story quoted Everett's mayor, Cassie Franklin, as saying that losing the 787 assembly line "would be devastating for our local economy."
Boeing began construction on its first assembly plant outside of Washington state, the 1.2-million-square-foot (116,794 sq m) South Carolina facility, in November 2009. On April 27, 2012, the first plane rolled off the assembly line, and the plane took its maiden flight on May 23, 2012, before being delivered to Air India.
By 2019, Boeing was building 14 787 Dreamliners a month at both plants, while today only six of the planes are produced at both sites. As we reported recently, Boeing has been hit hard, first by the grounding of its 737 Max airplanes, and then by a decrease in demand for new airplanes that were caused by the COVID-19 pandemic. Even before COVID, demand for wide-body planes had been decreasing.
The largest building by volume in the world
Should Boeing move 787 productions out of Everett, the world's largest building by volume would be sitting nearly empty. Boeing has announced that after 2022, it expects to build at most five 767 and 777 aircraft per month at the facility. In 2019, Boeing was building 15 of those planes per month in Everett.
Currently, the 767 assembly line is producing only cargo planes and the Air Force’s KC-46 air-to-air refueling tanker. This creates a particular squeeze since Boeing's contract with the Air Force is a fixed-price contract.
In announcing the potential consolidation of the 787 assembly lines, Boeing seems to be looking for concessions from its machinists in Everett, who are members of the International Association of Machinists (IAM) union.
The Seattle Times article quoted two Boeing executives, Stan Deal, CEO of Boeing Commercial Airplanes, and Greg Smith, Boeing executive vice president and chief financial officer, as saying that "Boeing wants to hear from the IAM what suggestions the union can offer within the current contract terms for further 'efficiencies and flexibility in production.'"
What will drive Boeing's decision
The South Carolina facility holds several advantages over the Everett facility because workers in South Carolina are not unionized, and there is less regulatory compliance.
More importantly, North Charleston has separate buildings where the 787 mid-body and rear fuselage sections are assembled. Those sections are then wheeled over to the final assembly building. For 787s built in Everett, those sections must be flown from South Carolina to Everett on one of Boeing’s Dreamlifter cargo planes.
However, the mid-body section for the 787-10, the largest of the 787s, is 114 feet long, and that's too large even for the Dreamlifter. That means that the 787-10 can only be assembled in South Carolina.
Should Boeing close the Everett plant, Washington state would lose a large number of aircraft engineers who would take their skills and experience with them. It could take decades, if not longer, for the state to rebuild that deep knowledge base for which it has been known for so long.
Airlines slash their workforces
On August 25, 2020, American Airlines announced that unless it receives an additional $25 billion from the U.S. government, it will cut 19,000 employees come October 2020. That will leave American Airlines' workforce at 100,000 compared to the 140,000 it employed in March 2020.
Those cut will include 1,600 pilots, 8,100 cabin crew members, and 1,500 managers. American said expects to fly 50% or fewer of its normal domestic flights, and only 25% of its international flights.
A day earlier, Delta Air Lines announced that it plans to furlough 1,941 of its pilots come October 2020. Delta had originally planned to furlough 2,558 pilots, but that number was reduced due to voluntary separation and early retirement programs.
It definitely looks like come fall, the U.S. aviation industry is going to be in for a very bumpy ride.