Boeing Co. BA -1.49% will set plans this week to consolidate 787 Dreamliner assembly in South Carolina, people familiar with the matter said, ending production of that jetliner in Washington state as the coronavirus pandemic saps demand for aircraft.
The decision carries significant implications for the Seattle-area economy and Boeing’s unionized workforce around Puget Sound. It wasn’t clear over what period of time the consolidation would play out, or how many employees might be affected by the move. Boeing could announce the plans as soon as this week, some of the people familiar with the matter said.
Boeing said in July that it was studying options to handle a slowdown in demand for the 787 that has led it to reduce production. A Boeing spokesman declined to comment late Tuesday on the study’s outcome.
Earlier this year, Boeing said 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 deeply depressed, Boeing said it was weighing cuts beyond the 19,000 already earmarked.
Boeing has assembled the 787 Dreamliner in Everett, Wash., since the first of the popular widebodies rolled off the line there over a decade ago. It announced plans in 2009 for a second line in North Charleston, S.C., a right-to-work state where attempts to unionize the workforce haven’t succeeded.
Earlier this year, production problems at the South Carolina plant prompted a broader review of quality-control lapses by U.S. aviation regulators. It isn’t clear whether manufacturing issues played any role in Boeing’s study of whether to consolidate Dreamliner production.
Consolidating Dreamliner production in South Carolina would mark another step in the shift of the U.S. aerospace industry to southern states from the West Coast. Companies have already shed thousands of jobs in California while states including the Carolinas, Florida and Alabama have attracted aerospace businesses with less-clogged infrastructure and cheaper, nonunionized labor, including an Airbus SE assembly plant in Mobile, Ala.
Boeing employs more than 7,000 workers in North Charleston, where it also has an engine-research facility. That compares with almost 70,000 staff in Washington, including around 30,000 at the sprawling Everett plant.
The Everett plant, where Boeing also produces 767s and 747s, produced around 15 widebody jets a month at its peak, which would drop to around six and fall further with the 747 program due to end in 2022 and output of the new 777X reduced as Boeing delayed first deliveries until 2022.
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.
With the narrow-body 737 MAX grounded for over a year since two fatal crashes, building and selling more 787s has been crucial to Boeing’s financial recovery. The company has orders for 526 of the planes and has delivered almost 1,000.
The twin-engine plane overcame years of delays and cost overruns to become a bestseller and is expected to overtake Boeing’s 777 and the Airbus A330 as the most popular wide body jet by 2023, according to analysts at Jefferies. Airlines are retiring older 777s and A330s in favor of the smaller 787 and Airbus A350.
Boeing had bet on a buoyant replacement cycle for older jets to boost 787 sales, only for slowing economic growth and then the pandemic to derail its plans. It also has shelved plans for a new midsize plane.
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