Boeing acquisition could land more aviation business

By Molly Parker
Published July 7, 2009

The vice president and general manager of Boeing’s 787 Dreamliner program said the company’s planned acquisition of the Vought Aircraft Industries plant in North Charleston will not create any significant changes in work force or structural departures from the region’s role in the aircraft supply chain.

“Seamlessness is a part of our transition strategy,” said Boeing’s Scott Fancher, the Seattle-based executive who has headed the Dreamliner program since December.

The announcement could indicate a competitive advantage for South Carolina as Boeing looks for a second 787 assembly line to supplement its Everett, Wash., operation. The Washington business community was visibly shaken by the Vought deal, as South Carolina political leaders rushed to heap praise on the announcement, indicating a tough fight is in play to secure another Boeing feather in their caps.

Like Everett, the Charleston region is rumored to be on a short list of possible locations for the company’s expansion plans for production of the Dreamliner, a program that has been delayed by supplier hiccups, labor strife and an unsuccessful stress test.

Immediately following Boeing’s announcement, a business association in Washington put out a press release headlined: “Business Leaders Unite in efforts to keep Boeing Production in Washington.”

Workers at Vought Aircraft Industries produce a section of fuselage for the 787 Dreamliner. (Photo/Andy Owens)In the statement, Washington Roundtable President Steve Mullin said that if Boeing opened a production line in South Carolina it would be a “devastating blow to the Washington state economy.” Another member, Don Brunell, president of the Association of Washington Business, called it a “wake-up call.”

Boeing has had a tough time in the arena of labor relations, with multiple strikes prompting plant shutdowns and production delays of the 787. State and local economic developers love to tout South Carolina’s low union membership numbers when recruiting business and industry.

Fancher said it is no secret that Boeing needs a second assembly line, but he was vague about the company’s site plans. He noted that the Chicago-based aircraft manufacturer has eyed the Southeast, and will continue to explore all options.

To suggest that decision would be motivated by labor issues is “really oversimplifying,” Fancher said. But any company, he said, is wise to diversify its risks as it relates to matters that could shutdown production.

But even in right-to-work South Carolina, Boeing will be dealing with a unionized work force. Late last year, in a vote that sparked controversy between Vought management and Machinists union organizers and workers, about a dozen employees voted to unionize the work force at the North Charleston plant.

Boeing's Dreamlifter transports sections of the Dreamliner to Washington for assembly. (Photo/Andy Owens) Fancher said the company will recognize the union, though the contract will have to be reopened for negotiation with Boeing officials.

This morning, Fancher sat down with the Business Journal inside the Vought facility for a brief interview about Boeing’s growing presence here.

The interview was on the heels of Boeing’s announcement it would pay $580 million for the Vought facility, a deal expected to close later this year. In a statement, Vought CEO Elmer Doty said that financial demands were “clearly growing beyond what a company of this size can support.”

In many ways, North Charleston is at the center of a multibillion-dollar Boeing experiment. With its 787 production, the company contracted with myriad partners to supply assembled parts on a level it had never done before. Boeing transports major sections of the plane to Everett for final production from cities around the world, including North Charleston, on its massive wide-bodied Dreamlifter.

In North Charleston, on a campus near the Charleston International Airport, workers at the Vought Aircraft Industries plant and its neighbor, Global Aeronautica, work on fuselage sections for the Dreamliner. Those two companies officially separated last June, with Boeing buying out Vought’s 50% share in the company.

In both cases, Boeing insisted the moves were not the fault of the companies, or the local work force. About Vought’s production, Fancher said, “I am very pleased, as a matter of fact.”

A worker at Global Aeronautica in North Charleston makes notations. Vought's stake in Global Aeronautica was purchased by Boeing last year. (Photo/Andy Owens) He quickly shot down the notion that the Boeing takeover in anyway signaled a failure of the company’s experiment in supply chain and joint-venture aircraft production.

With any new sweeping changes in the manufacturing structure, “you have to go through what’s called a learning curve,” Fancher said. The company will continue to explore best practices and hone its manufacturing playbook, he said.

While Fancher said that both Vought and Global Aeronautica were a part of that learning curve, he also said that the companies struggled in equal proportion to Boeing’s other global partners.

Scott Hamilton, with Seattle-based Leeham Co. LLC, a consulting firm that provides news and analysis on aviation matters, said the announcement would seem to indicate that the Boeing plan didn’t go as blueprinted.

“Otherwise, why would Boeing be reversing its ownership?” Hamilton said. “Boeing has freely admitted it didn’t provide the oversight it should have. And Boeing has freely admitted it has made mistakes, but they continue to say they believe the 787 production model is the model of the future.”

Hamilton said he was told by an industry insider that North Charleston is on the short list of cities under consideration for the second assembly line.

The others, he said, are Everett, San Antonio, Texas, and a fourth site that is speculated to be Long Beach, Calif., where Boeing currently builds the Air Force’s C-17 cargo planes. It is unclear whether the federal government will continue to fund production beyond next year, leaving the fate of the C-17 — a staple of the Charleston Air Force Base — up in the air, and in the hands of Congress.

Reach Molly Parker at 843-849-3144.

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Added: 14 Jul 2009

Iam very please that boeing might be considering charleston for asecond assemblyline.after working for a company 20 years that close in april2009 it give me hope.with unemployment so high where ever boeing choose will be a blessing.

isadora middleton

Added: 21 Aug 2009

Training and experience are paramont in this type of endeavour. We all ,including those in Chicago,must learn from recent and distant history or we are indeed doomed to repeat it!

anthony l magno