By Scott Miller
Staff Writer

Many of the supply-chain problems that led to lengthy delays in Vought Aircraft Industries’ Boeing 787 Dreamliner program in North Charleston have been corrected, the manufacturer’s CEO said in a recent conference call to investors.

Amid labor and production issues over the past year, the Dallas-based company posted its first profit in seven years. But investors and analysts questioning President and CEO Elmer Doty during the call sounded skeptical about Vought’s ability to meet the challenges ahead.

Vought’s production problems were highlighted last year when the Boeing Co. had to delay the first test flight 787 Dreamliner.

The North Charleston plant manufactures part of the fuselage for the aircraft then ships it to Boeing’s main assembly site in Everett, Wash. Each Dreamliner assembly partner contributes to the jet, so every plant’s production program is critical to the 787’s success.

“Vought’s priority remains the successful execution of the 787 program,” Doty said during the call.

It’s uncertain how procedures have been changed, but Doty said the production problems at the plant have been fixed and the supply-chain problems are largely a thing of the past.

Last year, Vought delivered rear fuselages to Boeing without all the components. Vought also received incomplete components from suppliers, leading to delivery delays that earned

Vought the distinction as the weakest link in the Boeing supply chain. Doty didn’t indicate what ratio of problems occurred in-house and what was a supplier issue beyond Vought’s control, but he said those issues have been largely corrected.

Vought just delivered fuselages to Boeing that were 98% complete, Doty said.

Labor negotiations

Tense employee-management relations led to a narrow vote in favor of a labor union at the North Charleston plant in October. Negotiations on a collective bargaining agreement through the International Association of Machinists and Aerospace Workers began in January.

Employees said they were disgruntled over pay, working conditions and safety concerns at the plant, including not having enough workers to accomplish specific tasks.

Union spokesman Bob Wood, citing the sensitivity of contractual negotiations, had no comment on Doty’s statements regarding production at the plant or the status of union negotiations.

Other contractual issues

Doty did acknowledge that the North Charleston plant still must boost production standards and that Vought still faces contractual negotiations with Boeing.

Despite delays with Boeing, Vought does not face cash flow shortages that could affect the 787 program or production at the North Charleston plant, said Vice President and CFO Keith Howe.

After reporting a year-end net loss of $36.7 million in 2006, Vought posted a $46.3 million net income last year, the company’s first profit ever.

On the 787 program, Doty would not be specific about Vought’s production numbers but didn’t dispute a prediction of six or seven fuselages a month. 

Scott Miller is a staff writer for the Business Journal. E-mail him at smiller@scbiznews.com.   

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