The decision announced late Wednesday by Boeing Co. (NYSE:BA) to locate its second 787 Dreamliner assembly line in Charleston, S.C., instead of the Seattle region, was followed by the expected cries and finger-pointing in Washington state. But the really interesting question for Boeing in announcing its first new final assembly line outside of the Puget Sound region is, what took so long?
The announcement is a reminder that the Dreamliner, for all of its delays and problems, remains a highly sought-after jet that should be a hot seller if and when Boeing works out its issues and gets the plane airborne. Boeing is late on deliveries, but it hopes that by investing now in the second line it will be able to speed production of the more than 800 airframes already on order.
But the plan to move to South Carolina is also another milestone in Boeing's slow move to spread itself outside of its traditional home base. Boeing, despite warnings from the likes of Sen. Maria Cantwell, D-Wash., that leaving Seattle and its expert workforce was risky, made the obvious choice. The company jumped at a chance to establish a base in an area with lower costs than Seattle in almost every category, in a right-to-work state where aerospace workers just voted to decertify a union.
Boeing will be leaving behind a workforce and union that has been at odds with the company on numerous occasions in recent years, culminating with a 57-day machinist strike last year that delayed deliveries and angered key customers like Virgin Group chairman Richard Branson.
The local media and politicians in and around Seattle are calling the decision "a wake-up call," but as aerospace consultant Scott Hamilton notes the move is just another step in Boeing's long journey away from its parochial roots and toward becoming a more global enterprise. The company moved its global headquarters to Chicago in 2001, and it has used the 787 program to spread its supplier base from China to Italy.
The worry for Seattle is that now that Boeing has taken the dramatic step of moving one assembly line away from the region, what incentive does it have not to further diversify in the future? Boeing in the years to come will likely need to launch successors to its 737 and 777 jets, and if South Carolina still offers the same lower costs and easier work environment that influenced the 787 decision, Boeing seems likely to make a similar choice then. Execs say they remain committed to Washington state, but reading between the lines the aerospace firm will likely require concessions from its workers and support from the state before it considers further expansion there.
The commercial aerospace industry is global in nature, and Boeing needs to focus on driving down its assembly costs if it is to compete not just against archrival Airbus SAS but against new emerging world threats as well. In that regard the South Carolina line is good news for the company and its stakeholders. What it means in the long-term for the Puget Sound remains to be seen. - Lou Whiteman
Way to go,the unions at work.They are the death of any company and eventually every state.
