Boeing S.C. says that no official decision has been made about moving the company’s 787 operations from the Seattle area to North Charleston, but Reuters is reporting that the company is getting ready to shift final assembly operations exclusively to South Carolina.
During the company’s most recent earnings call, President and CEO Dave Calhoun said there would be a study to determine whether it should consolidate the 787 program to one site. According to published reports, however, a final decision might not be made until late October, when Boeing next reports its earnings.
Closing the Seattle factory, which was established in the 1960s, would be a cost-cutting measure despite the West Coast plant making a record number of 787s last year, Reuters reported.
Transportation logistics could be another reason that the focus might lean toward keeping the S.C. plant open. The fuselage sections of 787-10, the largest of the 787s, are made in North Charleston and are too large to fit inside the Boeing Dreamlifter, a refitted 747 cargo plane.
In July, Calhoun addressed the severe impact the coronavirus pandemic has had on the commercial airline industry and said Boeing’s 2020 numbers continue to be far lower than those in 2019.
“This pressure on our commercial customers means they are delaying jet purchases, slowing deliveries, deferring elective maintenance, retiring older aircraft and reducing spend — all of which affects our business and, ultimately, our bottom line. While there have been some encouraging signs, we estimate it will take around three years to return to 2019 passenger levels,” Calhoun said.
Calhoun said that although he’s trying to find a solution to the robust demand for 787 Dreamliners, he isn’t going to jump to any conclusions and wants to ensure Boeing makes the right decision if it is to close a plant.
“We’re in the process,” he said. “We’re gonna do the best we can. I’m not even sure we can pull it off, but at any rate, we are gonna evaluate it.”
To bolster its near-term liquidity, especially with slower ramp-up in 737 productions than previously projected, the company suspended its dividend in July, terminated its share repurchase program, reduced discretionary spending and overhead costs, and issued $25 billion in new debt.
Additionally, production of 787s will be reduced to six per month in 2021 — down from the previously reduced production of 10 a month, which was announced in the second quarter.
“We are looking holistically at our infrastructure footprint, our overhead and organizational structure, our portfolio and investments, our supply chain health and stability, and our ability to drive operational excellence and a keen focus on safety in everything we do,” Calhoun said.
Closure of the Everett, Wash., factory would be a huge blow to Washington’s economy, but it could potentially bring new jobs to the Lowcountry. In May, Boeing began a 10% workforce reduction for the year, with 6,770 involuntary layoffs in its first round, in addition to the 5,520 voluntary layoffs to align with the smaller market.
“This is absolutely necessary for our future. Aerospace has always proven to be resilient — and so has Boeing,” Calhoun said.