Boeing, Charleston and the 777X: It’s like 2009 all over again
It wasn’t that long ago that Boeing went all-in and placed a bold, calculated bet on South Carolina.
The X factor
Boeing Co. is close to launching two “777X” versions of its widebody 777: the 777-8X and the larger 777-9X.
First delivery: By 2020
Operating costs: 15% lower than the current 777
Fuel usage: 20% less than the existing 777
Range: Equal to or exceeding 5,240-9,395 nautical miles
Seats: 777-8X, about 350; 777-9X, about 400
Buyers: German carrier Luf- thansa has committed to buy 34 777-9X jets once Boeing decides to build the new long-haul plane. “We expect Boeing to secure well over 100 aircraft for the initial launch of this program, with significantly more orders to follow in 2014,” Sterne Agee & Leach analyst Peter Arment predicted in a report last month.
Boeing Co.; Bloomberg News
Now, the case has been made that it could, or at least should, up the ante even more. Perhaps by building its next airplane in the Lowcountry.
Monday marks the fourth anniversary of Boeing’s historic decision to make 787 jets in North Charleston, its first and only commercial aircraft assembly plant outside of Washington state.
The Dreamliner’s arrival in the region has been bumpy, for sure, but it’s starting to pay off in ways few outside the company could’ve predicted.
Boeing has quickly amassed a local workforce of 6,100 employees.
It recently picked a site in Palmetto Commerce Park for a factory that will design and make 737 MAX engine inlet parts, its first big investment in the region not associated with the 787.
Earlier this year, Boeing announced plans to concentrate half of its information technology work in North Charleston and two other locations.
Just last week it announced it will crank up its 787 output in both Everett, Wash., and the Lowcountry by 40 percent by 2020. Driving the increase is a big backlog of standing orders combined with the addition of two longer versions of the lightweight passenger jet.
In anticipation of that, Boeing is expanding the local factory where it makes 787 aft fuselages by 276,000 square feet to improve the work flow and meet the higher production goals.
At the end of the day, it’s enough to make the Washington state worrywarts squirm, once again, as the discussion begins to drift to Boeing’s next big investment: the 777X.
Suddenly, it feels like October 2009 all over.
All things equal
Boeing hasn’t officially decided whether to go ahead with this new and improved version of its widebody, long-haul 777, which has been made in Everett for about two decades. CEO Jim McNerney said last week he expects to announce the launch of two new 777X models by the end of the year.
All things equal
The question then will inevitably turn to: Where will Boeing build the 777X? When asked about that earlier this year, McNerney was noncommittal, sending a fresh chill across Puget Sound.
As aerospace analyst Michel Merluzeau sees it, South Carolina has a strong hand to play.
“If you asked me for 2020, what is the best place for this aircraft, that place is Charleston,” he was quoted as saying last week by the Puget Sound Business Journal.
Merluzeau, a partner at Kirkland, Wash.-based G2 Solutions, dropped that nugget not in some obscure paper but while addressing an international aerospace conference in Seattle’s Museum of Flight. Attendees included business recruiter Hank Taylor of the Charleston Regional Development Alliance. Apparently, the sting from Boeing’s 787 decision four years ago is still a sore spot in the Pacific Northwest.
“I can tell you, without any doubt, the state of Washington was not pleased having South Carolina there, not at all,” Merluzeau told The Post and Courier.
He said his firm’s independent analysis took a hard look at all of the bottom-line expenses and other factors that go into assembling a complicated jetliner, from labor to automation technology to the local business climate.
“I’m not saying Everett would not be successful. That’s not what we’re saying. Everett is a great location for assembly of the 777X today,” he said.
Seattle’s disadvantage is that it’s increasingly pricing itself out of this kind of labor-intensive work, so “all things being equal ... Charleston is the better place for the 777X.”
Merluzeau expects Boeing to pick the final assembly site for the airplane by mid-2014. The first plane is supposed to be ready for delivery by 2020.
Other analysts have suggested Boeing won’t take the risk of uprooting the successful 777 program from it longtime home. One theory is that it’ll lean on its North Charleston outpost to manufacture some of the parts, such as the huge composite wings.
Boeing isn’t one to comment on such speculation. It also hasn’t yet clearly defined its long-term plans for South Carolina, though some of the pieces are starting to fall into place. This much is certain: The growth potential is as huge as it is wide open.
In the spring, for example, Boeing committed to investing another $1.1 billion and hiring 2,000 more workers in South Carolina by the end of the decade in exchange for $120 milllion in state assistance.
And within the next month it’s supposed to close on its $13.5 million purchase of 267 undeveloped acres at its airport campus.
“Charleston is a strong location, and only getting stronger,” Merluzeau said.
Contact John McDermott at 937-5572.