Boeing confident 787 rate increase will hold, even in downturn

With a record number of airplane orders in recent years, Boeing Co. is ramping up production of its wide-body 787 Dreamliners both at its North Charleston campus and in Everett, Wash.

But what happens if the order bubble bursts?

Turns out Boeing has already factored that possibility into its production rates.

“One of the reasons we’re confident with the production rate adjustments and ramp-ups that we’ve already announced is that we factored in ... historical trends,” CEO Dennis Muilenburg told stock analysts during a conference call last week.

Changes to customers’ orders — including deferrals, accelerations, debookings and cancellations — accounted for about 1 percent of Boeing’s production backlog of more than 5,700 planes during the past year. That is well below the 6 percent historical average Boeing experienced over the last 15 years.

“The decisions we’ve made to ramp up 737 to 47 a month, 52 a month, and then 57 a month and the ramp-ups we have planned for 787 all take into context these historical factors,” Muilenburg said. “If we were to see deferrals and cancellations begin to creep up, we wouldn’t change our plans. We’ve in fact designed our plans to envelope those historical averages.”

Boeing is increasing production of the Dreamliner to 12 a month from 10, split between North Charleston and Everett. That rate will go up to 14 a month by the end of the decade.

Muilenburg said he doesn’t see any indications that order deferrals or cancellations will return to historical levels.

“We continue to see strong passenger growth,” he told analysts. “Independent analysis is saying 6 percent to 7 percent globally growth year over year. And we’re going to continue to watch that and be mindful of it. But all of the trends right now support the analysis that we’ve done. And even if we would see some creep back towards historical levels, we remain very confident in the production rate decisions we’ve made.”

Jim Newsome, president of the State Ports Authority, told The Post and Courier last month that the Port of Charleston is willing to weigh cargo for shippers — at a “modest fee,” he said — to help them comply with new Safety of Life at Sea, or SOLAS, rules that take effect July 1.

Now, Newsome has a ballpark figure of how much revenue that service could generate.

The cost to shippers would be about $25 per container, Newsome told The Wall Street Journal last week. Based on March export volumes, that would have amounted to about $2 million if all shippers used the service.

On an annual basis, such a service would have brought in $18.3 million last year if all shippers used the service. To put that in context, that annual amount represents 9.3 percent of the SPA’s operating revenues during its most fiscal year.

Newsome is the first ports director to offer the service to shippers, which must start verifying the weight of each container filled with goods destined for export to another country. SOLAS is meant to protect the safety of ships as well as workers on board and ashore who handle cargo.

Regulatory agencies are seeking the public’s input on a pair of Charleston area projects.

The Army Corps of Engineers and the state Department of Health and Environmental Control are taking public comments on a proposed industrial park within the Camp Hall property in Berkeley County where Volvo Cars is building its first U.S. manufacturing plant.

The 1,387-acre industrial park will be marketed to Volvo suppliers and other manufacturers. Property owner Santee Cooper wants to fill nearly 119 acres of wetlands at the site. In exchange, the Moncks Corner-based electric utility is offering to restore about 365 acres of wetlands and preserve 682 acres of uplands and upland buffers.

The Army Corps will take comments through May 5 while DHEC will take comments through May 20. View the online permit at tinyurl.com/jnxmz65 for more information.

Also, the Army Corps will hold an open house and public meeting starting at 5:30 p.m. May 24 to get input on a rail transfer station being built in North Charleston by Palmetto Railways.

The public hearing will address environmental issues with the project, designed to ove cargo by rail to and from the Hugh K. Leatherman Jr. Terminal being built at the former Navy base. The hearing will be held at the Military Magnet Academy at 2950 Carner Ave. in North Charleston.

View the online public hearing notice at tinyurl.com/gphkax5 and visit www.navybaseictf.com for more information about the project.

Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_