Boeing Co. is getting more serious about the prospects of building a middle-of-the-market commercial plane, and that has some thinking the aerospace giant's 787 North Charleston campus could contend for production of the new aircraft.
CEO Dennis Muilenburg told investors during a conference call last week that the company is making progress toward a final decision on whether to commit to the project.
"We've talked with more than 50 customers around the globe with a diverse set of business models and business needs," Muilenburg said. "We continue to see a potential market there for 2,000 to 4,000 aircraft. We're continuing to work our way through the details of what that airplane might look like ... working through passenger sizing, range of the airplanes and having good, meaningful discussions with our customers."
A so-called middle-of-the-market plane would fill the gap between Boeing's single-aisle 737 and twin-aisle 787 Dreamliner models. It would have a range of between 4,000 and 5,000 nautical miles and would be able to carry between 220 and 270 passengers.
Muilenburg has said the plane would fill a need for new regional, point-to-point routes that are currently too long for the small planes and too expensive for big planes.
If Boeing decides to pull the trigger and build the plane, the program likely would ramp up around 2020.
Where it would be built is anybody's guess.
Scott Hamilton, editor of aerospace newsletter Leeham News & Comment, thinks Everett, Wash. — Boeing's other 787 assembly site — has the edge on North Charleston.
"Everett has a larger supplier base and the 777 composite wing factory is here, and this is almost certainly where the (middle-of-the-market) wings will be done," Hamilton said. He adds there's also a broader engineering and production worker base on the West Coast.
That's not to say North Charleston won't be in the running.
"I think Charleston will be a strong contender, but it may not be the only contender aside from Everett," Hamilton said, adding the South Carolina site could be used as leverage to gain concessions from the Puget Sound labor force and more government incentives.
"Boeing may well do another national site-selection competition," Hamilton added. "South Carolina and North Charleston should already be preparing a plan to win the middle-of-the-market plane rather than waiting to see if a competition will be forthcoming."
A new commercial plane program will be expensive — the 787 Dreamliner amassed roughly $30 billion in deferred costs before starting to turn a profit — and the middle-of-the-market decision likely "will come down to which production site will offer the best value for Boeing," said analyst Dhierin Bechai, who writes about Boeing for Seeking Alpha.
"Finance-wise, Boeing should be shaving off the costs where it can," Bechai said. "Airlines know what they want to pay for the aircraft, so keeping costs low is key."
That could give North Charleston, with its lower wages and lack of labor union presence, the edge.
"But, then, Boeing could also count on tax breaks from Washington state and it has made investments in Everett that it could leverage for the (plane)," he said.
Muilenburg told investors last week that Boeing is "working through the details of the supporting business case" for a middle-of-the-market plane.
Richard Aboulafia, vice president of analysis at Teal Group, says Boeing doesn't have much choice but to build the plane seeing how Airbus' entry in the category, the A321neo, is devouring market share.
"Responding with something more capable makes sense, even if they'll have a very hard time creating a twin-aisle jet with single-aisle economics," Aboulafia said.
And in that scenario, North Charleston is evenly matched with its West Coast counterparts to get the production nod.
"North Charleston certainly has a chance with this," Aboulafia said. "I don't think Boeing would be eager to create a third final-production facility, so it's North Charleston versus Puget Sound."