S.C. not at top of list for next 737: Boeing CEO says decision has not yet been made

Boeing CEO Jim McNerney rattled workers at the company's 737 plant in Renton, Wash., on Wednesday when he did not commit to building the next version of the workhorse plane there.

The Charleston region's lofty hopes of lassoing a new manufacturing plant that would make Boeing Co.'s next version of a workhorse 737 jet lost a bit of altitude Wednesday.

The aerospace giant's South Carolina 787 Dreamliner campus is not high on the list of possible production sites for the future airplane, Boeing CEO Jim McNerney told industry analysts.

McNerney announced that Boeing has decided not to replace the 737 with a completely new narrow-body aircraft, ending intense speculation about the future of the widely used jet. Instead, the company plans to incorporate a new, fuel-efficient engine on the existing airframe.

That was the less risky of the two options, McNerney said.

Exactly where the work will be done remains an open question, he said.

"We haven't made the final decision about where we're going to produce the re-engined airplane," McNerney said while discussing robust quarterly earnings with Wall Street analysts.

His remarks about possibly relocating 737 production set off alarm bells in the Pacific Northwest, the longtime home of Boeing's aircraft manufacturing business.

An obvious location for the work would be the existing 737 line in

Renton, Wash. McNerney said he was not prepared to make any assurances.

"But we have other options, and were going study them all as we think it through. ... The good news is we have options," he said.

McNerney noted that "major investments" would be required in Renton to meet the demand for the retooled jet. He estimated the production schedule could require 50 to 60 of the modified 737s to be built each month, up from 31 now for the current version.

"Until we sort that all out, we can't confirm where we're going to put it precisely," he said.

The company's North Charleston site could be considered for the 737 work "down the road," McNerney added.

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"We'll have to see how competitive the factory is," he said. He also said Boeing would look at how its local operation stacks up "compared to Renton or compared to another site."

South Carolina holds the distinction for cracking Washington State's longtime lock on the business of making commercial aircraft. In 2008, Boeing stunned the Seattle area by announcing it would invest $750 million to make up to three 787s a month at Charleston International Airport, partly in response to crippling labor strikes it had faced in the Northwest.

A plant in Everett, Wash., is gearing up to make seven 787s a month.

The newly opened Dreamliner factory in North Charleston will eventually employ 3,800 workers. Production work is now under way on South Carolina's first Dreamliner, which is set to be delivered next year.

McNerney cautioned that the immediate priority for the local plant is to hit its monthly production goals by 2013. He said he did not want to "dilute" the progress being made in North Charleston site by adding the 737 into the mix.

"It's not at the top of the list right now," McNerney said.

Contact John McDermott at 937-5572.