Boeing Decision on Second 787 Line Imminent

 - October 21, 2009, 10:29 AM

Boeing will reveal the location of its planned second final assembly line for the 787 “over the next couple of weeks,” CEO James McNerney said today. Speaking during the company’s third-quarter earnings call, McNerney effectively narrowed the competition to Everett and Charleston, S.C., while downplaying the risk and redundancy of locating two lines that build the same product on opposite sides of the country.

“There would be execution challenges associated with that choice [of Charleston],” said McNerney. “But keep in mind that we’ve got a pretty good-sized operation in Charleston today, and there would be some duplication. We would obviously work to minimize that, but diversifying our labor pool and labor relationship has some benefits.”

McNerney unambiguously identified the problems Boeing has encountered during negotiations with the International Association of Machinists over the years as perhaps the top reason it is seriously considering Charleston. “The union and company have had trouble figuring it out between themselves over the last few contract discussions, and I’ve got to figure out a way to reduce that risk to the company,” he said. “So some of the modest inefficiencies associated with the move to Charleston are certainly more than overcome by strikes happening every three or four years in Puget Sound.”

The Boeing chief executive expressed frustration with “the very negative financial impact to the company” caused by such strikes, particularly the eight-week walkout of 27,000 machinists that effectively halted production at BCA last fall. “Our balance sheet would be a lot stronger today had we not had a strike last year,” he said. “Our customers would be a lot happier today had we not had a strike last year, and the 787 program would be in better shape had we not.”

Nevertheless, McNerney characterized the tone of the current talks as “constructive,” as Boeing apparently tries to negotiate a no-strike clause with the Puget Sound workers in return for not moving the second assembly line to Charleston. Boeing’s Charleston machinists, who now build the 787’s aft fuselage sections, in September voted to decertify the IAM as their collective bargaining agent, leaving them without union representation.