Odds and Ends: Boeing’s presence in Seattle; 747-8 future; Japan awaits 787 NTSB hearings; Airport delays
Boeing’s presence in Seattle: Bill Virgin, a respected local journalist and observer of aerospace and manufacturing, wrote this column for the Tacoma News-Tribune looking at Boeing’s future presence in the Seattle area.
The points Virgin raise are valid, and in total have been discussed for years here. We raised some of these points as far back as April 2009 in a speech to a local economic development group.
Parochially, of course, we want to see Boeing stay here. Putting on our business hat, we can make a solid argument for Boeing’s diversification. We see Charleston becoming to Everett what Hamburg is to Toulouse: a major, major manufacturing center and aerospace cluster.
We are firmly convinced that when the day comes Boeing designs an all-new airplane to replace the 737, South Carolina will be its assembly home and Renton’s facility will close, to be given over to mixed use development along the lines of what’s called Renton Landing. Boeing’s “move to the lake” has been years in the planning and years in the making. We don’t believe it is over.
What about Everett? We see the future of Everett solid for at least a generation and probably a lot longer, at least until the 787 production begins to wind down. Local politicians fear Boeing will assemble the forthcoming 777X somewhere else. We don’t think so. The 777 tooling is here, the skilled workforce is here and it wouldn’t make sense to build a derivative elsewhere, just as it didn’t make sense to build the 737 MAX anywhere but Renton. Furthermore, we firmly believe the 777X will kill off the nearly morbid 747-8I. This will free up space to build the 777X here.
747-8 Future: The Puget Sound Business Journal last week published a long story about the inter-relationship between the 777X and the 747-8I, an its impact on the struggling program. On the same day the story was published (Friday), Boeing announced a production rate cut in the program from 2/mo to 1.75/mo. We had expected a deeper cut. One consultant we spoke with on Friday suggests Boeing will do what it can to keep the 747-8 alive pending recapitalization of the 747 at the USAF–in other words for Air Force One and the Doomsday aircraft. We’ve been saying the former for quite a while but had not thought about the latter. But there are only four aircraft. Still, the prestige of having the 747 as Air Force One is worth a lot.
The PSBJ article is here: PSBJ 747 041913
Japan Awaits Hearings: Japanese regulators are waiting for the Boeing 787/Japan Air Lines hearings by the National Transportation Safety Board this week before deciding whether to approve a return-to-service by the aircraft, according to this news report.
Airport Delays: You can track airport delays resulting from controller layoffs here.
Gov. Jay Inslee vows to keep assembly of the 777X in Washington State, a development that gained even higher profile this week with the announcement by Boeing Tuesday that it will spend $1bn to expand its Charleston (SC) facility.
In a press gaggle last week following Boeing’s opening of the Everett Delivery Center at Paine Field, where the current generation 777 is assembled, Inslee repeated his vow to win assembly of the successor airplane for Everett.
“Boeing management understands we’re the jewel of aircraft manufacturing in the world,” Inslee said. “We have to understand that every single model from here on, including the 777X, is going to be competed. We need to do our job to be competitive, to improve the skills training from machinists and engineers, to improve the transportation system so that we can move products and Boeing can move their engines back and forth. If we can do these things, we’re always going to be on top and I intend to do that.”
We asked Inslee about Washington’s strict environmental regulations compared with Southern states, including South Carolina, where regulations are much more lax compared with here. Inslee, a strong environmentalist during his tenure in Congress and who has a strong “green” agenda as governor, replied:
“I am firmly of the conviction that we can have a sound environment and a booming economy, including aerospace. What we can do is maintain our standards but I do hope we can find a way to expedite our permitting decision-making. I think we can make these on a more timely basis and I am working with my regulatory agencies to do that. I believe Boeing values the environment as we do in Washington, and we’re going to have both.”
The press gaggle then shifted over to Pat Shanahan, VP of Aircraft Programs, who was the ranking Boeing representative at the Delivery Center’s opening. In his position, he is also keenly involved in new aircraft development.
Given the now-paranoid nature of Washington politicians and media over Boeing’s future here, Shanahan was asked if the new Delivery Center had any bearing on Boeing’s commitment to Puget Sound.
“We wouldn’t build a facility like this if we weren’t committed to it,” he said. We then asked if the Everett facility has enough room to seamlessly integrate the 777X, or whether an expansion would be required, or whether another airplane program would have to be discontinued to make way. We noted that the Renton facility had to displace some staging areas for parts and equipment currently serving the 737NG production to make way for the 737 MAX line start-up.
“We have a lot of options,” replied. “You saw in Renton we had a lot of options. Over the course doing any kind of development, or laying out a program, you go through every one of those as well as what kind of investments are required and what kind of business case you need to make. We’re in the midst of the 777X doing lots of studies.”
Shanahan declined to answer a question from a reporter whether the 777X will kill the stagnant 747-8I.
The rivalry between Airbus and Boeing intensified in recent weeks with Airbus landing another major order from a previously exclusive Boeing customer, LionAir. Boeing announced another major order just a day later, Ryanair, retaining exclusivity with this customer.
The market share battle between Airbus and Boeing was fierce and prolonged. The introduction of the A320neo family placed more pressure on Boeing, particularly when it became clear Airbus was going to land American Airlines as a major customer for Current Engine Option and the New Engine Option. Boeing, which had been dismissing the neo as a viable option and dithering about whether to proceed with a new design to replace the 737 NG, found its hand forced. Having no other choice, Boeing launched the MAX, a re-engined version of the 737 NG.
With all the recent orders, we’ve done the math and determined market share for the current generation and re-engined types and sub-types. This data is through March 31 and only includes orders that have been listed as firm contracts, not those that have been announced but not yet firmed up.
Sources are Airbus, Boeing and Ascend Worldwide.
Boeing CEO Jim McNerney is cited in the Puget Sound Business Journal on labor unions, China and other stuff from his appearance at an aerospace summit.
In the article, McNerney tries to take a moderate stance on unions. But just this week Boeing announced it is moving SPEEA and other union jobs out of Puget Sound, here and here. The moves resulted in a blast from Seattle Times columnist Jon Talton here, and our response here.
Production is booming in Seattle’s Puget Sound, but it’s clear to us that Boeing is engaged in a long-term strategy to build up Charleston as a major, second production plant–not just a 787 production line. We see Charleston-as-to-Seattle as Hamburg-is-to-Toulouse some day. We don’t see Everett shutting down (at least not in our lifetime) because there is too much there. We think Renton is more at risk, once there is a New Small Airplane finally designed to replace the 737–but this is well into the next decade.
The question over where the 777X will be be built is, to us, a little more vexing. Logic says build it here, given the similarities between the baseline 777 and the derivative 777X. This is no different in principal than the 737NG and the 737 MAX–it would have been silly to build it elsewhere.
But McNerney’s comments about labor in the Business Journal notwithstanding, the anti-union sentiment at Boeing Corporate is obvious for all to see.
The future of the 747-8 is in jeopardy. Boeing said as much in its 2012 10K:
CSeries Powers On, Compresses Schedule: Bombardier is racing toward its first flight. The company powered on the CS100 Flight Test Vehicle 1 yesterday and Jon Ostrower had this article about BBD compressing the schedule to stay on track for launching the CS300. Static testing of the wing has been completed.
Next phase for 787: With yesterday’s successful test flight of the 787, Boeing is ready to move on to the final series of tests to return the aircraft to service. The Wall Street Journal reports that the new battery containment system will be tested once again by pushing the battery to destruction. Boeing hopes to get the airplanes back in the air by May 1.
The National Transportation Safety Board will hold public hearings April 21-22.
A320neo vs 737 MAX: Following the recent round of orders, Airbus now has a 65% market share for its neo vs Boeing’s 35% share for the MAX.
First vs Business: Here’s a piece we did for CNN International on the merits of First vs Business Class.
Herb and Lamar would roll over: Southwest Airlines finally acknowledged what we’ve been whinging on about for years: it’s not the airline of Herb Kelleher of Lamar Muse any more. We’ve written many times that this “legacy LCC” drifted away from its low cost model, its focus on simplicity and its point-to-point strategy in a series of steps. It took the mainstream media a long time to catch up to what we wrote so long ago.