Boeing announced on Thursday it is ending its 787 Dreamliner production in Washington state, saying it will be consolidating manufacture of the aircraft at its South Carolina facility in mid-2021.
“Our team in Puget Sound will continue to focus on efficiently building our 737, 747, 767 and 777 airplane families, and both sites will drive Boeing initiatives to further enhance safety, quality, and operational excellence,” said Stan Deal, president and chief executive officer of Boeing Commercial Airplanes, in a statement.
Boeing said in the statement that its decision is driven by the imperative to “preserve liquidity and reposition certain lines of business in the current global environment to enhance efficiency and improve performance for the long-term.”
It comes after Boeing announced in July that it would be carrying out a study into the feasibility of consolidating 787 production at a single location.
“The review examined the impacts and benefits to Boeing customers, suppliers, employees and the overall health of the production system. The 787 study is part of an enterprise review underway to reassess all aspects of Boeing’s facility footprint, organizational structure, portfolio and investment mix, and supply chain health and stability,” the company said.
Rep. Rick Larsen (D), who represents Washington State’s 2nd District and chairs the House Aviation Subcommittee, called the decision “shortsighted and misplaced.”
“The Pacific Northwest is home to the best aviation and aerospace workforce in the world. The strength of the Pacific Northwest’s aviation and aerospace industry includes the region’s strong education system, trained workforce, robust supply chain, extensive manufacturing experience and overall quality of life,” he stated.
Boeing’s move to end manufacturing of the Dreamliner in the Pacific Northwest comes amid a broader thrust to cut production and slash jobs as it seeks to conserve cash amid the pandemic. The company, which lost $2.4 billion in the second quarter of this year, announced in late May that it was eliminating more than 12,000 jobs, including involuntary layoffs of 6,770 workers. In July, Boeing said it was looking into the possibility of consolidating 787 production at a single location.
Boeing’s earlier decision to move some production to the non-union state of South Carolina was the culmination of a years-old board-led strategy to reduce reliance on Washington state, where Boeing has had stormy relations with unions in the past.
But doubling down on the southern state to cut costs is not without risk. If demand for the 787 bounces back to a rate of around 10-11 per month, Boeing would have to invest in expanding the South Carolina facility, while potential future design upgrades could also carry a high price tag.
“If they do an upgraded version of the 787 in five or eight years, they would have to either do it from a distance, or replicate the expensive design and engineering facilities they have in Everett,” Teal Group analyst Richard Aboulafia said.