Manufacturing

Plane Honesty

By Bill Virgin November 28, 2011

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For business writers in the Puget Sound region tackling the question of what to look for in the New Year, the perennial challenge is to round up someone other than the usual suspects upon whom to keep a watchful eye. As predictable and safe choices, Boeing and Microsoft always figure to be on the list. It would be a rare year when they were not making news of significant consequence to themselves, their respective industries and the states economy.

So we ask your understanding when we advise you, as you wind your way through the holiday festivities and begin considering what the 2012 regional economy is going to look like, that Boeing really, really bears watching next year.

Why is it such a crucial year for Boeing? Let us count the ways, starting with the 787, itself a perennial candidate for lists of stories well be reporting on. Now that the company has finally delivered the first 787 to a paying customer, Boeing has to speed up production in not one, but two, locations, hope that it can hold on to the orders it has booked and hope (theres going to be a lot of hoping going on next year, well warn you in advance) that customer reports on the planes performance match the pre-delivery hype.

Then theres the ramp-up of production of Boeings venerable 737, the first of three that will in three years take the build rate from the current 31.5 a month to 42. Already, Boeing and member companies in its supply chain are asking about the availability of resourceshuman and raw materialto handle an increase for multiple plane models. Boeing has indicated it will need 3,500 to 5,000 new machinists a year for the next five years to accommodate this higher rate and to replace those who retire.

And have we mentioned yet that in 2012 Boeing will make a decision on where it will build the re-engined 737? The plane dubbed the MAX could go to Renton or it could go somewhere else in the state or to some other state entirely, a prospect that has local and state leaders, already made jittery by Boeings moves to Chicago and South Carolina, positively hair-trigger jumpy with nervousness.

Not that Boeing officials are feeling calm, because they actually have to design and build the 737 MAX, a decision they were forced into by Airbus and customer defections to that competitors own re-engined plane. Even though its not as huge an undertaking as starting with a blank piece of paper, the MAX is not simply a matter of loosening a few bolts, pulling the old engines and slapping new ones on the wings.

Oh, yeah. Theres also the matter of what will happen next year with military spending by a cash-strapped federal government.

Thats a full plate already, and we havent even hit the big one, or ones, yet. Boeings Puget Sound-region contracts with machinists and with the union representing engineers and technical workers are both up for renegotiation in 2012. Contentious labor relations get a lot of the credit (blame) for the second 787 line being in South Carolina; the widely held fear is that another strike will send Boeing out of the Northwest for good. Tayloe Washburn, who heads the governors Project Pegasus effort to keep Boeing here, acknowledged as much at a recent conference. For all the effort being put into workforce development and other issues, he warned, It is crystal clear if we dont solve that problem [labor relations], nothing else weve talked about is going to do the job.

It might be inviting to take comfort in the fact that fretting about Boeing is a normal condition around here, and that its when you dont have Boeing around to worry about that you should really be concerned. In 2012, we can worry about that one, too.

Bill Virgin is the founder and editor of Washington Manufacturing Alert and Pacific Northwest Rail News.

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