Boeing takes a leaf from the Airbus playbook

It is hardly coincidental that Boeing chose to leak in the second week of September the news it would soon announce a new 737 completion centre in China, the first-ever Boeing Commercial Airplanes production facility to be located outside the United States.

The leak, conveyed in a phone call to a surprised reporter at Aviation Week & Space Technology magazine, suggested Boeing would officially confirm the new facility during a visit by China’s President Xi Jinping to its widebody commercial-aircraft assembly lines at Everett in Washington State.

All these widebody lines are contained in one gigantic structure, which is the world’s single largest building by volume – a building which is due to become much bigger when the Boeing 777X composite wing-manufacturing facility is added on to it.

Boeing’s leak – the AW&ST news story announcing the company’s China move was published on September 11 – clearly was timed as an attempt to draw publicity away from the inauguration of Airbus’ new A320 assembly line at Mobile in Alabama on September 14.

However, dozens of journalists from throughout the world were already converging on Mobile and the new Airbus FAL subsequently received mountains of publicity. So Boeing failed in its attempt to minimise the impact of the news Airbus is now the second manufacturer of large commercial aircraft in the US.

But Boeing appears to have learned an important lesson from Airbus’ various moves to globalise its aircraft production throughout the world, ensuring the largest markets have their own ancillary production and completion sites.

During Xi Jinping’s visit to Boeing’s Puget Sound widebody lines, the company did formally announce on September 23 that it would establish a new 737 completion centre in China. In concept, this may well operate like the A330 completion centre Airbus recently confirmed it would locate in Tianjin.

However, Chicago-headquartered Boeing’s announcement – simultaneous with its signing of a general terms agreement with China Aviation Supplies Holding Company, China’s official commercial-aircraft procurement organisation, to provide 250 737s and 50 unspecified widebody jets valued at $38bn at list prices – had one possibly surprising element.

This was that the operation of the 737 completion centre in China – which will complete the interiors of, paint and deliver new Boeing 737s destined for Chinese customers – would be structured as a joint venture with Commercial Aircraft Corporation of China (COMAC).

Coming a day after China Daily reported COMAC and Russian manufacturer United Aircraft Corporation (UAC) expect to sign a joint development agreement by the end of 2015 for production of a new commercial widebody, the news of COMAC’s forthcoming relationship with Boeing indicates China is extremely serious in seeking to become a leader in commercial-aircraft manufacturing.

COMAC will learn from its 737 completion JV with Boeing how to design, make and install state-of-the-art aircraft interiors. That knowledge and experience will be invaluable as COMAC ramps up production of its new C919 single-aisle jet – a direct competitor to the 737 MAX – and designs and builds a new widebody jointly with UAC.

Not surprisingly, even though Boeing said no existing US jobs would be lost as a result of putting a 737 completion centre in China and noted the centre would help the company increase its 737 assembly rate at Renton, the International Association of Machinists (IAM), which represents Boeing mechanics in the Puget Sound region, protested Boeing’s China initiative.

In a written statement, IAM District 751 said: “Our union must reiterate that any movement of aerospace work from our members and other aerospace workers in Washington State gives rise for great concern. We understand the importance of selling airplanes to customers around the world; however, the work we perform here seems to be what is offered as a bargaining chip to fill aerospace manufacturing across the country and the world. Where is the commitment to our communities?”

But the IAM seems to be missing the point. Boeing has been learning from Airbus that by siting ancillary completion facilities in major markets globally, it can use its domestic facilities to construct more major component assemblies for aircraft, sending them elsewhere to be assembled or completed.

This will increase Boeing’s overall aircraft production rates – to the requisite commercially viable degree, of course. It will also help stimulate additional Boeing aircraft sales in the markets in which Boeing’s ancillary facilities are located. These production-efficiency and sales-enhancement moves will create more jobs for union mechanics in Boeing’s US home market rather than produce lay-offs.

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