State losing out on 500 7E7 jobs: Boeing partner looks for lower costs

Seattle Times ^ | 7/22/04 | Dominic Gates

[BurbankKarl]

State losing out on 500 7E7 jobs: Boeing partner looks for lower costs

By Dominic Gates Seattle Times aerospace reporter

FARNBOROUGH, England — One of Boeing's major 7E7 partners is close to picking the site of a 500-employee manufacturing plant for the new jet.

But it won't be in Washington state.

Washington has lost out to aggressive incentive offers from other states, lower wage rates elsewhere and considerations of congressional delegation influence on defense spending.

"I don't think Washington state is in the running," said Tom Risley, president and chief executive of Dallas-based Vought, who will choose the site.

Some more bad news: About 100 Vought engineers working in Seattle on the 7E7 will be moved to the new location once the preliminary design phase is finished, Risley said.

The hope that major suppliers would establish factories near the 7E7 plant was a key piece of the rationale for Washington state's $3.2 billion incentive package to Boeing to choose the state for final-assembly work.

Risley, who said he will make his selection within six weeks, was first reluctant to reveal his thinking. In an interview at the Farnborough Air Show, he finally said he was making the disclosure to avoid creating "false hope."

"I'd never say never until the decision is made," Risley said, "but right now, I wouldn't put [Washington] in the top three."

State officials were dismayed at the news.

"It's extremely disappointing," said Robin Pollard, who coordinates the 7E7 project for the state. "We had hoped there was still an opportunity to lure them here."

Earlier this week, an executive with Vought had said the Puget Sound region still had a chance to win work. Yesterday, his boss extinguished that hope.

Vought wants a site for two plants that will build more than half the 7E7's fuselage and install all systems and insulation.

It needs a fabrication plant to build two 7E7 fuselage sections and an adjacent "integration" plant run jointly with another 7E7 airframe supplier, Alenia of Italy.

In the integration center, the two Vought pieces will be joined and stuffed with hydraulic systems, tubing and insulation.

Then two more fuselage sections made in Italy by Alenia; the center wing box made by Fuji in Japan; and a small part of the fuselage forward from the wing, made by Kawaski in Japan, will be joined and stuffed.

Boeing plans to fly these two large finished fuselage sections — extending from just in front of the wing to the tail — to Everett for final assembly. These sections will be transported in specially designed air cargo freighters — converted 747 jets with large bulging tops.

7E7 program head Mike Bair said last week Boeing would let the suppliers pick the site.

Giorgio Zappa, Alenia's chairman and CEO, interviewed in Farnborough, said the selection would in the end be "an American choice."

So Risley gets the final decision.

"Just like Boeing did when they went out looking throughout the United States for an assembly plant," Risley said, "I'm looking for what state assistance we can get."

The 7E7 timetable requires Vought to deliver its first fuselage sections to the integration facility in just over two years, so Risley is in a hurry.

"It has to be somewhere that the funding is in place," he said. "I don't want to wait for legislation to be passed."

Asked why Washington hadn't made the cut, Risley said: "It has to do with the aggressiveness of other states; the competitive labor market."

But, he insisted, "It's not all about money."

He said it's important to locate the work in a state with the skills to execute the 7E7 plan and also "where we think we can get assistance on the Hill for our military programs."

Risley also said that his home state of Texas will "more than likely not" be chosen.

Vought's plant in Dallas will be essentially at capacity after work is consolidated from elsewhere and its military work grows, he said.

"It's a very competitive market in Texas," Risley said, mentioning the rivalry for defense deals with Lockheed Martin and Bell Helicopter. "So it might behoove us to be located somewhere else."

[BurbankKarl]

So tell me, did Boeing get the big tax breaks just on the 7E7 or the whole corporation? Did they lower their tax liability AND start moving jobs to lower cost areas?

[Paleo Conservative]

Why do you think Boeing is building these special transporters for the 7E7 program?

Boeing 7E7 Will Use Air Transport for Component Delivery

EVERETT, Wash., October 13, 2003 -- Boeing [NYSE:BA] will dramatically reduce the time to move components of its new 7E7 passenger plane to final assembly from suppliers by adopting air transportation as its primary method of parts delivery.

The company projects possible savings of 20 to 40 percent compared to traditional shipping methods, with delivery times of as little as one day, rather than as many as 30 days for other programs today.

Such savings will allow the initial 7E7 investment in the air transportation assets to be recouped in the first few years of production.

"Transporting large pieces by air will allow us to dramatically reduce flow time," said Mike Bair, senior vice president of the 7E7 program. "We're committed to doing things differently to create value for our customers."

Boeing will rely on at least three modified 747-400s to move the 7E7 components, although it has not determined details such as asset ownership or where the 747s will be modified.

"We announced in June that the 7E7 will be the first large commercial jet to have a majority of its primary structure -- including the wing and fuselage -- made of composite materials," Bair said. "That allows us to build larger, more integrated assemblies that will come from all over the world. Regardless of where the final assembly site is, air transport is a perfect solution."

The decision to transport large 7E7 assemblies by air does not alter the requirement for the 7E7 final assembly site to be accessible by water. Boeing plans to select the 7E7 final assembly location later this year.

[Paleo Conservative]

http://www.boeing.com/news/releases/2003/q4/nr_031013g.html

[BurbankKarl]

I see Union Pacific is killing the LA Brooklyn, Oregon trains on August 1, 2004. Those the the trains that carry the wings up from Long Beach....

Going to be interesting to see how they make it to Everett now.

[El Gato]

Cool, a 747 "Guppy". Eat your heart out Airbus.

They should locate the Voight 7E7 plant at Kelly USA in San Antonio. Lots of workers with the proper skills, and wages are reasonable in the area. Facilities are lilkely available, although Boeing is doing KC-10/DC-10 work there already. Cost of living is also fairly low. (Kelly USA is the old Kelly AFB, minus the runway, which are still accessable from Kelly USA, and a few facilities on the west side of the runways. The runways and the facilities are now part of Lackland AFB.)

[wyattearp]

"Washington has lost out to aggressive incentive offers from other states, lower wage rates elsewhere and considerations of congressional delegation influence on defense spending."

And oppressive B&O taxes, excessive property taxes, insane environmental regulations, a hostile legislature, greedy local governments, greedier unions, "infrastructure improvement" demands (completely rebuild the streets and traffic systems wherever they locate)...

Frankly, I'm wondering what took them so long.