Posted on 01/14/2005 12:57:30 AM PST by conservative in nyc
LONG BEACH — The Boeing Co. is expected to announce today that it will end production of the 717 the last commercial jetliner built in California and eliminate at least 750 jobs.
The aerospace giant will close the Long Beach plant that manufactures the 717, which traces its lineage to the McDonnell-Douglas Co., once orders for 18 of the planes are filled, according to an internal memo obtained by the Press-Telegram.
Boeing executives began informing workers of the program's termination at about 2 p.m. Thursday.
The last 717 will likely roll off the moving assembly line in mid-2006, Pat McKenna, vice president and general manager of the 717 program, wrote in a memo to employees.
"Layoffs will occur over time as the program is phased out," McKenna wrote. "However, attrition may help mitigate the number of layoffs and a number of employees will move to other programs or to other jobs in Boeing. We do not have an estimate at this time."
Demand simply wasn't strong enough for the 100-seat jet.
"This was an extremely difficult decision," McKenna wrote. "However, we must face current market realities. The projected demand for our airplane will not sustain a profitable production line."
Production of the C-17 military cargo plan will continue at another plant adjacent to Long Beach Airport. The aircraft has orders well into 2008.
Production on what was conceived as the McDonnell-Douglas MD-95 began in 1995 in a Lakewood Boulevard hangar distinguished by a sign urging people to "Fly DC Jets," a relic that still reminds passersby of when Douglas dominated the Southern California aircraft industry.
Boeing was set to officially announce the program closure on Thursday afternoon, after employees were informed, but the corporate announcement was delayed until today.
"It's devastating," said Bill Schultz, president of UAW Local 148, which represents about 300 plant workers who build the 717. "It's a good plane, a proven aircraft. This just means more work going away from Long Beach. Since Boeing bought us they've canceled out the MD-80, MD-90 and MD-211, and now our last little program that we have left."
Most 717 union workers will have enough seniority to move over to the C-17 program, Schultz said.
"Our leadership team down here did everything possible to keep the 717 alive," Schultz said. "They really did a fine job, keeping that plane going as long as they did."
McKenna's memo did not refer to specific numbers of layoffs. However, Boeing officials notified Long Beach City Hall that layoffs will begin in January 2006, resulting in a net loss of about 750 jobs, said Ray Worden, the city's Workforce Development Bureau manager.
The company employs 2,500 workers in its Boeing Commercial Aviation and Commercial Airplanes division in Long Beach, which includes the 717 program, as well as departments that perform work for commercial airplane manufacturing in Boeing's Renton, Wash., facility near Seattle, where all other Boeing commercial planes are made.
In all, Boeing is Long Beach's largest private employer, with 10,500 workers at its 717, C-17 and other plants near the airport.
Boeing says that Commercial Aviation Services plans to continue operations in Long Beach, helping to decrease the impact of near-term of layoffs.
But there are questions about whether Boeing would choose to continue related commercial airplane work in Long Beach when all other assembly work is done is Washington state.
Commercial Aviation Services does support work for airplane spares, modifications and in-flight training.
The 717's death was inevitable, one analyst said. Boeing told the U.S. Securities and Exchange Commission in March 2004 it was ready to take a $400 million charge off if the plane's sales campaigns continued to sputter and it decided to close the production line.
Boeing only sold 13 models in 2003 and 12 in 2004. In late 2001, Boeing considered shuttering the plant but opted to slow down the production rate to about one a month in a bid to wait out the slow market.
Faced with slow sales, Boeing cut more than 1,200 717 workers beginning in late 2000 and continuing through 2001. In all, the program's workforce dropped by 45 percent.
"It was sort of expected. It's a difficult plane to sell," said Mike Boyd, an airline industry analyst with The Boyd Group in Evergreen, Colo.
Boyd said the 717 probably would have been killed when Boeing merged with McDonnell-Douglas, but "Boeing only kept it going to keep some politicians happy."
But after nearly two years of internal wrangling at Boeing corporate headquarters in Chicago, the company couldn't find enough airlines to buy the single aisle, 100-seat 717e, even though airlines, analysts and Boeing engineers continually praised its performance.
The plane's biggest booster was AirTran Airways, which was the 717's launch customer.
Long Beach Mayor Beverly O'Neill was told about the decision on Thursday afternoon by McKenna.
"Boeing is an invaluable member of this community," O'Neill said. "We're really deeply disappointed in this news."
And although O'Neill has made mentions of the 717 program in her State of the City addresses, she said there was nothing prescient about her not making a 717 reference in her latest speech on Tuesday.
Already the city is working to help transition laid off Boeing employees, much as it did during a large round of layoffs in Long Beach two years ago and part of more than 30,000 cuts made by the aerospace giant in the wake of the Sept. 11 terror attacks and a slowdown in passenger travel.
The city's Career Transition Center will be made available to any Boeing workers laid off and Long Beach will likely apply for up to $5 million in federal money to assist with retraining and relocating employees who lose their jobs.
"We probably will start doing the ground work this spring," Worden said.
The city has established a career transition center on Boeing property to assist with past layoffs. Worden said the city would likely seek a similar arrangement again.
"We're much more expert in helping with Boeing on downsizing than I would ever have wished us to be," Miller said.
Citing the 717 as the last of the city's airplane production with a tie to Douglas, Miller called Thursday "a dark day."
"This is the end of an era," he said.
The plant's impending closure was also rippling into surrounding neighborhoods in Long Beach and Lakewood, home to generations of Boeing and Douglas employees.
"When I worked here 25 years ago it was going big across the street," said Sally Haynes, owner of Flite Room tavern and eatery, near the intersection of Carson and Lakewood.
The Flite Room was one a popular gathering spots for aerospace workers in the industry's heyday, and Haynes also worked as a waitress at another bustling hangout, the Thirsty Isle on Carson.
"You couldn't get a place at the bar," she said of the heydays for Boeing workers at the Flite Room. "We all depended on Douglas, or Boeing."
Haynes, a Lakewood resident of 35 years, used the jobs to support her children, but as the aerospace industry cutback its ranks, .
"It's killing us," she said.
Jack Kyser, chief economist with the Los Angeles County Economic Development Corp., said the closure is a tough blow to the area's economy, especially when you're talking about losing good, high-paying manufacturing positions.
"It never seemed that Boeing's heart was in pushing that plane," he said. "You're disappointed and feel sorry for the workers, but it's not totally unexpected."
Of particular interest will be what Boeing decides to do with the immense property where the 717 assembly hangar now stands, Kyser said. Boeing Realty recently received the OK to develop more than 280 acres of land across Lakewood Boulevard from the 717 plant with retail, office and residential at what formerly was the site of aircraft manufacturing plants.
Placing workers might pose a challenge, he said.
"It's going to be tough for them finding new jobs," he said "Where is the job growth? It tends to be right now in leisure and hospitality."
Press-Telegram staff writers Jason Gewirtz and Don Jergler contributed to this story.
I guess the 717 just couldn't compete with the 100-seat regional jets being produced by Embraer in Brazil. Or maybe there's just no market for a 100-seat jet these days?
Well they can always tear down the hanger and build condos on that site. Real estate near the coast in Southern California is worth a king's ransom. Boeing will either sell the land or build something on it--that land is far too valuable to be covered by an idle factory building. The lost jobs in aerospace are likely to be replaced with construction jobs in a year or two.
It is sad. The B-717 had conquered the MD-80 wing ice problem due to unused preheated fuel going back to the tanks and efficient engines. The B-717 cost around $36 Million last I heard. The similar Tu-334 costs around $15 Million but is not awarded U.S. FAR-25 certification for lack of a bilateral agreement bewteen USA and Ukraine.
http://www.tejavia.com
It is sad. The B-717 had conquered the MD-80 wing ice problem due to unused preheated fuel going back to the tanks and efficient engines. The B-717 cost around $36 Million last I heard. The similar Tu-334 costs around $15 Million but is not awarded U.S. FAR-25 certification for lack of a bilateral agreement bewteen USA and Ukraine.
http://www.tejavia.com
Do you have any idea what Embraer is selling their 190s for? The 717's a bit heavier, but probably a lot more durable in the long run. 30-year old Douglas jets are still flying today. Can't say the same for Embraer jungle jets.
The 100-seater market just doesn't seem to be very big these days. It's probably been killed by regional jets, which can offer higher frequency at lower costs. As far as I know, all U.S. airlines have scrapped their Fokker 100s, and only Northwest still flies DC-9s. Only a handful of smaller airlines, like Airtran, Midwest and Hawaiian bought the 717. And I've never seen a 737-600 or A318 (I think Frontier flies the later). On the other hand, JetBlue did order a bunch of Embraer 190s recently.
Ping
The article should have mentioned the absurd air-quality regulations in Southern California that make it difficult or impossible to use and store the paints and solvents necessary to build aircraft.
Actually, the market for the smaller RJ's is dying and the hot new area is the 100 seat market. Boeing tried twice before to cancel the 717 but was talked out of it by airlines, primarily Airtran I believe. Boeing has abandoned this market segment and the only producer of 100 seat jets is Embrear. Even Canadair doesn't have a jet in this segment yet.
What's the seating capacity on the CRJ-900? 80 to 90? Then again, I haven't actually seen any of those.
A sad day to see the end of the DC-9/MD-8x/MD-9x line, really. Not a bad 40-year run for them, though.
}:-)4
Dang it. I really like flying on this aircraft. Comfy and quick.
Seating is 86. I don't know if Bombardier plans to compete in the 100 seat sector and it would be a shame if they didn't. Having flown on both the Canadair plane and the Embrear I think the Embrear is more comfotable from a passengers perspective but I understand the Embrears don't have the operational flexibility of the Canadairs.
I always thought the 717 was doomed. In addition to the Embraer offering, there's the Airbus A318 and there will soon be a 90-100 seat offering from Canadair, not to mention the erosion in the market since the introduction of the smaller regional jets from Canadair and Embraer and the fact that there are still a lot of good used F-100s out there.
Canadian discount carrier JetsGo started flying F-100s last year- they probably got them from a US carrier. Not sure what the economics of the plane are like, but I had a ride on one and if I didn't know that Fokker was out of business I would've sworn it was brand new.
The CRJ900 is 80-90 seats but is not yet in production. They're also looking into developing something in the range of 110 seats. I think what we'll end up with is two distinct markets- Boeing vs. Airbus for larger (130+) jets and Canadair vs. Embraer for the smaller ones. I think Bombardier blew it- they invented the regional jet but cancelled the 90-seater, giving Embraer an advantage of several years. If they don't pick up the pace Embraer could end up pushing them out of teh no. 3 spot in the jet market.
Actually the aeronautics/aerospace regs that kicked in a few years ago(99-00?) was national in scope. 99.99% of the VOCs and particulates have to be removed from the exhaust stream.
Depending on how/when the technology matures, the body shops will eventually face the same requirements.
The old Norton AFB (can't remember what they call it these days) advertises that the VOC regs are more lenient up there than in the LA Basin.
U.S. citizens hold/held the aerospace jobs. Illegal aliens will get the construction jobs. Yet another kick in the pants...
The constructions jobs created by real estate development go to all kinds of people. Not all construction workers in California are illegal immigrants. I know because I did a home renovation in San Diego a couple years ago. A lot of the low-skilled people are illegal immigrants but there are all kinds of contractors who work on new buildings and most of them are U.S. citizens: architects, engineers, electricians, concrete and roofing contractors, HVAC contractors, wall and window contractors, and all the office staff who support them. It's a huge group of people that build new buildings when you count everybody who's involved. When Boeing develops that real estate they will create a lot of jobs for U.S. citizens.
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