Douglas, China Agree on Jet Co-Production : 1st Time Foreign Nation to Produce U.S. Jetliner

Culminating six years of negotiations, McDonnell Douglas said Friday that it had reached a final agreement for China to buy and co-produce 26 MD-80 jetliners--the first time, it said, that a foreign country will provide the final assembly of a U.S. jetliner.

The deal announced Friday involved one more plane than had been specified in January when the St. Louis-based company had said that it had reached a tentative agreement for China to co-produce 25 of the aircraft.

McDonnell Douglas declined to disclose the value of the order, but the MD-80 normally sells for $25 million, so the deal would be worth about $650 million.

The first of the 147-passenger, twin-engined jets will be built and assembled at McDonnell Douglas’ Long Beach facility for delivery later this year to the General Administration of Civil Aviation of China.

Begin Service in 1987

The other 25 jets will be partially assembled in Long Beach and shipped to Shanghai for completion, beginning next January. Delivery of the aircraft will continue into 1991.

The aircraft are scheduled to begin service on China’s domestic and international routes in 1987.

A McDonnell Douglas spokesman in Long Beach said the company, its subcontractors and major component suppliers “will continue to have substantial majority of the work value on the airplanes.”

Asked if China’s order will mean more jobs, he said: “This, along with other orders, will contribute to hiring in some cases, and it certainly will help sustain the employment level.”

In addition, 50 Douglas employees will be transfered to Shanghai, he said.

A joint management committee of Douglas and Shanghai Aviation Industrial Corp. executives will oversee the licensed production arrangement.

McDonnell Douglas will provide tooling, instructions and documentation to get the Shanghai assembly line started.

Since 1979, the Chinese plant has built landing gear doors for MD-80s assembled in Long Beach.