McDonnell to Expand Plant in Long Beach : Aerospace: With a $66-billion backlog of commercial orders, the firm will add a second production line for MD-80 and MD-90 jets.

McDonnell Douglas plans to open a second production line for its MD-80 and MD-90 passenger jetliners in Long Beach, an important strategic decision aimed at increasing the firm’s share of the world aircraft market, company officials disclosed Wednesday in an interview.

Under a plan to be implemented over the next four years, the firm’s Douglas Aircraft unit would boost production of the two aircraft models by as much as 60% by rearranging operations in at least two major hangars, said John D. Wolf, Douglas vice president and MD-80 general manager.

Douglas order books are bulging with an unprecedented $66-billion backlog of commercial sales commitments, the result of many multibillion-dollar orders over the past year. The firm has sales commitments for 904 MD-80s and 200 MD-90s. Its MD-11 program, which has yet to start deliveries, has sales commitments for 350 aircraft, worth an estimated $35 billion.

The wealth of business has a downside, however. Production for MD-80s is sold out through 1995 at the current production rate, and airline customers are reluctant to have deliveries extend indefinitely.

If Douglas hopes to compete effectively against its primary rivals, Boeing and Airbus Industrie, it must increase its production rate rather than continue to push orders further into the future, Wolf said.

The current production rate of 2.5 aircraft per week would be increased to an ultimate goal of 4 per week or roughly 200 per year, Wolf said. In addition, Douglas would produce about 50 MD-11s per year and up to several dozen Air Force C-17s cargo jets per year, the highest production rate the firm has achieved in the jet age.

The opening of the second production line puts an end to speculation that Douglas would open a second line outside its crowded Long Beach facility, which is operating at full capacity with 37,000 employees. Another 5,000 are in Torrance at a parts production plant. A decision last year to build the MD-90 with modules common to the MD-80 ended planning that could have put that program in a separate geographic facility, Wolf said.

Although the opening of the second production line will not increase the 9,500 workers assigned to the MD-80 and MD-90 programs in Long Beach, it will mean those jobs are preserved even as the firm moves out some production.

In addition, Wolf said, it concentrates the highest-skilled and highest-value production work in Long Beach.

“It is a very positive development,” Wolf said. “It is really increasing the assemblying and flying part of our business that consumes the greatest amount of knowledge and skilled resources.”

But at the same time, the decision to set up the second production line means that Douglas will have to transfer work to satellite plants outside of California to make space at the crowded Long Beach plant. On Tuesday, the firm announced that it will move fuselage subassembly work to a plant in Salt Lake City, increasing the jobs there to 800 from 300. In addition, Douglas has feeder plants in Macon, Ga.; Columbus, Ohio; and Melbourne, Ark.

Last month, Douglas disclosed that it had established a policy to focus efforts in Long Beach on final assembly and design, transferring peripheral work out of the area or divesting some assets.

The employment buildup at Douglas during the 1980s was so great, however, that the company was unlikely to continue to grow significantly in Long Beach or elsewhere in California. Since 1984, Douglas employment in Long Beach has grown to 37,000 workers from 12,000 and in Torrance from 1,000 to 5,000.

Parking alone has become a major problem at the plant. Some workers now park their cars at a nearby drive in movie theater and are bused into the plant.

The economic downside of the Douglas strategy to concentrate only assembly in Long Beach could come when the commercial aircraft boom peters out. Then, employment in Long Beach could drop below what it might otherwise have been. But Wolf did not rule out the possibility that production work might someday be consolidated back in Long Beach during a downturn.

For the time being, however, the current historic boom in commercial aircraft production shows no signs of abating. The world demand for jet aircraft is increasing rapidly and the need to replace aging jets is growing more critical every year.

Kim Still, Douglas vice president and deputy general manager for commercial marketing, said the company captured a 20% share of the world aircraft market in 1989 for jetliners of the MD-80 size. Douglas booked firm orders, not including options and reserves, of 195 MD-80 aircraft out of a total world market estimated at 983, Still said. The other manufacturers included Boeing, Airbus, Fokker and British Aerospace.

Douglas is a distant second to Boeing and during the early 1980s had fallen on such hard times that the parent company considered liquidating the operation. Even with the massive backlogs, it lost money last year after experiencing production problems and a disruptive management reorganization.

Wolf said he did not want to set a specific figure for increasing that 20% market share, but Douglas has disclosed in public documents that it has set a goal of capturing 25% of the market for small jetliners.

Under the plan to expand production, Douglas will increase the number of factory positions where wings are joined to fuselage sections to eight from three. And it will double the number of positions in its final assembly line, where the aircrafts’ horizontal stabilizers, engines and interiors are installed, Wolf said.