MD-95 May Be Built in Long Beach : Aerospace: McDonnell Douglas makes decision after reaching agreement with union. Program remains uncertain.
In a major about-face, McDonnell Douglas Corp. has agreed under certain conditions to build its proposed MD-95 jetliner in Long Beach instead of in Texas as part of a new contract that was ratified Sunday by McDonnell’s hourly workers.
It was the second dose of good news in two months for hard-pressed Long Beach, which has lost tens of thousands of jobs in recent years because of cutbacks in defense spending.
In February, Douglas decided to move the production of its MD-11 fuselages to Long Beach, even though it had considered other, low-cost sites such as Utah. The fuselage work, which previously had been performed by a subcontractor in San Diego, is expected to create more than 1,000 additional jobs in Long Beach.
The proposed MD-95 jetliner had been slated to be built at Love Field near Dallas. But Douglas agreed to shift the MD-95 work to Long Beach in large part because its Long Beach work force agreed, as part of its new contract, to limit its overall wage and cost-of-living pay increases to 4% a year for the next five years, said UAW Local 148 President Douglas Griffith.
“That was the price to get the MD-95,” he said.
Spokesman Don Hanson of McDonnell’s Long Beach-based Douglas Aircraft division, which builds the company’s commercial jetliners and the C-17 military transport, said: “We’re very pleased” with the new five-year contract.
“The people on both sides of the bargaining table worked hard to get that agreement nailed down,” he said, referring to the company and the workers’ union, United Aerospace Workers Local 148 in Lakewood.
That trade-off kept the vote close among the workers, however. The pact was approved 54% to 46%, Griffith said.
However, it’s still not certain that the MD-95 will be built in Long Beach.
First, Douglas has yet to formally launch production of the plane--which would be priced between $20 million and $25 million--because the company still hasn’t gotten sufficient orders to begin assembly. The orders might not come for several months, if at all.
Also, the Douglas-UAW contract says state and local governments, along with local utilities in Southern California, must complete various financial commitments that will provide Douglas with incentives and cost-savings if it builds the plane in Long Beach.
And there is a clause in the pact that says if the MD-95’s “launch” airline customer is “a Texas-based customer” and that airline “demands that the MD-95 final assembly be done” in Texas, then the Douglas-UAW contract would be reopened for negotiation.
Such an airline could include Houston-based Continental Airlines or American Airlines or Southwest Airlines, both Dallas-based.
Douglas’ Hanson said he was unaware of whether any airline had made such a request to date.
Hanson said the company can’t yet say how many jobs might be added to the Long Beach work force because of the MD-95. However, it’s certain to be considerably less than the 5,000 jobs that the airplane was expected to create had it been built in Texas.
That’s because Douglas already has its aircraft-manufacturing infrastructure in place in Long Beach, where about 10,000 people build Douglas’ existing commercial jetliners, the MD-80, MD-90 and wide-body MD-11 tri-jet. Another 10,000 or so work on the C-17. The new Douglas-UAW contract covers about 7,700 hourly commercial and military workers.
Regardless, the twin-engine MD-95 would help ensure long-term employment for the existing Long Beach work force.
Douglas had announced last November that a different subcontractor, Dalfort Aviation, would perform the MD-95 final assembly at Love Field. But a month ago, Douglas said the deal with Dalfort still hadn’t been signed.