McDonnell Will Assist Boeing on Jetliner Project

McDonnell Douglas Corp., in a move that has the potential to protect 10,000 jobs at its struggling commercial aircraft plant in Long Beach, agreed Tuesday to help prosperous archrival Boeing Co. develop new versions of Boeing’s wide-body jetliners.

The unique collaboration of the otherwise fierce competitors, which could mean new work building future Boeing planes, calls first for McDonnell to send “several hundred” engineers and other employees to Boeing’s Seattle headquarters to help design stretched versions of Boeing’s famed 747 jumbo jet.

Beyond that, the companies offered few details about the dollar value of the venture, how much additional work McDonnell would perform in their open-ended pact, or how that work would affect the Long Beach employees of Douglas Aircraft Co., the McDonnell unit that makes commercial jetliners.

But McDonnell did leave open the possibility that Douglas might manufacture or assemble major parts of future Boeing planes in Long Beach, where Douglas is the largest industrial employer.

The deal offers the prospect “of larger components and or full aircraft being done in Long Beach,” Douglas President Michael Sears said at a news conference.

There is also precedent for Boeing--the world’s largest airplane builder--using a Southern California subcontractor for key plane components. Northrop Grumman Corp.’s Hawthorne plant produces fuselages for Boeing’s 747s.

Boeing is scrambling for help because it is awash in a record number of airplane orders. To keep up with those sales and pursue new projects like the stretched 747, it has been aggressively recruiting engineering talent and other workers in recent months.

Douglas, in turn, needs the work. A distant third in the commercial market behind Boeing and No. 2 Airbus Industrie of Europe, Douglas has struggled to land orders despite the overall boom in plane orders this year.

Douglas is now a mere niche player that competes mostly in the market for single-aisle, narrow-body airliners, which is why its deal with Boeing focuses on the wide-body market. Douglas does make a wide-body, the MD-11, but orders for that plane have eroded badly in recent years.

Boeing stopped short of saying whether its pact with Douglas would eventually boost production in Long Beach. “It remains to be negotiated what, if any components, might be manufactured in their Long Beach facilities,” Lawrence Clarkson, Boeing’s senior vice president for planning and international development, said in another news conference.

When asked if the agreement would increase jobs there, Clarkson replied: “No. I think this helps [Douglas] keep their employment stable, and helps Boeing get through some of the peaks of the current demand” for jetliners.

Clarkson also said the chances were “zero” that final assembly of the new 747s would take place in Long Beach, instead of in Everett, Wash., where Boeing’s wide-body planes are assembled.

Some industry analysts said the deal is a major plus for Douglas not only because it keeps idle engineers from being laid off, but also because it keeps Douglas busy designing and testing new aircraft technology.

“This will protect their design teams and their manufacturing base, and then they can live to fight another day,” said analyst Wolfgang Demisch of BT Securities Corp. in New York. The deal also sends a signal to the world’s airlines that Douglas will remain a viable, if small, provider of jetliners, he said.

Analysts also noted that Boeing benefits from its pact with Douglas by precluding Douglas from reaching a similar venture with Airbus.

For now, though, Douglas’ prospects still look bleak. Among other things, McDonnell recently announced that it had abandoned its once ambitious plan to make Douglas more competitive by expanding its family of airplanes. The cost was simply too high, McDonnell said. McDonnell also recently lost a major bid to build a new fighter jet for the Pentagon.

It was after McDonnell scrapped its expansion plans in October that Boeing and McDonnell began discussing their alliance, Clarkson said.

The pact’s first phase calls for Douglas engineers to help design Boeing’s 747-500X and 747-600X planes, which would be stretch versions of the jumbo jet capable of seating 500 passengers or more.

The agreement also renewed speculation that Boeing might be eyeing a purchase of Douglas, or a merger with McDonnell Douglas, which also is one of the nation’s biggest defense contractors.

Executives declined to comment on that speculation, but a year ago the companies seriously considered a merger before the talks fell apart.