Fate of Douglas’ Long Beach Site Still Uncertain

Boeing Co.’s plan to buy McDonnell Douglas Corp. is not lifting the cloud of uncertainty hanging over the future of McDonnell’s giant Douglas Aircraft Co. plant in Long Beach.

Just as analysts were divided over whether ailing Douglas could sell enough jetliners to keep the commercial aircraft plant and its 10,000 employees at work beyond the next few years, so now are they divided over whether Boeing will market the Douglas line of airplanes or simply fold the plant into its own operations.

Nonetheless, optimism swept over Long Beach on Monday as Boeing’s stunning proposal to buy McDonnell Douglas for $13.3 billion raised hopes that aerospace titan Boeing will find a way to maintain Douglas’ role as a linchpin of the city’s economy.

“We are delighted with the merger,” Mayor Beverly O’Neill said. “I think it’s going to be a really good collaboration.”

Toncie Blackwell, a 10-year Douglas employee, agreed. “It seems to me that the two go good together,” she said after ending her shift Monday. “Everyone I’ve talked to feels the same way.”

In announcing the merger, Boeing Chairman Philip Condit said Sunday that the fate of the Douglas family of jets “will be decided by the customers,” meaning that if the world’s airlines keep ordering the planes, Boeing will build them.

Some analysts doubt that will happen, because orders already are so weak for Douglas’ MD-11 wide-body, MD-90 narrow-body and MD-95 100-seat jetliners. Douglas’ share of the jetliner market has dwindled for years in the face of stiff competition from jets built by Boeing and Europe’s Airbus Industrie.

But even if Boeing does fold Douglas Aircraft, it doesn’t necessarily spell doom for the Douglas work force--the largest industrial work force in Long Beach, observers said.

Boeing, the world’s largest maker of commercial airliners, is struggling to keep up with a surge of new orders and has aggressive plans to develop new models of jetliners. Those trends could keep Douglas’ employees busy under Boeing’s wing, and give them other job opportunities within Boeing.

“Given the fact that Boeing is looking for additional [production] help . . . I would expect some of that work to come to Southern California,” said Jim Schwendinger, aerospace and defense director for Deloitte & Touche’s consulting group.

Jenny Oropeza, a member of the Long Beach City Council, likewise said Boeing should help stabilize Douglas’ operations. “The unions are fairly encouraged by this, as I am, that the workers will retain their jobs,” she said.

Douglas’ plant will operate as usual for now. Boeing’s purchase of St. Louis-based McDonnell Douglas requires antitrust clearance and other approvals, and so won’t be completed for months.

Also, Douglas has a backlog of firm orders for 206 aircraft (and airlines have options on another 188), which should keep the Long Beach production lines humming for at least two or three more years.

Next door to Douglas Aircraft is another McDonnell Douglas factory, which builds the C-17 military cargo plane. That operation, and its 10,000 workers, are unlikely to be affected much by the merger, analysts said, because McDonnell will be busy for years filling the Pentagon’s recent order for 120 of the transports.

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Long term, however, there are several ways that Boeing could handle the Douglas commercial-jetliner operations. Among its choices:

* Keep making Douglas jets, especially for airlines that already have Douglas planes in their fleets and desire that “airplane commonality” because it lowers their training and maintenance costs.

“The market has stayed away from Douglas products because there’s been so much uncertainty” about McDonnell Douglas’ future, said Mark Biagetti, vice president at First Equity Development Inc., an aerospace investment firm in Stamford, Conn. “But now that it’s under Boeing’s umbrella, I think that may help sell aircraft.”

* Eliminate Douglas models except for its new, small MD-95. So far, the plane has only one customer--struggling ValuJet Airlines--and the jet is just now coming to production. But some analysts think the plane could give Boeing an expedient entrance into the market for 100-seat jets.

* Drop all Douglas jets but keep the plant and the work force to help design and build Boeing airliners. “They’ll have a lot of work, they just won’t be building anything with an ‘MD’ on it,” said Richard Aboulafia, an analyst at Teal Group, an aerospace research firm in Fairfax, Va.

Douglas workers, too, were wondering which course Boeing will take. “I don’t know what it will do to existing [Douglas] aircraft,” said Al Fierino, a 30-year flight test worker. “Where do they fall into the overall plan?”

And in light of Douglas’ difficult history, some plant workers guarded against being too optimistic. One was Mary Velasquez, who has worked in Douglas’ fabrication department for 18 years. She said she is positive about Boeing’s arrival, but added, “Anything can happen.”

* TITAN TIMES

A vision of a few dominant firms is closer to reality. A1

* BOEING AS BOSS

Boeing’s management has its darker side. D2

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Jet Set

Douglas-made planes have had a tough time competing with similar-size aircraft made by Boeing and Europe’s Airbus Industrie. A sample of commercial jets manufactured by the three industry leaders, ranked by range in miles and passenger limits:

Source: Company reports

Researched by JENNIFER OLDHAM / Los Angeles Times