Boeing to Expand Jet Assembly in Long Beach
Boeing Co. on Thursday officially announced that it will add a 737 assembly line in Long Beach this year, giving a badly needed boost to the area’s downtrodden work force and solidifying Southern California’s role in commercial jet production.
As part of a sweeping consolidation of facilities designed to cut costs, the Seattle-based airplane maker will reshuffle workers in its Southern California facilities, including nearly all 3,100 employees in Downey, who will move to Anaheim, Seal Beach and Huntington Beach. Boeing also plans to shutter facilities in Canoga Park, Palmdale, Sunnyvale and all but two buildings in Downey.
Boeing’s new assembly line--which will build specialty versions of the popular 737 model--will save about 600 jobs in Long Beach that had been slated for cuts. At the same time, the company’s new plan may also include a few hundred additional job cuts in other Southern California businesses.
Those layoffs will be part of the company’s plan to cut 18,000 to 28,000 jobs--or about 7% to 12% of its payroll of 238,000--by the end of next year. By earlier counts, California’s share of those cuts could have approached 10,000 jobs. But that number could be offset somewhat by job growth, further production increases and attrition.
In a symbolic move, Boeing will erase one of the last vestiges of the former Douglas Aircraft Co.--a name with a proud history in the region--by changing the facility’s name from the Douglas Products Division to the Long Beach Division.
But for California, which was bracing for steep job cuts from Boeing, the overall news is good: The company strengthened its commitment to Southern California as the headquarters of its growing space business, and it has given a nod to the experienced work force in Long Beach to help produce the company’s top-selling commercial jet.
“I think this is a very, very important win, because it will show a lot of people that we still do a lot of aircraft manufacturing in Southern California,” said Jack Kyser, chief economist at the Economic Development Corp. of Los Angeles County. “It says we can win competitions, because there was a lot of opposition to this . . . and Boeing didn’t walk away from us.”
Gov. Pete Wilson praised the move as “an accomplishment all of California should be proud of.”
“Boeing didn’t choose us so they could take their lunch breaks at the beach,” he said. “They were impressed by our skilled work force and the ability of the state and the city to work together to produce a winning offer.”
The state and Long Beach are finalizing an incentive package for Boeing, which includes unspecified tax credits, training funds and other benefits.
Indeed, Boeing’s move to tap its base of experienced--and highly motivated--workers in Long Beach caps months of speculation and a fierce internal battle between rival labor unions over the work transfer.
Boeing had proposed the added line in Long Beach to relieve a huge backlog of orders and a clogged assembly line in Renton, Wash., where Boeing builds the newest models of the 737 passenger jet. That backlog, along with the financial crisis in Asia, led to Boeing’s first annual earnings loss in decades.
The International Assn. of Machinists and Aerospace Workers, a formidable force as the representative for 39,000 Boeing workers in and around Seattle, fought hard to keep the assembly work from leaving Washington state.
But after months of touchy negotiations, Boeing won the union’s approval by agreeing to limit the number of 737s that could be built in Southern California to five per month, and by pledging that no Seattle-area jobs would be lost because of the work shift.
That agreement will stay in place until Sept. 1, 1999, when the union’s labor agreement with Boeing expires.
Even with the production limit, the new line will reinvigorate the local work force, which is facing the loss of thousands of jobs by early 2000 as Boeing phases out production of the MD-80, MD-90 and MD-11 passenger jets. Together, the three programs employ about 6,500 workers in Long Beach.
The Boeing 717, a new 100-seat passenger jet with McDonnell Douglas roots, is set to begin production and could boost employment well beyond its current 1,500 if the company wins more orders for the plane.
Long Beach also is home to production of the C-17 military cargo plane--and a hoped-for commercial version of the aircraft--which has a solid employee base that might absorb some of the expected job losses.
However, the new work, while a badly needed morale boost, isn’t necessarily enough to stem the tide of job losses.
Production plans call for the new Long Beach line to begin building its first 737--a Boeing business jet--by the end of the year, eventually building three jets per month. Other models, including the convertible freighter and possibly some 737-900s, could be mixed into the California line.
At that rate, the added line is expected to create about 600 jobs, including about 450 assembly positions. About 240 Long Beach employees have been trained to work on 737s, and most have been working on a few 737s flown in for refurbishment and other work.
“This is really a tough thing to do, but we’re obviously going to downsize that facility, that’s all there is to it,” said Fred Mitchell, executive vice president for production at Boeing’s Commercial Airplane Group. “We do not have the volume of business down there for those employees.”
In Long Beach, the mood was mixed among employees.
“The morale is still low here because they don’t know what’s going to happen with different divisions,” said T.J. Towery, a blueprint planner who has worked at the Long Beach facility for 19 years and has been assigned to the 737 project.
“[The news] is good for about 600 people,” he said, but “things change here from day to day.”
Still, the president of United Aerospace Workers Local 148, which represents the line workers in Long Beach, remains hopeful.
“I think this is our foot in the door . . . and people are just tickled to death,” said Kedrick Legg. “Once we show them how good we are, I think they will put more work here.”
Elsewhere in Southern California, Boeing’s latest plan will move about 1,000 workers to Anaheim, while shifting about 3,100 employees from Downey to other locations.
Boeing’s full consolidation plan for California, which follows a similarly complex plan unveiled in March, includes plans to:
* Vacate all but two buildings in Downey, shifting 2,200 Reusable Space Systems employees to Huntington Beach, 300 military program employees to Anaheim, 200 to Seal Beach and about 40 workers to Palmdale. The shift will begin next spring. However, the company will decide in the coming months which operations to move into the remaining Downey buildings.
* Move the headquarters of the Information & Communications Systems business unit to Anaheim from Kent, Wash., a move affecting less than a dozen workers.
* Move Boeing’s Integrated Defense System operations to Seal Beach from Huntington Beach, a shift affecting 800 employees. About 200 employees working on surveillance programs will move to Anaheim.
* Transfer program management for the Teledesic satellite communications system to Seal Beach from Washington state, a move affecting a small number of workers.
Company investors appeared unimpressed with the cost-cutting moves. Boeing’s stock price, on a steady slide amid Asia worries and poor earnings, fell $1.69 to close at $37.19.
“Nothing will satisfy Wall Street until they get the earnings back up,” said Paul Nisbet, who follows aerospace developments as president of JSA Research Inc., “and that’s a long way off, at best.”
Times staff writer Susan Abram contributed to this report.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
A Victory for Long Beach
As part of a major facilities overhaul, Boeing will add an assembly line for 737 planes in Long Beach, a move that will offset some of the planned layoffs at the plants.
What: Specialty versions of new Boeing 737 jets, starting with the Boeing Business Jet, a derivative of the 737-700.
When: Starting sometime after October, and working up to assembly of three planes a month before the middle of next year.
Where: In an empty area alongside dwindling production of the MD-11 trijet, where Long Beach employees have already have begun preparations for the new line.
Jobs: The 737 work will employ about 600 people, many of whom would have been laid off.
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Other Major Moves
* Boeing will move all of its current operations out of Downey, vacating about 1.8 million square feet of government-owned buildings and relocating about 2,200 employees to Huntington Beach, 200 to Seal Beach and about 300 to Anaheim.
* The company reiterated plans to cut 18,000 to 28,000 jobs from its payroll by the end of 1999 through a mix of layoffs and attrition.
* It will close 21 million square feet of plants, offices and warehouses by the end of 2000.
* St. Louis will become Boeing’s center for fighter-jet production, including assembly of the Joint Strike Fighter if the company wins a production contract.
* Boeing will shift the headquarters of its information and communications systems business unit to Anaheim from Kent, Wash., a move that affects fewer than a dozen employees.
