Boeing to Abandon Long Beach 737 Plans

Reeling from losses, layoffs and production cuts, Boeing Co. is expected to announce today that it will abandon plans to add a specialty 737 assembly line at its Long Beach facility, according to sources at the company.

The decision would reverse a commitment made by Boeing in August, dashing hopes for new jobs in the region. It would also render useless the millions of dollars in improvements made inside the plant that was to house the new production line.

Boeing called special meetings Thursday to brief managers and labor union officials about the decision, said the sources, who asked not to be named.

Company spokesman John Thom refused to comment late Thursday. However, sources said the company plans to announce the news to employees today.

“It’s just devastating news,” said an official who was briefed on Boeing’s plans Thursday.

In the meetings, Boeing executives said a new assembly line is no longer needed because its Seattle-area plants have recovered from their earlier production problems. Given the added expense of training Long Beach employees for the 737 work, Boeing decided to scrap the plan, the sources said.

Seattle-based Boeing may try to blunt the blow by raising the possibility of bringing additional jet modification projects to the former McDonnell Douglas plant in Long Beach, the sources said.

But that would bring little solace to a work force that viewed the new 737 line as its best chance of forging a solid, long-term role within Boeing’s commercial business. State officials, who spent months wooing Boeing to land the new work, are also likely to feel jilted, no matter what Boeing might offer in its place.

“It’s very sad, because I felt it was a big step in incorporating this facility into Boeing’s commercial empire,” said another official familiar with the expected announcement. “We had an opportunity to be part of the company, and now it looks like we’re just doing scrap work.”

Boeing announced in August that the company would set up an assembly line to build specialty versions of its 737 jet at the Long Beach plant. The move was designed to help relieve a huge backlog of orders and a clogged assembly line in Renton, Wash., where Boeing builds the newest models of its most popular passenger jet.

At the time, employees and local and state officials heralded the move as potentially saving up to 600 of the thousands of jobs that will be cut in the next year.

Many also cited the new line as a badly needed bit of good news for the long-suffering employees in Long Beach, who are awaiting thousands of layoffs in 1999 and 2000, as Boeing phases out the locally built MD-80, MD-90 and MD-11 passenger jets.

Workers in Long Beach also assemble the new 717 jetliner, but most of the twinjet’s major components are built elsewhere. In addition, the 717’s future is not yet secure, despite the announcement Wednesday by Trans World Airlines that it would buy up to 100 of the short-haul planes--bringing total orders and options to 215 jets.

The reversal on the 737 was directed by Alan Mulally, who took over as president of Boeing’s troubled commercial airplane unit in September.

Mulally and other top Boeing executives are under intense pressure to cut costs and improve the giant company’s financial performance. The company recently announced another major round of layoffs and further slowdowns in future production.

In October, Mulally postponed the start-up of the 737 line in Long Beach and included it in a long list of projects he planned to reconsider.

Some have suggested that the new line was never a popular project in Seattle, where workers were strongly opposed to any assembly work leaving the state for fear that it could lead Boeing to move more work later.

Now, the company is halting work on Building 84 in Long Beach, where a new floor, crane and rails had already been installed in anticipation of the 737 assembly work. All tooling and equipment are being sent back, sources said.

To partly offset cancellation of the 737 line, Boeing is expected to offer to bring more jet-modification work to the plant. Employees in Long Beach have some experience in that kind of work, having completed major refurbishing and other work on more than 10 737s this year.

But some speculate that Boeing won’t commit to more modification work without first gaining major wage concessions from the Long Beach work force.

Given the commercial jetliner unit’s troubles and apparent disarray, Wall Street analysts said they would not be shocked if Mulally dropped plans for the Long Beach 737 line.

“It wouldn’t be terribly surprising, because they are expecting some decline in the 737 production line,” said Paul Nisbet, president at JSA Research, a Newport, R.I., research firm. “They’ve probably decided it’s not worth the effort and money to bring all that down there and also probably irritate the daylights out of the unions up in Seattle.”