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Boeing Says Its Production Is Back on Track

From Times Staff and Wire Reports

Boeing Co. said Wednesday that it has largely overcome production bottlenecks that cost the aircraft manufacturer more than $2 billion and is delaying plans to lay off 12,000 workers.

Boeing also said it will decide within a month whether to move additional production work to Long Beach, where the phaseout of three commercial jet programs threatens to decimate the work force in the next 18 months.

“By about Aug. 1, we will make the decision if we do or if we don’t put a 737 next-generation final assembly operation in Long Beach,” said Ronald B. Woodard, president of Boeing’s Commercial Air Group.

The Seattle-based aerospace company’s upbeat announcement came on the same day Europe’s Airbus Industrie said it won an order for 20 A319 and A321 jetliners, worth about $900 million, from Air France, which will use the short-haul aircraft to replace some of its older Boeing 737 planes.

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The French carrier, Europe’s third-largest, also will take options to buy another 20 of the narrow-bodied jets, which have gained ground against the 737 in recent years and helped Airbus erode Boeing’s market share.

Indeed, Boeing officials cautioned that even though its commercial jets are being delivered at record rates, it still faces fallout from the Asian financial crisis, which is causing some customers to delay their plans to accept completed aircraft.

“I think it will be relatively long-lasting,” Boeing Chairman Philip M. Condit said. “I don’t see any optimistic signs for a quick recovery.”

Boeing ran into problems in the fall when parts and labor shortages left it unprepared for a surge in aircraft orders. The company was forced to close some assembly lines and complete planes out of sequence.

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But in a sign of recovery, deliveries reached all-time high of 61 planes in June and 139 in the three months ending June 30, compared with 108 planes in the first quarter of this year and 102 in fourth quarter 1997.

Boeing said a previously announced plan to lay off 12,000 workers in its commercial jetliner division this year will stretch into 1999. But spokesman Peter Conte said the company still plans to make those cuts.

Even though production is returning to normal, Boeing still faces problems, particularly on the assembly lines for new-model 737s.

To help ease the remaining production snags, Boeing has been reviewing the cost of setting up a final assembly line in Long Beach, where there are plenty of experienced workers building a dwindling number of MD-11, MD-80 and MD-90 passenger planes. All three programs--which employ about 6,500 people--will be halted in early 2000.

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“We’re looking at the possibility of three or four [737] airplanes per month in Long Beach,” Woodard said. If the Long Beach plan takes flight, Boeing would probably use the site for assembly of nonstandard configurations of its updated 737 jets such as the Boeing Business Jet and “combination” jets, which include both passenger seats and freight space in the main cabin, executives said.

Woodard’s remark was the first mention of the potential 737 production rate at the former Douglas Aircraft facility, according to John Thom, a spokesman at Boeing’s Douglas Products Division in Long Beach. “That would be 36 to 48 planes a year, which is not too shabby,” Thom said. “It keeps [us] pretty busy.”

Boeing’s shares gained $2.88 to close at $47.44 on the New York Stock Exchange.


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