Uncertain Future Painted for Boeing’s C-17 Assembly Line

Boeing Co. may be forced to shutter California’s last major aircraft manufacturing plant in 2008 because the Pentagon will not extend its order for C-17 cargo planes, company executives said.

Currently, some 6,500 Boeing employees work on the C-17 assembly line in Long Beach.

The four-engine Air Force jet has been a major workhorse for the military in Kosovo, Iraq and Afghanistan, transporting military personnel and heavy equipment. But the Globemaster III could fall victim to a Pentagon budget crunch, analysts said. Military operations in Iraq are taxing the Pentagon’s procurement budget, limiting the Air Force’s aircraft acquisitions, including next-generation fighters such as the F-22 and F-35.

Boeing has delivered 145 of the 180 C-17s under the current Pentagon contract. The last C-17 -- each costs about $175 million -- is scheduled to be delivered in 2008.

The military can’t order additional C-17s until the Pentagon finishes a planning review for its next round of weapon systems, Air Force officials said. That procedure is not expected to be completed until early next year, leaving the C-17’s status in limbo.

Air Force officials “have told us in no uncertain terms that they’re really struggling to meet their budget,” said David M. Bowman, Boeing’s program manager for the C-17.

Boeing said it would start terminating contracts with suppliers if it received no additional orders for the plane by year-end.

Eventually, Boeing would have to gradually scale back production as the C-17 program neared completion, shutting down the line altogether in 2008.

That move would ripple throughout the aerospace industry in Southern California, where 500 firms that employ 5,000 workers make parts for the Globemaster III. An additional 200 subcontractors in 41 states supply parts and services for the C-17.

“If we don’t receive a commitment by the end of the year, our supplier base will start knocking off,” Bowman said

The contract imbroglio is likely to hit some local suppliers particularly hard.

Ducommun Inc. in Carson makes aluminum skin panels for the C-17’s fuselage and wings. Work on the aircraft accounts for about 45% of Ducommun’s revenue.

Ducommun recently delivered parts for the final C-17 on order, and it needs to order raw materials this month for additional aluminum panels to avoid any production disruption. But that won’t happen unless another plane order comes in.

“I can’t run the business with nothing to do,” said Steve Woodhouse, vice president of operations for Ducommun. “In all likelihood we’ll have a reduction in force” because of uncertainty about the C-17.

About 150 Ducommun workers are employed on the C-17 at its Gardena plant.

Few disagree that the Pentagon could use more C-17s, which has delivered more than 70% of all U.S. military cargo going into Iraq by air.

C-17s also are being used to transport people and cargo in the Hurricane Katrina disaster area. Additionally, the aircraft delivered 2.4 million pounds of food and supplies for the tsunami relief effort in Asia and Africa.

A recent Pentagon study found that the military might need as many as 120 additional C-17s. But Boeing officials say privately that budget pressures may force the Air Force to order only one or two planes at a time.

This grim prospect comes after Boeing announced in January that it would shut down a nearby Long Beach plant that makes its 717 jetliners. The final 717 will be delivered next year, leaving the C-17 plant as the last major airplane production line remaining in the state.

The vast Long Beach complex was opened in 1941 by Douglas Aircraft Co., and for decades the plant thrived by producing such popular airliners such as the DC-3, DC-8 and DC-10.

The 717, however, never caught on with the airline industry, and orders slowed after the 2001 terrorist attacks.

But the C-17 -- the first model was delivered in 1993 -- quickly turned into a versatile aircraft for the Pentagon. The plane has a range of 2,400 miles, can carry 171,000 pounds of payload and can land on short dirt runways. It’s been used to deliver troops to the battlefield and fly back casualties, and has hauled the military’s heaviest equipment, including helicopter gunships, tanks and air defense batteries.

The C-17s are in such heavy demand that many have logged twice the number of flight hours expected by this time.

Initially, the Air Force ordered 120 C-17s, with the last to have been delivered in 2004. But the plane’s popularity prompted the Pentagon to order an additional 60 under the current $9.7-billion contract.

“The reality of a line shutdown is not new to Boeing. There is nothing that will go on forever,” Bowman said. “But to shut it down, given that everybody acknowledges there is a need [for additional C-17s], would be a shame.”

Shares of Boeing rose 81 cents Friday to $65.40.