December 10, 2013
Judging from the early returns, the Boeing Company's 777X will be a hit, garnering hundreds of advance orders by combining fuel-efficient materials and technology with a popular existing-plane design.
Now, for the United States, comes the crucial question: Where will it be built? In a decision with implications for the country's top export industry, a dispute between Boeing and the machinists union at the company's traditional base in Washington state has put the 777X up for grabs?not just among competing states, but among countries such as Japan with the expertise to build the plane's most sophisticated components.
That there is even a discussion is a sign of change in an industry that is increasingly willing to spread production away from legacy manufacturing plants. South Carolina and Alabama have built burgeoning aerospace hubs with the lure of a union-free, "right-to-work" atmosphere, while Boeing's 787 Dreamliner is built in pieces around the world.
Companies such as Europe's Airbus also have moved production away from long-standing sites, potentially putting the aviation industry on the same path that other manufacturers have followed by spreading supply chains around the world, relying more on subcontractors and reducing their reliance on any particular pool of labor.
As company officials revel in the pace of orders for the 777X, "I don't think there is any confidence at all" about where Boeing will build the plane, and in particular its massive, high-tech wings, said Dan Swank, a union steward with the International Association of Machinists District 751. "They may hate the union badly enough" to take the work elsewhere, he said.
Boeing has said it would decide by early next year how to organize production for the 777X, a next-generation version of the 777 airliner that is the workhorse of many international carriers.
The recent Dubai Airshow emphasized the plane's appeal. Boeing received orders for as many as 200 of the jets?which cost about $350 million each?from fast-growing United ArabEmirates Airline alone, a company that has tapped economic growth in Southeast Asia and positioned Dubai as a global transit point. Emirates and two other Gulf-based carriers?Qatar Airways and Etihad Airways?are fueling what Boeing and industry analysts forecast as booming demand for perhaps 35,000 new planes over the next 20 years.
That should be good news for the United States. Boeing is a top global aerospace company and is perhaps the largest single exporter in the country. Its non-U.S. sales last year exceeded $44 billion, more than half of total revenue.
But, as Washington state officials note, recent developments in the industry mean that the location of the associated jobs is no longer a certainty. In an earlier era, said Alex Pietsch, director of the state's Office of Aerospace, companies like Boeing concentrated production in locations where they were near key suppliers, a trained labor force and adequate ports and other infrastructure.
But look to Alabama, where there's a final assembly line for Airbus taking shape in Mobile. Major components of Boeing's Dreamliner are built in Japan and Italy, then sent to South Carolina and Washington State for final assembly.
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