Boeing’s top leadership will meet virtually Thursday morning, with executives logging in remotely from Chicago, Washington, D.C., and Seattle to formally make a decision on consolidating 787 Dreamliner production in a single location, according to several people with knowledge of the plans. (Read Thursday’s update on the decision here.)
Boeing’s choice of North Charleston, S.C., is all but sealed, the Wall Street Journal reported, citing unnamed sources, though the company declined to confirm that prior to the meeting.
The original 787 assembly site in Everett would lose the airplane for which the state first introduced massive tax breaks in 2004 that have since then saved Boeing billions of dollars. The latest state Department of Revenue data shows that Boeing saved $1.4 billion in the six years 2014 through 2019.
A win for South Carolina will be the latest blow to Boeing’s standing in the Puget Sound region, which has seen the industrial giant steadily move thousands of both engineering and production jobs to other regions of the U.S.
And the loss for Everett — as well as concern about the future of the massive complex, which before recent pandemic-driven layoffs employed about 30,000 well-paid workers— will reverberate throughout the city and the region’s economy.
With the 787 gone and the 747 jumbo jet production set to end in 2022, the Everett widebody jet final assembly building — long touted by Boeing as the largest building by volume in the world — will be left a giant, half-empty box.
Only the 767 and 777X lines will remain, both in low-volume production, with no new airplane on the horizon.
Jon Holden, district president of the International Association of Machinists (IAM), said his union until recently had about 1,100 people working locally on the 787 program, though by now that number is likely significantly lower after a round of layoffs this summer.
Gov. Jay Inslee, in a statement, estimated the consolidation in South Carolina would mean direct job losses in Washington of around 1,000. That would include not only Boeing employees on the 787 assembly line, in its fabrication and cabin interior shops, and in various support roles, but also small numbers of employees in Everett at suppliers such as Safran, which makes the 787 landing gear, and GE and Rolls-Royce that make the jet’s engines.
And the impact at Boeing goes beyond those 1,000 jobs. It means the entire future of Boeing in the region looks to be in decline while its East Coast manufacturing complex flourishes.
Economists and local government officials say the likely loss would be significant, yet wouldn’t bring the same level of economic catastrophe that have followed the embattled aerospace company’s misfortunes in earlier eras when Boeing was a more dominant factor in the state’s economy.
They warn that the decision will certainly compound the regional economic fallout from earlier Boeing crises, including the grounding of the 737 MAX and the drastic fall in demand for jets during the pandemic, which have combined to leave hundreds of jets sitting undelivered.
“It’s going to be a bad three or four years, if not longer,” warned aerospace analyst Scott Hamilton.
Hamilton’s bleak assessment was quickly confirmed at local businesses that rely on the daily rhythms of three shifts of Boeing employees — from drive-through espresso joints pouring early-morning cups of coffee to dive bars slinging late-night pints of beer — and are now bracing for what the next months could bring.
“Almost everyone who comes in here works at Boeing,” said Maria Liberta, a barista at High Flying Espresso, a drive-through a half-mile down the road from the Everett production facility, where jet planes adorn the menu and the coffee cup in the logo wears pilot’s wings. “That’s most of our regulars.”
Lawmakers were quick to denounce the possible decision to move 787 Dreamliner production and to issue warnings to Boeing if it follows through with the move.
“Boeing would be turning its back on the finest workers and the finest place in the world to build airplanes,” said Inslee, warning that a move could lead the state to take “a hard look at [Boeing’s] favorable tax treatment.”
Boeing “should not cut its Puget Sound workforce further without a real plan for retaining and retraining that skilled workforce,” added Democratic U.S. Sen. Maria Cantwell of Washington in a statement.
Like several other elected officials, she argued that the production line in Everett should be kept in place for the eventual recovery of the aviation sector. “We should be taking the opportunity now to prepare for a recovery in aviation demand by retaining a production workforce in Everett and keeping the supply chain hot and ready for higher production levels,” Cantwell said.
But economists and aviation experts warned against expecting a quick recovery. And Boeing CEO Dave Calhoun made clear in July, when he announced plans to study the consolidation, that it would be done for the long term, not just until 787 demand rebounds to the expected level of 10-12 per month. At present Boeing is completing only six Dreamliners a month between the two sites.
Hamilton and many economists were quick to note that any decision to move the 787 out of Everett would likely have smaller effects than earlier setbacks, such as the MAX grounding and Boeing’s recent announcement of 12,000 job cuts this year as the COVID-19 pandemic devastates travel and the demand for new jets.
But Hamilton said that the solid earnings of each typical Boeing worker help create “three or four indirect jobs” at other businesses.
Even before the most recent news about the Dreamliner, seven months of pandemic closures and previous rounds of Boeing layoffs had already decimated small businesses around the Everett complex.
Henry’s Donut, whose maple bars and apple fritters have long been a standby at Boeing staff meetings, is on the verge of closing one of its two branches for good, said Richard Ho, whose brother Huan Nguyen owns the shop.
Moving the Dreamliner out of Everett would be yet another blow, Ho said. Since March, sales are down nearly 40% year-over-year, and the brothers worry they may be out of business entirely before long.
Everett’s business ecosystem, in many ways, is dominated by Boeing, said mayor Cassie Franklin.
“There isn’t a business in Everett that isn’t impacted by changes at Boeing,” Franklin said. “When Boeing grows, Everett grows. When Boeing is making reductions, that pain is felt in every family, every small business.”
Recovery from the loss of the 787 won’t be fast, Franklin warned. Meanwhile, the city is partnering with local colleges to retrain displaced workers and is trying to draw new industries to Everett. Eventually, Franklin said, she’s confident that “aerospace will be back on a growth trajectory.”
The IAM’s Holden said Boeing’s leaders discount “the efficiency, quality and productivity” of the Puget Sound-area workforce. He cited a Teal Group study commissioned by the two major Boeing unions that found this is “the most cost-effective state to place work.”
Boeing’s decision ignores recently revealed quality-control lapses at Boeing’s facilities in South Carolina, he and others said. Eight 787s that were in service with airlines including Air Canada and United Airlines have been grounded since August and are still under repair to fix structural flaws in their aft fuselages, built in North Charleston.
Holden said management’s favoring of nonunion sites is shortsighted. “A lot of this is about control of the workforce,” he said.
Seattle Times reporter Jim Brunner contributed to this report.