The slowed manufacturing rate for Boeing’s fading 747 jumbo jet has prompted major supplier Triumph to cut its losses and exit the program. Boeing will transfer the work of making fuselage panels to its Macon, Ga., plant and is putting other Triumph work on the 747 out to bid.
The slowed manufacturing rate for Boeing’s fading 747 jumbo jet has prompted a major supplier to cut its losses and exit the program.
Boeing said Thursday it has agreed to take over the work of building 747-8 fuselage panels from supplier Triumph Group.
Beginning in 2018, the huge aluminum-panel assemblies — the largest being 18 feet wide by 55 feet long — will be built at Boeing’s facility in Macon, Ga. That means the panels for the next Air Force One presidential plane may be made there.
The Macon site now only does military work, but that is ending next year.
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Boeing will now transition Macon to become part of its fabrication division with a focus on building metal fuselages.
The company said it will invest approximately $80 million in employee training, tooling and building modifications at the facility over the next three years.
Triumph will also offload its other 747 structures work, including building the tail, floor beams and flight surfaces.
All that is “currently being competitively bid to selected suppliers,” Boeing said.
It expects to announce additional new sourcing decisions later this year.
The 747 fuselage panels have been made for many years in a Hawthorne, Calif., plant south of Los Angeles dedicated exclusively to 747 parts production.
Triumph acquired the plant when it bought Vought Aircraft in 2010. Vought had purchased the plant from original 747 supplier Northrop.
In January, after Boeing cut the 747-8 rate for the third time in less than two years — production is now at 16 jets per year, down from 24 jets per year in 2013 — the loss of revenue prompted Triumph to declare a forward loss of $152 million.
“As close to the profitability edges as we were, any reduction in rate put us into a loss position on the contract and require a charge to be taken,” then-Chief Executive Jeff Frisby explained on an earnings call with Wall Street analysts. (Frisby resigned in April and was replaced on an interim basis by Triumph co-founder Richard Ill, who remains at the helm.)
Boeing spokesman Larry Wilson said the jet maker has been talking with Triumph about taking over the work since it announced the latest rate cut last December.
The 747-8, the latest and largest model of the venerable jumbo jet that first flew in 1969, has just 29 unfilled orders left on the books.
That’s not enough to keep the Everett assembly line going at the current rate into 2018.
Despite a prolonged downturn in the air-cargo market, which is where most 747 sales are expected, Boeing insists it still has hopes for further orders.
In a statement Thursday, Bruce Dickinson, 747 program vice president, called the 747 “an iconic airplane and a key part of our product strategy.”
And in December, trade journal Inside Defense reported that the Pentagon will order several 747-8s for delivery in 2018 to replace the president’s current Air Force One planes.
However, absent new commercial orders, Boeing will have to cut the production rate further to stretch out production into that time frame.
Meanwhile, taking the fuselage panel work in-house provides a lifeline for the Macon facility, which just a couple of years ago employed 500 people.
Work there making fuselage panels for the giant C-17 military transport ended in January when that program closed.
The site’s remaining defense work on replacement-center wing sections for the A-10 Thunderbolt, and subassemblies for the CH-47 Chinook helicopter is scheduled to be complete in mid-2016.
Boeing said Thursday that “staffing will be temporarily reduced” as the site transitions to the 747 work for 2018, “at which point it will employ up to 200 people.”
Boeing said it will equip the 220,000-square-foot Macon facility with new tooling and equipment, installing “a new advanced manufacturing-production system (that) will reduce the time to produce fuselage panels.”
Kent Fisher, vice president of supplier management at Boeing Commercial Airplanes, said that could create future opportunities for further manufacturing work beyond the 747.
“While our initial focus is on production of fuselage panels for the 747, the Macon facility provides us a high-quality alternative for structures work currently outsourced to other suppliers,” Fisher said. “It’s also an attractive option for developing new airplanes.”