Though expected, the decision announced yesterday by Boeing to cease 717 jet production is a heavy blow to commercial airplane workers in Toronto and Long Beach, Calif. The Boeing plant in...
Though expected, the decision announced yesterday by Boeing to cease 717 jet production is a heavy blow to commercial airplane workers in Toronto and Long Beach, Calif.
The Boeing plant in Toronto will close down this year. And though Long Beach will retain production of the C-17 military cargo plane, a long history of commercial jet-making in California will end in 2006.
A total of 860 workers are employed on the 717 program, according to a Boeing internal document obtained by The Seattle Times. About 350 are in Toronto, where the wings for the 717 are made. The rest work on the final assembly line in Long Beach.
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The 717’s demise also means that Boeing is virtually ceding the market for airplanes with around 100 seats to regional jetmaker Embraer of Brazil.
The writing was on the wall for Boeing’s 717 in December 2003 when Air Canada, which had been considering a big 717 order, chose instead to spend $2.7 billion on 90 regional jets from Embraer and Bombardier of Canada.
The 717, Boeing’s smallest jet, is a 106-seater that was originally a McDonnell Douglas derivative of the stalwart DC-9. After the merger with Boeing in 1997, all other McDonnell Douglas commercial programs were canceled.
The production line in Long Beach pioneered the moving assembly line. Apart from the wings, fabrication of the airframe was almost entirely outsourced to risk-sharing external suppliers, foreshadowing the way of the future for Boeing.
Boeing said it will take a charge of approximately $340 million pre-tax, or $0.27 per share, attributable to the closure decision. This includes payments to supplier partners for termination.
The jet’s future has been on the line ever since the Boeing merger. The 100-plus-seat market has always been a difficult niche. The 717’s status as an orphan, without any commonality to the rest of the Boeing product line, also weighed against sales.
In the end, the 717 production line will close for good in June 2006 with a sales total of only 155 jets, more than half of those to one customer, AirTran Airways.
All of the people in the Toronto plant are losing their jobs. The plant will shut down by year-end.
“People are pretty devastated,” said Doug Tyler, chair of the CAW Canadian Auto Workers local that represents production workers. “The last wing is to be shipped by mid-July.”
The average age of Tyler’s members is about 53. Many have a quarter century and more of service. Much of the historic Toronto site, which once saw the building of Lancaster bombers and Avro fighter jets, has already been sold off and the buildings ripped down, Tyler said.
In Long Beach, many of the final assembly-line workers have long service and will be able to exercise their seniority rights to move over to C-17 production, across the airfield in Long Beach.
Union leaders hope that attrition in the next 18 months will minimize layoffs in California.
“We’re sad to see it,” said Bill Schultz, president of UAW Local 148, who represents about 300 production workers in Long Beach. “[Southern California] used to be a mecca of commercial aerospace. It’s truly the end of an era.”
Most of the Boeing commercial airplane site in Long Beach has already been cleared and sold for development. In place of the aircraft buildings once painted with the Douglas insignia, a mix of offices, commercial development, housing, retail stores and a hotel is planned — Douglas Park, it’s called.
No decision has been made on the future of the 717 building.
The rise of regional jets sped the 717’s end.
Regional jets are smaller airplanes, typically viewed as commuter jets between small airports and bigger hubs. But those jets have gradually been growing in size and comfort.
Embraer now offers four sizes, ranging from a basic 70-seater to the 108-seat E-195, currently in flight trials.
Successful discount airline JetBlue, previously an all-Airbus customer, made a defining $3 billion order for 100 Embraer 100-seat E-190s in 2003.
Embraer may have the field to itself.
Bombardier, which makes only smaller regional jets, is in financial trouble; the president and chief executive both abruptly resigned last month.
And Airbus is not selling any better than Boeing in this niche.
Because the 107-seater A318 is in the same family as the successful A320, Airbus has no need to close the production line. But it delivered only 10 A318s in 2004.
Both the A318 and the 717 are relatively heavy for their seating capacity and costlier to buy and to operate than regional jets.
The E-190 sells for about $30 million, the 717 for $40 million.
Boeing still has the 110-seat 737-600, made in Renton. But that’s a scaled-down version of a longer, heavy, more costly jet, and Boeing doesn’t sell many.
“Shrunk planes never are good,” said Adam Pilarski, an industry analyst with Avitas and, until the 1997 merger, McDonnell Douglas’ director of strategic planning at Long Beach.
John Wolf, formerly an executive vice president at McDonnell Douglas and program manager of the 717 when it originally launched, now lives in retirement in Bellevue.
Wolf views the 717 not as a short-term failure but instead as successor to Douglas’ DC-9.
“That airplane went into service in the mid-1960s. It’s been in production as a DC-9, or an MD-80, or an MD-90, or now a 717,” said Wolf. “It’s really been a continual evolution and to be in production for over 40 years is really quite unusual.”
Dominic Gates: 206-464-2963 or email@example.com