Untested South Carolina outpost is central to Boeing’s Dreamliner hopes

Wall Street Journal
Jon Ostrower
April 30, 2012

NORTH CHARLESTON, S.C.—It was just one airplane, but the Boeing Co. BA -1.11% jetliner that rolled out of an enormous factory here had a lot riding on it.

The 787 Dreamliner that left the assembly building Friday was the first plane completed at a plant that has shifted the dynamics of U.S. aircraft manufacturing and is pivotal to the company’s most ambitious production increase since Boeing started delivering jetliners in 1958.

The Dreamliner, with “Made with pride in South Carolina” emblazoned on its nose, was the first commercial jet built on the East Coast and the first assembled by a nonunion workforce. The 240-acre site here includes the first new jetliner assembly campus in the U.S. in more than four decades and Boeing’s first outside Washington state.

But with all those firsts comes risk, principally that North Charleston’s largely untested work force won’t be up to the task of churning out a model that is central to Boeing’s future.

The main building here is nearly a fifth of a mile long, capable of hosting all 32 indoor Olympic swimming events and three NFL football games under its roof simultaneously, with room to spare.

While smaller than Boeing’s Everett, Wash., factory—home to the primary Dreamliner assembly line and still the world’s largest building by volume—the North Charleston structure was constructed without support beams down the middle of the assembly bay, giving it the widest open space in any of the company’s facilities world-wide. It houses a horseshoe-shaped assembly line with five assembly stations to prepare, join, outfit, power and test the Dreamliner, with three spots available to park airplanes during a hurricane. The site also includes two other factories, which make the mid- and rear-body sections of the Dreamliner.

“They put all the learning from all the sites we have…and infused it into this facility,” said Jack Jones, general manager and vice president of Boeing South Carolina.

Perhaps the most distinctive thing about the North Charleston plant is its work force of more than 6,000, most of whom were on hand to chant, “We build jets” at Friday’s ceremony.

For decades, Boeing has relied on unionized machinists in Washington. The company’s Pacific Northwest tenure has seen generations of aerospace workers, many from the same family, pass down experience building some of the world’s most complex flying machines.

But the relationship between Boeing and its largest union has been tumultuous. The International Association of Machinists and Aerospace Workers’ membership, currently above 29,000 at Boeing, has voted to strike five times since 1977. The most recent walkout, in 2008, halted production for 58 days.

The plant in South Carolina, a right-to-work state, is a gamble that a less-experienced, nonunion work force will provide a strong supplement to Boeing’s core operations. The staff includes some management veterans from Washington; workers from Boeing defense sites, including some who worked on the now-retired Space Shuttle fleet; and contract labor. But it also includes trainees with no previous aerospace experience. Boeing has collaborated with the state to cultivate a work force from the region, with some new employees training for 26 to 43 weeks at nearby Trident Technical College.

“Whenever you go to a new site, obviously there’s uncertainty, there’s risk,” says Boeing Commercial Airplanes Chief Executive Jim Albaugh, but North Charleston employees “have exceeded all our expectations.”

Much hinges on getting these workers and the new plant in full swing. The 787, the first commercial jetliner to be built mostly from carbon-fiber composites, is the Chicago-based company’s most ambitious technological and industrial undertaking since it helped inaugurate the jet age a half-century ago. The project has suffered from supply-chain woes and design changes and billions of dollars in cost overruns. The first Dreamliner, delivered in September, was 3½ years behind schedule.

Boeing faces a steep challenge to make the 787 profitable. The company estimates it will have to deliver 1,100 Dreamliners before the program breaks even. It has received orders for 854 Dreamliners so far and put just 11 in customers’ hands.

To meet demand for all its planes, Boeing is increasing its overall production of jetliners by 40% to record levels, and South Carolina is central to that effort. By the end of next year, Boeing aims to build 10 Dreamliners a month, including three in South Carolina.

Mr. Albaugh on Friday said for the first time that North Charleston is designed to handle more, saying it could build as many as seven Dreamliners a month. The fuel-sipping model is sold out until the end of the decade.

Boeing’s main union initially fought plans for the North Charleston plant. The machinists persuaded the National Labor Relations Board to file a complaint last spring, two months before production was to start, alleging that Boeing had selected the plant as an illegal retaliation for the 2008 strike. The NLRB dropped the complaint following an agreement between Boeing and the union to build the next version of its single-aisle 737 Max at its unionized Renton, Wash., factory.

The South Carolina plant has faced other struggles, especially on the two smaller lines next to the main factory. Most recently, Boeing in February said one factory improperly installed spacers in the jet’s rear body. The error had to be repaired on completed planes, delaying deliveries of new ones.

South Carolina offered substantial incentives to secure an estimated $4.6 billion in annual economic benefits to the region. The state’s General Assembly passed an incentive package with an estimated value of at least $450 million moments before the company made its choice of location in 2009.

Boeing won’t pay local taxes on its facilities or the jet fuel it uses, says North Charleston Mayor Keith Summey. “We were willing to give up certain things to get to that point because the spinoffs that come from the aerospace industry really makes it worth it,” he says.

At Friday’s ceremony, Sen. Lindsey Graham told workers that South Carolina is just the third place in the world where such large jets are built, after Washington and Airbus’s facility in Toulouse, France.

“You have put us on the map of the world economy,” the South Carolina Republican said.

Write to Jon Ostrower at jon.ostrower@wsj.com

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