Dreamliner demand to rev up hiring in aerospace industry

The demand for the Boeing Co.’s new 787 Dreamliner aircraft will likely translate into five or more years of sustained job creation with the Charleston plant building its key components, according to an aerospace industry financial analyst.

Paul Nisbet, an analyst with JSA Research in Newport, R.I., said Boeing’s recent announcement that it is considering doubling orders for fuselage sections to be assembled in Charleston should inspire its subcontractors to “ramp up their hiring process considerably in coming months.”

Though a final decision by Boeing isn’t expected until summer, the announcement effectively means that workers at the Charleston plant, now under construction and expected to be completed in July, will hit the ground running from the first day of operation.

The plant, a joint venture between Dallas-based Vought Aircraft Industries Inc. and Italy’s Alenia Aeronautica, is currently scheduled to deliver its first fuselage to Boeing in April 2007.

The partnership will assemble most of the 787 fuselages at the Charleston facility, although the planes will be completed in Washington state. Vought spokeswoman Lynne Warne said the manufacturing ramifications of a decision by Boeing to increase its orders “are an unknown at this time.” However, “Vought has a ‘life of program’ contract with Boeing on the 787 Dreamliner and will fully support the program’s production requirements,” she said.

Boeing currently has 291 firm orders from 23 customers, as airlines are rushing to replace their aging aircraft with more fuel-efficient and passenger-pleasing models.

Nisbet predicts orders will surpass 500 before the first plane is ever delivered, but that presents the company with a problem: As more planes are ordered, their delivery dates stretch farther into the future, possibly beyond a point potential customers will be comfortable with.

“Frankly, I’d hate to be a Boeing salesperson at this point because it’s getting to the point where you can’t sell anything that can be delivered before 2011 or 2012,” Nisbet said.

Industry analysts had initially anticipated that Boeing would deliver about 36 planes in 2008 and about 56 in 2009, Nisbet said. “The question was, how high would the production numbers go after that?”

But as orders for the passenger plane kept rolling in, the company soon realized that it is effectively sold out of 787s through 2011, said Boeing spokeswoman Yvonne Leach.

According to published reports, Boeing’s 787 program manager, Michael Bair, has said the company may have to boost annual output of the plane to 112 787s in 2008 and 2009 in order to keep pace with demand.

He also said that Boeing is reviewing whether to increase output beyond original targets starting in 2010.

None of these moves would be considered, Nisbet said, unless Boeing felt assured demand would sustain these production levels for two years or more.

“It just doesn’t pay to have your production numbers go up one year and come down the next,” he said.

What might all this mean in terms of employment numbers at the Vought-Alenia plant?

Prior to Boeing’s announcement that it may increase its production demands, Vought had anticipated the gradual hiring of approximately 350 people, most of them for manufacturing jobs, with the remainder being technical and other support positions.

Alenia, rechristened Global Aeronautica for the joint venture, had planned to hire approximately 250 people for its integration center, with Boeing adding another 50 people to support the operation.

Although Nisbet cautions that aircraft manufacturing is a cyclical business, he said if history is any guide, then Vought and Alenia initially will have to “hire more people more quickly and hire way more people than they’re ultimately going to need down the road.

“But you need to do that when you’re just starting up,” he said. History also suggests the workforce will remain fully employed for four or five years and gradually begin to decline as greater factory efficiencies are achieved and orders for the 787 begin to come down, Nisbet said.

But in the case of the 787 Dreamliner, the world’s first passenger plane constructed entirely of composite material rather than aluminum, history may be a bit harder to predict, Nisbet said.

“Past aircraft introductions have played out this way, but whether that’s true when it comes to composites, I’m not so sure,” Nesbit said. “This is a whole new era in manufacturing, so we’re talking about some truly uncharted waters.”