Stakes Are High in Contest for Boeing 737 MAX Final Assembly

AIN Air Transport Perspective » November 28, 2011
Will 737 final assembly stay in the state of Washington?
All Boeing 737 final assembly now takes place in Renton, Washington.
November 28, 2011, 5:24 PM

To win final assembly of the planned Boeing 737 MAX, the state of Washington must take swift, bold action, says consultancy Accenture, which has analyzed the manufacturer’s potential return on investment (ROI) from competing sites in Alabama, California, Florida, Kansas, New Mexico, North Carolina, South Carolina and Texas. The Washington Aerospace Partnership lobby group commissioned Accenture to recommend how to improve and strengthen the state’s aerospace competitiveness.

Advantages listed for Washington include the local workforce’s high productivity and knowledge and a supplier network that could provide a faster ROI than could new assembly facilities. Offsetting disadvantages include higher long-term wage and related costs, a limited ability to produce required engineering talent and a perceived greater risk of strikes.

At stake in the contest to produce the 737 MAX are not only nearly 20,000 jobs and more than $5.5 billion of related total economic activity, according to Accenture, but the decision could also determine the future standing of Washington as a global aerospace hub, where some 89,000 people are currently employed at about 150 “aerospace-focused” companies. “If Boeing chooses [an alternative site to Renton], Washington’s aerospace cluster could weaken, creating a very uncertain future,” warned Accenture.

Washington has an established record of state- and local-government support for aerospace. Recent investments include funds for training, preferential tax rates, credits and exemptions, and changes to unemployment insurance and workers’ compensation programs, as well as dock, rail and road construction. Key state actions identified by Accenture to help Washington win 737 MAX final assembly and strengthen its general position in global aerospace include recommendations covering mechanics’ education and training, increased numbers of engineering graduates, expanded aerospace-related research, extended tax credits, improved infrastructure and support for management/labor collaboration.

To strengthen its bid for work beyond the 737 MAX program, Washington also must enact other Accenture recommendations “in the next 12 to 24 months.” These include: educational initiatives to increase student “engagement,” creation of an aerospace support coordination post within the state Governor’s office, and working with Washington’s U.S. senators and congressmen on funding and support for education, workforce development, training and research.

Washington is uniquely positioned to win the 737 MAX final assembly work, but must make immediate decisions to address targeted investments to secure its aerospace future, said Accenture. “The opportunity has far-reaching economic consequences [with] implications [for] Washington’s ability to compete for subsequent airplane programs,” it concluded.

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c. b. chang
on November 29, 2011 - 12:01pm

to avoid interruption of production lines, boeing should consider other sites for assembling 737max . washington may have many advantages over other sites but too much power concentrated on one local union is not good for business since boeing has to satisfy all customers not just labor.

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rengab
on November 30, 2011 - 12:50am

With the lessons of natural disasters like tsunamis, earthquakes, floods, etc, it behooves Boeing to spread its production and assembly facilities. If I were Boeing, I will locate the initial 737 MAX facility in Boeing Wichita to be near Spirit and maintain the Boeing workforce there. This will also protect the ramp up of the 737NG in the Washington area. As the 737 production transitions to the MAX from the NG, the Washington plants can then be transitioned to MAX production.

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