Everett has advantage in race for Boeing site

The Seattle TimesDecember 27, 2013 

The skills of Boeing’s Washington workforce salvaged the 787 Dreamliner program when other less-experienced locations let Boeing down.

The state has passed tax incentives for Boeing that no other can match.

And in existing infrastructure, Everett has just about everything on the wish list Boeing sent out to states nationwide that want to build its 777X jet.

According to most industry experts, Everett ought to be a shoo-in.

“Boeing’s request for proposals, as it has been reported in the press, describes Everett,” said Alex Pietsch, director of Gov. Jay Inslee’s Aerospace Office.

“If they are willing to spend $10 billion to reconstruct that, it’s an unnecessary cost when a proven facility is already in place.”

Aviation analyst Richard Aboulafia wrote recently that, if not for Boeing’s showdown with the Machinists union, Everett would have an open-and-shut case for building the next version of a plane it already builds.

“From a strict industry/business/economics/common sense standpoint, the alternatives are seriously inferior,” Aboulafia said.

Boeing said earlier this month it has whittled down the 54 bids it received from 22 states, but is not disclosing which remain on its short list.

The detailed outline that Boeing gave the states for 777X proposals, a copy of which was reviewed by The Seattle Times, included a conceptual map of a $10 billion facility showing a final-assembly bay, a wing fabrication and assembly building, a fuselage-assembly area, a cabin-interiors facility, a paint shop, a jet-delivery center and an office tower.

It also showed a rail line going right into the complex, a runway to accommodate large cargo jets, and a wide ramp for parking newly built planes. A seaport was listed as desirable.

Everett is missing only one item on Boeing’s list: An advanced manufacturing building in which to produce the 777X’s 114-foot-long wing, which will be made out of carbon-fiber-reinforced plastic composites.

But if Boeing doesn’t want the capital expenditure of constructing it, Everett offers the jet-maker a deal on that too.

Snohomish County, which owns Paine Field airport, has offered Boeing a site for the wing facility on the west side of the runway.

If asked, the county will develop the land, construct the building to Boeing’s specification, and then lease it to the company over a couple of decades to recoup its money.

The county did such a deal before, when Boeing built its $35 million Dreamlifter operations center for servicing the huge modified 747s that feed the 787 assembly line.

Boeing designed the operations-center building, which opened this fall. The county paid for its construction and gave Boeing a 20-year lease, with optional extensions out to 50 years.

Peter Camp, Snohomish County executive director, said Boeing is “very happy” with this financial arrangement.

The lease rates would have to be market rate, a requirement of the Federal Aviation Administration, which oversees airport affairs. But the same would be true at any alternative site, such as Salt Lake City.

Alternatively, Boeing insiders confirm that the company has explored the option of demolishing some of the older buildings just north of the current 787 and 777 assembly bays and putting a wing facility there on its existing property.

It might also choose to put some work in a large hangar at the south end of Paine Field that is now busy with 787 rework but due to be empty in time for the 777X.

If Boeing chooses either of those routes, all it needs is a building permit, and the city has made clear there won’t be any delay in providing one.

“We could probably turn around a permit in four weeks,” said Pat McClain, executive director of government affairs for Everett.

Anywhere other than Everett, the capital expenditure needed to create a new facility will be only the beginning of Boeing’s investment.

The productivity of a workforce building machines as complex as jetliners depends upon experience and is built up slowly over time.

The current 777 has become a cash cow with profit margins somewhere between 15 percent and 20 percent, thanks to incremental lean manufacturing improvements to the Everett assembly line, according to a senior Boeing engineer who asked for anonymity because employees are not authorized to speak independently with the media.

“It has taken a decade to nudge 777 margins to where they are today. Everett’s 777 line is a well-oiled machine,” he said.

He estimated that potential rival sites, even places such as California with a history of making large transport aircraft, could take as long as 10 years to get a 777 line up to the productivity level Everett has already achieved.

“Not all aerospace is the same,” the veteran engineer said.

In addition, an intricate supplier network has built up around Everett over the years that delivers parts exactly when needed.

For example, many of the lavatories and galleys for Boeing’s jets are supplied by JAMCO, just five minutes away from the assembly plant.

Any “greenfield” site missing such a web of suppliers must expect glitches in parts deliveries during the initial years of production.

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