Boeing talks up future in Puget Sound region

FARNBOROUGH, England — Top Boeing executives at the Farnborough Air Show offered encouraging words Monday about the future prospects for designing and building airplanes in the Puget Sound region.

Pat Shanahan, vice president in charge of airplane production, had good things to say about the Renton narrow-body-jet plant, considered — not least by many of the workers there — as the most likely to start fading away once the 737 is replaced.

"I love Renton," said Shanahan, who once managed the 757 assembly line there and helped develop the lean moving line that is now the model for every Boeing jet program. "The 10,000 people down there are a strategic asset," Shanahan said.

"The basic foundation of our production system, its genesis, is out at the Renton facility."

Boeing executives periodically have chosen to remind the people of Washington that the next new airplane after the 787 doesn't have to be built in the Puget Sound region.

That message was rammed home last year when the company chose Charleston, S.C., over Everett for a second 787 final-assembly line.

Renton is seen as particularly vulnerable.

Stores, restaurants, apartments and a cinema now sit on what used to be Boeing property by Lake Washington.

But maybe Renton doesn't have to assume the worst. Since that Charleston decision, Boeing execs have talked more softly about the region.

Commercial-airplanes Chief Executive Jim Albaugh, without committing to building the next plane in the Puget Sound region, has said that would be his preference.

Asked at Farnborough whether he has the engineering resources needed if he decides to put a new engine on the 737 and perhaps to revamp or replace the 777, Albaugh said he wants to find new work for the thousands of engineers who for the past six years have worked intensively on the new 787 and 747-8 jet programs in Everett.

"The last thing we want to do is have them go out the door because we don't have work for them," he said.

On Boeing's next jet, he said, "the outsourcing pendulum is going to swing back. We will not be outsourcing as much as we did on the 787. We want to de-risk the supply chain as we go forward with new airplanes."

Asked whether Boeing might ever do final assembly outside the United States, he said, "we have not considered that to date."

"We've got a big investment in Puget Sound. ... We have great personnel. I think that's gonna be the area we look at first in terms of where we do final assembly."

Then he added: "But I won't rule out that in the future we could do final assembly someplace else."

Shanahan, pressed further about making a commitment to building the next plane in the Puget Sound area, also declined to make an ironclad statement.

"There's just uncertainties about what the new product is," he said, adding, "Management is committed to Renton. We absolutely are."

747-8 delivery

could shift to 2011

Like the 787, the 747-8 — Boeing's new larger version of its venerable jumbo jet — still is scheduled to be delivered this year.

But Albaugh admitted Monday that, like the Dreamliner, the 747-8's delivery may slip into next year.

Airplane programs Vice President Shanahan said the reason for the potential delay is that problems with the design configuration require "enhancements to the flight controls" and "some new flight tests we hadn't originally planned."

"We have different loading conditions that we need to go fly to certify the structural capability," Shanahan said.

And because of the addition of new instrumentation on the test airplanes for those tests, "some of our layups (on the ground) are taking longer."

Shanahan declined to say what specific problem had been identified.

"These extra flight tests put a lot of pressure on the end of the year" deadline, he said.

Boeing, Airbus

rack up orders

Airbus and Boeing announced 189 orders on the first day of the air show, more than double the total in the entire event last year in Paris, as leasing companies returned to the market after the recession.

Airbus won contracts for 122 aircraft worth $11.6 billion at list prices, while Boeing revealed 67 orders valued at $7.5 billion, according to Bloomberg's tally.

Boeing secured commitments for nine planes at the 2009 Paris show, which alternates with Farnborough each year, compared with 69 for its European rival.

Leasing companies led by General Electric's GECAS unit accounted for 151 of Monday's contracts, their comeback eclipsing business done by commercial airlines, among which Dubai-based Emirates placed the biggest order for 12 Boeing 777-300ERs worth $3.3 billion.

The Emirates order replaces a large narrow-body order from Dubai lessor DAE Capital. While it isn't new revenue for Boeing, it is good news for the company; Boeing can afford to lose some 737 orders from its big backlog, while the boost to the Everett 777 line is beneficial.

"Much was written about the leasing companies' demise, but not only have they survived, their portfolios have performed remarkably well," said Mike Cave, president of Boeing's finance unit.

"You're also seeing private equity come in and start up new leasing companies, so the aggregate appetite to be in the leasing business is as large as ever."

GECAS ordered 40 Boeing 737-800s and 60 Airbus A320s in Farnborough with a value of about $8 billion, while Steven Udvar-Hazy's Air Lease Corp. bought 51 Airbus single-aisle jets worth about $4.4 billion.

Air Lease will buy about 50 additional planes from Boeing, according to two people who spoke on condition of anonymity because the agreement has not been made public.

Bloomberg News contributed information about orders placed at the Air Show.