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Originally published Wednesday, July 8, 2009 at 12:00 AM

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Boeing's East Coast presence grows; Still-grounded Dreamliner begins taxi tests

Boeing's dramatic, billion-dollar move Tuesday to acquire the factory of a major 787 Dreamliner partner was forced by Vought Aircraft Industries'...

Seattle Times aerospace reporter

787 production in Charleston

Aft-fuselage manufacturing: Boeing said Tuesday it will buy this plant from Vought Aircraft Industries for $580 million in cash and forgiveness of $422 million in advance payments from Boeing that Vought was due to repay. The facility builds the two rear fuselage sections of the 787 and joins them together. Production workers at the plant voted narrowly last year to join the Machinists union.

Fuselage integration and testing: Known as Global Aeronautica, this plant joins the two midfuselage sections built in Italy by Alenia to a fuselage section built by Kawasaki and a center wingbox built by Fuji in Japan. The two resulting cylindrical assemblies then are flown to the 787 final-assembly plant in Everett. Vought sold its 50 percent stake in this plant to Boeing in June 2008 for $55 million, making it a Boeing-Alenia joint venture.

Sources: Seattle Times archives, company reports

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Boeing's dramatic, billion-dollar move Tuesday to acquire the factory of a major 787 Dreamliner partner was forced by Vought Aircraft Industries' unwillingness to invest further in the plant and its inability to find another buyer for the operation.

However unplanned, the upshot is Boeing Commercial Airplanes for the first time owns substantial aircraft-assembly facilities on the East Coast.

The acquisition of the 787 rear-fuselage plant in Charleston, S.C., from Texas-based Vought will cost Boeing more than $1 billion.

The figure includes $580 million in cash, plus $422 million in forgiveness of advance payments Boeing made to Vought that were to be repaid when planes started being delivered.

Coming a year after Boeing bought Vought's share of the adjacent midfuselage assembly plant in Charleston, the latest deal means a sizable part of Boeing's strategic Dreamliner outsourcing plan is now reversed.

The 342,000-square-foot rear-fuselage plant and the 334,000-square-foot midfuselage plant sit side by side on a 240-acre campus with space for more assembly buildings.

When the deal closes this fall, Boeing will acquire Vought's share of the long-term lease for the land.

This emerging Boeing complex raises the specter that future final assembly — either for a second 787 production line or for the next new plane after the 787 — could be done there instead of at Everett or Renton plants.

Boeing presented the move as aimed solely at strengthening the 787 program.

Boeing Commercial Airplanes CEO Scott Carson said taking back from Vought the 787's composite fuselage-manufacturing technology would enhance Boeing's in-house expertise.

"Integrating this facility and its talented employees into Boeing will strengthen the 787 program by enabling us to accelerate productivity and efficiency improvements as we move toward production ramp-up," Carson said in a statement.

Vought's Charleston work force was inexperienced and early production snags at the plant contributed to the program's delays and raised costs.

As the delays lengthened, Vought was left with little income and mounting costs. The company balked at the further investment needed to ramp up.

Explaining the sale, Vought CEO Elmer Doty said in a statement that "the financial demands of this program are clearly growing beyond what a company our size can support."

Dallas-based Vought is owned by the Carlyle Group, a private equity firm, which declined to sink further capital into the aerospace supplier and instead had been seeking to sell all or part of Vought for at least a year.

The 787 rear-fuselage plant was shopped around unsuccessfully to other potential buyers, including another major 787 partner, Spirit AeroSystems.

Spirit operates the former Boeing parts plant in Wichita, Kan., and manufactures there the 787's front-fuselage section.

Vought's Charleston plant employs about 550 people, about half of whom are contractors.

Boeing will inherit a labor contract covering the permanent Charleston production work force, which Vought negotiated last year with the International Association of Machinists (IAM) union.

Assembly workers at the plant build the 787 rear fuselage in two sections out of carbon-fiber-reinforced plastic composite, then join them together.

In the adjacent plant run jointly by Boeing and Alenia of Italy, three fuselage sections built by Alenia and Kawasaki and a wingbox built by Fuji are joined together, and wiring, ducting and other systems are installed.

Vought agreed to provide temporary support services to Boeing Charleston, including engineering help from several hundred Vought engineers based in Dallas. And Vought will continue as a supplier to other Boeing programs, including the 747.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

Copyright © 2009 The Seattle Times Company

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