Bidding for Boeing’s 777X: Long Beach pitches a skilled workforce
Boeing this week will narrow “down to a handful” its list of possible sites to build the 777X jet and its advanced composite wing. Washington is among 22 states that have submitted proposals. The Seattle Times in the next few days will report on several of the contending sites.
Seattle Times aerospace reporter
• 2,000 skilled Boeing workers with a legacy of building jet aircraft
• Large pool of manufacturers, aerospace companies
• Large Pacific port for delivery of fuselage panels from Japan
• C-17 assembly plant should be empty by 2016.
• State incentives: sales tax exemption and tax credits
• A high-cost state for taxes, energy and workers’ comp
• Strict environmental regulations
• Unionized workforce that struck in 2010
• Road route from port to plant is slow.
LONG BEACH, CALIF. —
Boeing has sold off the old Douglas Aircraft jet-assembly buildings next to the airport in Long Beach, Calif. Also sold is a vast swath of additional land where the buildings have been leveled, a testament to the desolation of a dead commercial-airplane manufacturing center.
Across the runway, Boeing’s only remaining factory here, the C-17 military cargo-plane assembly plant, is threatened with closure in 2015.
Yet at this bleak moment for Southern California aviation, Boeing’s nationwide competition to find a site to build its 777X jet has raised last-ditch hopes of a revival.
“It’s a big lift for California, but I think it can be done,” said Loren Kaye, president of the California Foundation for Commerce and Education, a think tank affiliated with the state Chamber of Commerce.
Long Beach has some key selling points as a site for building the 777X’s giant composite wing and assembling the plane.
After all, this is the only U.S. location outside the Puget Sound area that has a long legacy of building big airliners. It still has a core of about 2,000 experienced, highly skilled airplane-manufacturing workers.
Long Beach has a long runway and a massive port that could take delivery of 777 fuselage sections from Japan. And Southern California has a deep, diversified pool of manufacturing suppliers.
“L.A. County, even after the recession, is still one of the largest manufacturing centers in the country,” said Kaye. “We have lots of aerospace companies down there.”
Gov. Jerry Brown can arrange fast-track permitting to ease Boeing’s way through the state regulatory bureaucracy.
And when it comes to financial incentives for Boeing, Kaye said Brown can wrap sales-tax exemptions and tax credits into California’s 777X bid worth hundreds of millions of dollars.
California officials have not disclosed what sweeteners they included in the package that was due to Boeing by Dec. 10.
Jack Stewart, president of the California Manufacturers & Technology Association, praised Brown’s moves to improve the state’s business climate.
“For the first time, California is concerned about industrial investment,” he said, adding that he’s confident the Golden State’s 777X bid is “a very substantial and competitive proposal.”
The state, however, also has longstanding disadvantages to overcome.
“It’s been a difficult place to do business,” said Stewart. “I think we’re seeing some changes. But I would say California is still a high-cost state.”
It has higher taxes than most states. Workers’ compensation costs and energy costs are among the highest in the nation. Complying with California’s environmental regulations can be expensive.
Richard Aboulafia, aviation analyst with the Teal Group, scoffed at Long Beach’s chances of winning the 777X.
“They have a legacy Boeing facility there. They have a Pacific port,” he said. “Everything else is just awful.”
And there’s one more issue for Boeing: That skilled workforce is unionized.
Though the United Auto Workers (UAW) District 148 is weakened now, the most recent Boeing contract negotiations in 2010 ended in a monthlong strike.
“If the main motivation is to get away from the union, then a ‘right-to-work’ state seems pretty essential,” said Aboulafia.
On the ground in Long Beach, there is less space available to Boeing than is suggested by the glut of abandoned aviation facilities.
That big assembly building with a Boeing logo on the corner and topped by the historic “Fly DC Jets” sign?
Not available. Boeing sold the property in 2012. The new owner just leased it to Mercedes-Benz.
The vast empty acres across the road that used to house Douglas subassembly buildings?
Not available. Boeing sold that, too. About a third of that land was redeveloped into offices; the rest is awaiting office and hotel tenants.
Boeing retains no more than about 50 acres next to the runway. Still, that’s big enough for a new 777X wing-fabrication facility.
The existing C-17 main assembly building is the only place to potentially put 777X final assembly.
Both spots have logistical shortcomings.
Boeing’s guidelines to the states submitting bids described a rail spur directly into the 777X site as essential. There isn’t one now, though perhaps a nearby railway line could be extended — at considerable expense.
And the proposed road route from the port to the plant would be a challenge if used to deliver big airplane parts such as those fuselage panels. The route wends its way slowly for about 10 miles along busy arterial city streets.
Stewart, of the state manufacturers group, said the state has a fund that could be tapped for infrastructure improvements.
The major plus for Long Beach is the current Boeing workforce, including some 1,100 UAW skilled production workers.
Jim Snyder, chairman of the UAW bargaining committee, said the current union contract with Boeing has company-friendly elements compared with the Machinists union contract in the Puget Sound area: New hires get neither a traditional pension nor retiree medical benefits, and the union has agreed to flexible work rules.
After Boeing bought McDonnell Douglas in 1997, it closed down all the Douglas commercial-aircraft operations.
“Ultimately, two-thirds of our commercial-jet division was bulldozed,” Snyder said. “There was a fair amount of distaste” toward the company.
Now faced with everything closing, the union is ready to welcome Boeing back.
Snyder said the union has been asked if it would agree to extend its current contract, so Boeing wouldn’t face new bargaining in 2015. “We said, ‘When we get the terms and conditions, we’ll make a decision,’ ” Snyder said.
Yet Stan Klemchuk, president of UAW District 148, jumps in to add that “if an extension were offered, the membership would take it in a heartbeat.”
That’s a measure of the dire employment situation facing his members.
The closure of the C-17 plant is looming, and a substantial number of the workers are just shy of the 30 years of service needed to secure an early-retirement pension.
Curt Platt, a C-17 structure mechanic with 28 years at Douglas and Boeing, said management’s September announcement of the plant closure in 2015 shocked the workforce.
“Everybody is trying to figure out what they are going to do,” said Platt. “The reality is, people don’t believe (777X in Long Beach) will happen. I hope I’m wrong.”
Without the 777X, Long Beach City Councilwoman Gerrie Schipske said, the city’s heavy bleeding of middle-class jobs will continue.
“What we have in Long Beach are a lot of low-paying, minimum-wage, service-sector, fast-food jobs,” Schipske said.
“Boeing used to be the number one employer. We haven’t filled the gap.”
Training for the future
If Boeing were to choose Long Beach for 777X, it would need to hire thousands of new employees, which is why money for workforce training is a big part of every state’s bid for the work.
Long Beach City College recently discontinued its aviation-maintenance program.
But other nearby local vocational colleges do offer training in both aviation technology and composites.
Ten miles from the C-17 plant, at Orange Coast College in Costa Mesa on a recent afternoon, a group of young aviation maintenance technology trainees practiced their skills on old, discarded aircraft provided by McDonnell Douglas or Boeing.
Working in a Southern California aviation graveyard where large wing and fuselage sections of a DC-9, a DC-10, an MD-82, an MD-90, a 717 and various helicopters had come to their final rest, young trainees reaching for an aviation future carefully machined away corrosion from a wing.
When they get their certificates, jobs at airlines or at local aerospace firms such as Parker Hannifin will open up.
What about jobs building airplanes?
“I’ve heard about Boeing’s 777X,” said Kevin Tanamas, 25, who holds down a full-time job in a bakery while training at the college on very little sleep. “It would be a great opportunity.”
Dominic Gates: (206) 464-2963 or email@example.com