Boeing Addresses Concerns Over China Plant
September 22 2015 - 7:10PM
Dow Jones News
By Jon Ostrower
Boeing Co. sought to assuage employee concerns over its plans
for a new plant in China that was expected to be announced as part
of the visit by Chinese President Xi Jinping to a company factory
on Wednesday.
The new plant would be Boeing's first big manufacturing facility
overseas, and would mark a milestone for its presence in China,
which is fast becoming its most important market.
The facility is expected to handle only final steps in
completing work on 737 single-aisle jets ordered by Chinese
customers, according to a person familiar with discussions on the
venture.
China accounted for roughly a quarter of Boeing's single-aisle
jet deliveries this year and is expected to claim a large share of
future orders, but the company has lost ground in recent years to
Airbus Group SE, which delivered the first of its rival A320 jets
from an assembly plant in Tianjin in 2009 and now claims around
half of the Chinese market.
The prospect of Boeing moving some work to China such as
painting jets and completing their flight tests has riled Boeing's
unions.
Boeing hasn't yet announced the planned facility, but Ray
Conner, chief executive of its commercial airplanes unit, alluded
to it Tuesday in an internal memo viewed by The Wall Street
Journal.
"We are in important discussions with Chinese partners about our
strategic partnership in China and also possible sales agreements,"
Mr. Conner said. "I want to assure you that agreements we may reach
with our Chinese partners will not result in layoffs or reduce
employment for the 737 program in Washington state."
A location for the planned facility has yet to be selected, but
it would install seats, in-flight entertainment systems, and some
galleys and lavatories, as well as the custom paint job for each
airline, said the person familiar with the plans. Each jet will
then be flown on production flight trials before delivery. Because
it will take several years to establish, The facility will mostly
handle Boeing's new 737 Max jets, which begin delivery in 2017.
Airbus has assembled more than 200 jets in Tianjin near Beijing
and is also building a completion center in China for its larger
A330 planes--work it promised as part of a deal for up to 75
aircraft.
While China has become its single-largest growth market, Boeing
has resisted siting an assembly plant there to retain the
efficiencies of its existing plant in Renton, Wash., and to avoid
disturbing its often strained labor relations.
"Any shift of aerospace jobs from our bargaining unit or
Washington state causes grave concern," the bargaining unit for the
International Association of Machinists and Aerospace Workers in
Seattle said in a statement last week.
The lure of the China market has already led other large U.S.
capital goods makers such as Caterpillar Inc. and Joy Global Inc.
to assemble equipment there. General Electric Co., which makes
engines for Boeing jets, last week said it would move final
assembly of some power turbines to China from the U.S., citing the
loss of financial sales support from the Export-Import Bank. Boeing
and GE have led the battle to reauthorize Ex-Im, which has been
closed to new business for almost three months.
While Chinese firms are already big suppliers for Boeing and
Airbus planes, previous efforts to deepen ties with its aerospace
sector have floundered. McDonnell Douglas opened a facility near
Shanghai to assemble its MD-80 jets in the mid-1980s, but Boeing
curtailed the effort following its 1997 merger with McDonnell.
China is now investing heavily to develop its own passenger jet
industry, and though the state-backed Comac C919 plane includes
engines from a joint venture between GE and France's Safran SA and
parts from other Western suppliers, it is years behind
schedule.
Write to Jon Ostrower at jon.ostrower@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 22, 2015 19:55 ET (23:55 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
Boeing (NYSE:BA)
Historical Stock Chart
From Apr 2024 to May 2024
Boeing (NYSE:BA)
Historical Stock Chart
From May 2023 to May 2024