Boeing to front costs for extended C-17 parts production
The Boeing Co. said Tuesday it will extend production of the C-17 Globemaster military cargo plane beyond the scheduled 2009 shutdown of the assembly line in Long Beach, Calif.
The aerospace firm said it will spend its own money to keep the production going, advancing parts suppliers with long lead times for the cost of parts for 10 planes not yet ordered.
Tuesday's announcement comes less than three months after Chicago-based Boeing notified its 700 suppliers, which employ more than 7,000 workers in 42 states including California, Missouri, Georgia and Arizona, of the 2009 shutdown. Nearly 350 company suppliers in California, employing up to 6,000 skilled workers, face an impact of some kind due to the closure. Boeing estimates that there are roughly 25,000 U.S. jobs tied to the C-17 production. According to California officials, C-17 production impacts the national economy to the tune of $8.4 billion a year with nearly $4 billion of the impact within California.
Boeing's change of heart came after conversations with Air Force officials, who said they want to decommission 30 aging C-5 Galaxy cargo planes and replace them with C-17s.
Analysts defined the conversations as a clear signal from the Air Force to buy more C-17s. Congress, who must approve any new purchases, has so far been reluctant. The House version of next year's budget includes $2.4 billion for 10 more C-17s, but the Senate version does not. To allow the purchase of the 30 C-17s, Congress would have to strike down a provision calling for the C-5s to be refurbished, not retired.
The C-17 is one of Boeing’s most visible projects, bringing in about $3 billion in annual revenue. The company has delivered nearly 75 percent of 209 orders, including those for the United Kingdom, Australia and Canada. Production and delivery continues on the remaining aircraft under order. Unless further orders are placed, the last plane will roll off the former McDonnell-Douglas assembly line in Long Beach in October 2009 and Boeing will lose the parts money it plans to advance. The plane is the last major aircraft still under construction in Southern California, once a world center of aerospace production.