Boeing's Long Beach Plant Gets Set For 737 Work -- Moves Meet Political, Production Goals

LONG BEACH, Calif. - Managers at the former Douglas Aircraft plant in Long Beach, Calif., are preparing for a radical transition: They will say goodbye to the company name they've known for 75 years and begin operating simply as a Boeing division this fall.

That's just a small sample of changes ahead at Douglas and throughout Boeing. Today, Boeing announced a delicate combination of strategic "consolidation" moves to wring greater efficiency from the massive 238,000-employee aerospace-and-defense enterprise brought together through its purchases of McDonnell Douglas and Rockwell Aerospace during the past two years.

In the high-altitude view, those changes must rebalance where Boeing manages and makes its jetliners, fighter planes, satellites and other products. The moves also must preserve labor peace and political support from Missouri to Southern California. And they should enable Boeing to shrink its work force and, so, its costs.

As Boeing rejuggles, closing laboratories and poorly used plant space, "jobs will be reduced in the process," says Boeing Chairman Phil Condit, but lower costs mean "a stronger, more competitive company," with more jobs over the long haul. He restated Boeing's plan to cut as many as 28,000 jobs from the total 238,000 work force by the end of 1999 and noted "additional reductions are expected" in 2000.

Jobs are at the center of Boeing's contentious decision to move limited production of Boeing 737s to the former Douglas site at Long Beach from overloaded operations in Renton. All but one of the McDonnell Douglas airliners being made in Long Beach are being phased out.

The production facility now will be known only as Boeing's Long Beach Division. It had been known as the Douglas Products Division.

The move shows both the potential and the fine balance that Boeing must strike in its extensive operations. Boeing gains a sorely needed overflow operation to ease strain on its Puget Sound-area plants. It also demonstrates to California's numerous representatives in Congress that it is not closing down a cherished piece of their industrial heritage.

For Boeing's top commercial-airplane production managers, the decision couldn't make more logistical sense.

Moving the business-jet and freighter versions of the 737 to Long Beach would reduce the variation of models moving down the Renton lines, thus decreasing chances for disruption.

"We're in trouble here on this line," said Fred Mitchell, executive vice president for production at the commercial-jet headquarters in Renton. "We felt we needed another line, to take the variability out of it. The idea is to make the Renton line the most efficient we can."

Boeing also was attracted to Long Beach by the experienced hourly work force and found that tooling costs were significantly below projections. Analysts estimate the total cost to convert the Douglas factory into a 737 assembly line at about $100 million. Some Boeing executives say it would cost a fraction of that - with total costs in the low tens of millions.

After working on a few business-jet versions of the 737 during the fourth quarter of this year, Boeing plans to start assembling two business jets a month in Long Beach. Rates are set to increase as Douglas workers become more familiar with the Boeing production system.

Workers will build three planes a month by mid-1999, and the factory will have the capacity to build up to five 737 models a month, if Boeing decides to take production to that level.

Still to be worked out is the mix of models to be assembled at Long Beach. The business jets will be followed by 737s for airline customers. Several airlines, including Delta, American and Southwest, have expressed interest in having Douglas workers build their 737s.

Some Navy versions that can carry cargo or passengers will probably be fed into the production stream there late in 1999.

Among Boeing's most delicate problems is that the unprecedented move of final-assembly work from Renton to another site has unnerved some labor-union officials and employees in Washington state.

In an internal memo distributed at Boeing today, Ron Woodard, president of Boeing's Commercial Airplane Group, sought to soothe those concerns. He noted that workers in Washington will assemble "80 percent or more of the order base" for 737s - and the employment-intensive production of big plane parts still will be done at traditonal sites such as those in the Puget Sound area and Wichita, Kan.

As of July 31, there were 1,017 unfilled announced orders for various versions of the 737.

Similarly, Boeing's other consolidation decisions - from those that move more space and satellite work to California, to another that declares St. Louis the lead fighter-jet production site for the future - have caused employee concerns as word of them has become public.

Employees worry that while the changes involve moving few jobs for now, the number of employees shifted or asked to move could increase dramatically over time.

Alan Mulally, chief of the company's defense and space group, said the company is making "hard choices" in the revamped business plan, but big cost savings will result.

For example, he said 25 percent of the company's laboratories will close and his division will clip 12 million square feet of plant space. The latter move will save $1.6 billion over five years, he said. In all, Boeing will close 21 million feet of space, including 9 million from commercial-jet operations.

Because many of the defense-and-space moves call for relocation of administrative and management work to California, analysts see Boeing as wisely helping offset political damage from the net decline in commercial-jet work there.

"Naturally, it helps Boeing's position from a political perspective to move some work to Southern California, even though there will be job losses," said Peter Jacobs, an aerospace analyst for Seattle-based Ragen MacKenzie. "Politically, California is the single most important state in the union."

Boeing will create at least 600 jobs - and perhaps as many as 1,000 longer term - at Long Beach by shifting the 737 work there. But thousands of jobs still will be lost there as Boeing phases out slow-selling Douglas-heritage planes such as the MD-80 and MD-90 before 2001.

At the new Long Beach Division of Boeing, 737 production could begin as soon as construction workers finish converting a central production building into a final assembly plant. Douglas managers say construction work could be completed as early as October.

The moves come as Boeing plans to increase production of 737s. The company will move first from 14 to 21 a month, toward an eventual total of 27. Higher rates are being studied, and executives want to relieve some of the strain on the production lines in Renton by building another in Long Beach.

In Long Beach, pumped-up Douglas managers have been planning for months for this day. Early on, they identified an assembly location in a facility known as Building 84, where half of the factory is used to assemble MD-11 widebodies.

Douglas engineers said they have kept costs low by borrowing Douglas equipment as well as keeping the tooling to a minimum. They will use an existing 20-ton crane to offload the fuselages and move them to the wing/body join area.

The most extensive construction work will be building a three-story support structure for the three key positions at the end of the assembly line, they said.

"These types of projects are a lot more fun than the other stuff," said Steve Lang, director of manufacturing operations for the Douglas division, referring to past layoffs and product cancellations. "This is an exciting opportunity."

Lang, who is overseeing the 737 project, said one of the division's big coups was finding a spare "wing/body join tool," one that was used for MD-80/90 airplanes. The costly tool is critical to joining the wing to the airplane body.

Having a spare tool was a key factor in Boeing's decision, said Mitchell, the Boeing production chief. The rest of the critical tools, such as drill and locator jigs, are small and relatively inexpensive.

The modular design of the 737 was another advantage. The fuselage and the flight decks are completed in Wichita and delivered to Long Beach for assembly.

Douglas workers will be mating a whole airplane to a whole wing, Mitchell said.

Renton will continue to build the 737 wings and the engine struts. They will be delivered to Long Beach by trucks. The fuselage will travel by train.

But equally important to Mitchell and other Boeing executives was the skill and experience of the hourly work force.

"There's no doubt about it," Mitchell said. "They understand how to build airplanes."

Stanley Holmes' phone message number is 206-464-2732. His e-mail address is: sholmes@seattletimes.com