The Exact Opposite of the Global Supply Chain

Well, there’s been a lot of talk about how Boeing’s global supply chain for the 787 has or has not worked. And a lot of folks have been thinking that, in the future, Boeing probably won’t rely as much on shipping various parts from vendors around the world without any quality control until final assembly. But I have a feeling that not too many people thought that they’d go in the exact opposite direction!

Which is what seems to be under discussion.

Crucially, the new plane’s supply chain will be radically different from the Dreamliner’s — most likely a cluster of major supplier plants near Boeing’s final-assembly site. Such a supersite would transform the manufacturing landscape of this state — or another one, if Boeing chooses to go elsewhere…Supplier partners would build wings, fuselage and other parts of the airframe near the final-assembly line. That could mean, for example, a major Mitsubishi facility making carbon-fiber composite wings in Washington state — or maybe in South Carolina.

There’s about 30 interesting things with regard to this model, not the least of which being that Boeing would be doing the region’s recruitment work for us. Why bother spending money on going out and getting new aerospace companies to move to the region with the promise that general proximity to Boeing will make them more attractive as a supplier? Instead, just have the company require their vendors to move not only to the region, but actually to the same campus…then all you do as economic development professionals is sit back and let the tax revenue roll in.

Of course, until that actually happens, the exact opposite is true for economic development folks, in that you have to convince Boeing to locate that “supersite” here in the region. Another fascinating part of the story is that the new 737 won’t be built in Renton – contrary to what we’ve discussed before – both because there’s not enough space there PLUS the fact that Boeing will still be making the old 737 there for at least another 15 years.

The single-aisle 737 plant in Renton isn’t a good candidate for assembling the new plane, because for years both planes will likely be in production at the same time, Bair said. Piasecki said 737 production will continue at least through 2026. But the wide-body jet plant in Everett is a possibility if the final-assembly site and potentially the supplier factories around it are to be in Washington, he said.

The Air Force Tanker win was a huge one for the region, but even before the last celebratory balloon deflated we knew that we couldn’t just rest on our laurels. Keeping aerospace manufacturing a strong part of our region’s economy is a task that’s never done, and groups like the Washington Aerospace Partnership are going to mobilize right away to fight for the new 737 to be built here.

Whoever said that geography doesn’t matter in today’s economy is w-r-o-n-g. Talk about industry cluster theory – the idea that there’s an economic advantage to the geographic proximity of lead and supplier firms – taken to the full iteration! But at the end of the day, as it almost always is, this decision is going to be in large part due to what Boeing refers to as “predictability,” i.e.-whether or not the union is going to strike. If there’s labor peace, we’ll likely do production here. If not, South Carolina.

If you had any doubt about how big next year’s contract negotiation between Boeing and IAM will be, I think this probably helps you make up your mind…

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