Wednesday, June 3, 1998 - Page updated at 12:00 AM

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Boeing Plans To Phase Out MD-11 -- Some Layoffs Likely At Long Beach Division

Seattle Times Business Reporter

With only three orders for MD-11 trijets booked so far this year and a backlog of just 22 orders and options for the airplanes, Boeing said today it will phase out the model by February 2000.

No Seattle-area employees will be affected, but up to 3,750 who work on the program in Long Beach, Calif., and several other sites will have to find new jobs. Some layoffs are likely, said Ron Woodard, president of Boeing Commercial Airplane Group.

"The move is not a signal that Boeing is closing the production lines at its Douglas Products Division in Long Beach, Calif.," Woodard said. Boeing acquired the division last year when it purchased St. Louis-based McDonnell Douglas.

In addition to the MD-11 workers, about 1,500 employees are working at Long Beach on the new 100-seat 717-200, which will be rolled out in ceremonies next week. Others are doing some limited finishing work on 737s there, and Boeing is considering setting up a 737 production line in Long Beach for special models such as the Boeing Business Jet and aircraft that can be used to carry both passengers and cargo.

Woodard said the company will try to find new jobs for the MD-11's 3,000 workers at the Long Beach plant; 600 who manufacture wings in Toronto; and about 75 each in Salt Lake City and Melbourne, Ark.

The announcement comes as no surprise because of the lack of customer interest. The trijet, launched in 1986 as a successor to the DC-10, never has been a consistent seller, with only 178 delivered through the end of April. That compares with a tally of about 1,300 for the larger 747 produced at Everett. The MD-11 also competes with Boeing's popular new 777, its 767s and with Airbus Industrie's A330-340 widebody jets.

Woodard announced in January that Boeing would close the MD-80 and MD-90 narrow-body lines next year. He said at the time that continuation of the MD-11 program would depend on new orders. The company thought there might be more demand for freighter models, but that hasn't happened.

"Despite our best marketing efforts, it became clear to us that there simply was not enough customer interest in either the passenger or freighter versions of this airplane to justify keeping the production line open," Woodard said.

Closure of the MD-11 line will not result in a separate charge against earnings, Woodard said, though some adjustments will be reported in second-quarter operating earnings. The company will continue to provide parts and support services as long as the airplanes are in service.

The brunt of the job cuts at Long Beach will be felt about a year from now. New work on 737s there could absorb some of the MD-11 workers, as well as those from the MD-80 and MD-90 programs. MD-11 workers at other sites and at suppliers will begin feeling the squeeze earlier, Woodard said. That's because of the long lead time for parts.

He said the company intends to place additional work at its Salt Lake plant. Boeing also is looking at the possibility of sending more temporary work to Toronto and is reviewing options for the Arkansas plant.

In Toronto, Boeing Canada President George Capern said the MD-11 phaseout will leave the plant with almost no contracts with Boeing.

"The plant will be phased out - unless something dramatic happens," he told The Associated Press. He said Boeing likely will choose to use other more modern facilities than the older plant in Toronto.

Boeing operations in Winnipeg and Arnprior, Ontario, are not threatened by the MD-11 phaseout.

Although Boeing said earlier this year it would transfer more than 1,000 employees who provide customer support from the Douglas division in Long Beach to Seattle, it has decided not to relocate most of them to minimize cost and disruption. That means customer support will continue from Long Beach.

Boeing has discussed the MD-11 line shutdown with California Gov. Pete Wilson and indicated a desire to work with the state to help trim the impact of any job losses, The Associated Press reported.

Polly Lane's phone message number is 206-464-2149. Her e-mail address is:

Copyright (c) 1998 Seattle Times Company, All Rights Reserved.


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