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Wednesday, October 15, 2003 - Page updated at 12:00 AM

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Tail fin may be only key part of 7E7 made in Washington

Seattle Times aerospace reporter

Goodbye, Jet City.... Hello, Fin City?

As Boeing's plans for 7E7 components take shape, the only major part of the next-generation jet likely to be built in the Puget Sound region is the vertical fin on the tail.

The 7E7's nose and cockpit are expected to come from Boeing's Wichita, Kan., operation. The rest of the tail and the rear fuselage sections are to come from Boeing's partner Alenia Aeronautica in Italy and from Vought Aircraft Industries in Texas.

The forward fuselage and the wings are to come from Japan, wing edges, flaps and fairings from Boeing Winnipeg in Canada; passenger doors from Latecoere in Toulouse, France.

To be sure, the 7E7 could still have a Washington flavor; Everett and Moses Lake are still hoping to win the 7E7 final assembly.

But if Chicago-based Boeing's board of directors goes ahead with the plane, the 7E7 will be the most international product Boeing has ever made.

No wings for region

It will also be the first Boeing design whose wings — once considered the company's key engineering marvel — are made outside this region.

Though Boeing has identified its major global partners, it has not publicly disclosed how the work on subsections of the airplane is to be divided.

But employees familiar with the sourcing plan have confirmed that Boeing has settled upon its preferred allocation — between Italy's Alenia; Fuji Heavy Industries, Kawasaki Heavy Industries and Mitsubishi Heavy Industries, all of Japan; and Vought. This is all contingent upon suppliers coming up with substantial funding.

In Boeing's state-of-the-art Frederickson plant near Tacoma, which makes wing and tail sections for the 777, the factory grapevine has already conveyed the disappointing news that the 7E7's horizontal stabilizer (the winglike parts of the tail) will be outsourced.

Boeing says it has to work with global partners to find the best technology available, get help with financing and help win orders in important markets.

John Douglass, president of the Aerospace Industries Association (AIA), the industry's main lobbying group, cited the relentless trend toward globalization in manufacturing as something Boeing has no choice but to follow.

"It wouldn't surprise me if significant portions of Boeing's planes are to be built in Asia or wherever they can get a high-quality, low-cost supplier," said Douglass. "I don't see anything new here. This trend is going to continue."

But the prospect of a 7E7 made largely from components outside the United States drew a strong reaction from the leadership of the International Association of Machinists (IAM), a union that has long campaigned against U.S. companies sending jobs abroad.

"To off-shore much of a new airplane is tantamount to a total betrayal of this country, its workers, its citizens and its taxpayers," said Thomas Buffenbarger, the IAM's international president. "Boeing will claim it's a global company," he said. "It's a global company that's been supported by U.S. taxpayers forever."

Snap-together assembly

The trend toward plane making as a global enterprise has been 30 years coming.

Japanese suppliers, for example, currently supply most of the fuselage of Boeing's 777 jet. But those parts are shipped to Washington as panels. Machinists in Everett put the panels together into barrel sections prior to final assembly and subsequently install all the airplane systems.

On the 7E7, finished subassemblies will arrive complete with electronic and hydraulic systems for snap-together assembly in as few as three days. All of the airframe buildup and system-installation work goes to the suppliers, not to Boeing workers.

Boeing announced this week it planned to use a small fleet of modified 747 freighters to speed major components to the final assembly site.

If the largest fuselage sections were to go to Italy, Boeing could make an East Coast site viable by flying wings from Japan.

The major global partners are still referred to as "candidate suppliers" because participation is contingent on negotiating financial terms and contract conditions.

To build a watertight business plan that the board in Chicago will approve, Boeing wants the suppliers to come up with a major portion of the development costs, which could total $7 billion to $10 billion.

It expects partners to share the risk, earning profits in proportion to the success of the jet in the marketplace. Both the Japanese and Italian suppliers expect to get government funding for their parts of the 7E7 project.

Though Boeing has long criticized European rival Airbus for its receipt of government subsidies, it has no issue with such indirect government funding of the 7E7.

"It's up to our partners whom they'll choose to work with," said Boeing spokeswoman Lori Gunter.

Even if a significant part of the 7E7's components are imported, AIA's Douglass sees the jet as central to the future of U.S. aerospace. In August, he suggested the U.S. government consider the 7E7 to be "America's Airplane."

"Our aerospace industry produces $30 (billion) to $50 billion of positive trade surplus for this country every year. So we are on the winning end of this thing," said Douglass. "If we have to export certain parts of the 7E7 to be manufactured around the world, but in the end it sustains commercial aviation in the U.S. and carries us on to a new era, and we sell those things like hotcakes, then we are going to come out ahead."

Douglass also has suggested federal agencies such as the Department of Transportation, the Federal Aviation Administration and the National Aeronautics and Space Administration give Boeing regulatory and research help.

Globalize it must

Richard Aboulafia, an industry analyst with the Teal Group, dismisses the "America's Airplane" tag as "window-dressing." But, like Douglass, he thinks Boeing has no choice but to globalize the airplane and argues that any federal protectionist measures to promote U.S. aerospace jobs would only backfire.

"Unless you believe the government can manage things better than the private sector, this is necessary and inevitable," said Aboulafia. "Those manufacturing jobs are not going to come back."

Adam Pilarski, an industry analyst with Avitas, contends Boeing must bow to the forces of globalization and the intense competition with Airbus, which is on track to overtake Boeing this year as the world's No. 1 commercial-jet maker.

"If you look at Boeing's objectives, creating jobs does not make the top 10. It probably doesn't make the top 100," said Pilarski. "This is not attacking Boeing. It's reality.

"We used to have a family feeling. It's no longer a family feeling," said Pilarski, characterizing Boeing's attitude. "Right now we have to be efficient. Hasta la vista, baby."

The sharp union reaction to such arguments is heightened by the fact that to save jobs, unionists have been promoting Boeing's interests in this country.

Buffenbarger, the national Machinists leader, said his staff is working full time in Washington, D.C., lobbying on Boeing's behalf to land its crucial 767 military tanker deal.

"If the way they are going to reward the members of my union is to off-shore the 7E7," said Buffenbarger, "then I don't know how (Boeing Chairman) Phil Condit and (Boeing Commercial Airplanes chief) Alan Mulally can sleep with a clear conscience."

Charles Bofferding, executive director of the Society of Professional Engineering Employees in Aerospace, fears Boeing's outsourcing will not only eliminate jobs but eventually threaten the company's commercial-airplane business by reducing profits.

Follow 'the logic trail'

"If you've given all your profit to these major suppliers, in the end what profit is left for Boeing?" Bofferding said. "If profits are low, why stay in this business? That's the logic trail. They won't be in a sustainable position."

In June, during a news briefing before the Paris Air Show, Mike Bair, head of the 7E7 program, indicated Boeing was weighing the issue of outsourced profits.

"If you give away risk you also give away upside," Bair said then. "We think this plane is going to be a runaway best seller. So part of our thought process is, how much of that do we want to give away?"

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

Copyright © 2003 The Seattle Times Company

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