Boeing management needs a reality checkFinal assembly labor costs are a small fraction of the total cost of building a jet
Experience. If 777X were a clean sheet design, a new facility and a new work force might be feasible. But as a major derivative, having an experienced workforce from day one would reduce manufacturing costs and program risk. Moving to a new site would disrupt the production learning curve.
Infrastructure. There’s more relevant infrastructure in Everett than anywhere else, of course.
State government support. Just before the union vote, Washington State passed an $8.7 billion tax break for Boeing, just to show good faith or something. Washington has a pattern of generosity that might be tough for other states to beat, particularly since the Washington state government can be generous with taxes on a much wider variety of Boeing products.
Customer concern. At the Dubai Air Show 777X Emirates CEO Tim Clark, the plane’s launch customer and biggest 777 user, told the Wall Street Journal, “All we said to [Boeing] was, ‘Please don’t do to 777X what you did to the …Don’t do that to us.” Co-launch customer Qatar Airways’ Akbar Al Baker said, “Frankly, we would rather everything was built in one place, and I think Boeing from the 787 experience have learned a lesson.” Clearly, airlines pay attention to program risk. Boeing has already lost key customers, most recently Japan Airlines, to the A350XWB, in large part because it has been dragging its feet on launching the 777X. Adding risk to the program by moving the line might not convince other customers to order Airbuses instead of 777Xs. But it might well convince them to hedge against 777X program risk by also ordering A350XWBs. [Incidentally, a strange headline that I read at Dubai: Boeing 777X Won’t Be Built In UAE (Gulf News, November 17).]
Further labor disruption risk mitigation The current contract with IAM751 expires in 2016. If no accommodation is reached on the 777X line, bitter feelings will worsen, and a strike will loom in a few years.
They learned what happened going cheap on the 787, the world knows, and the Boeing customers know and the shareholders know. it allowed Airbus to run up and grab at least 50% of the total market . Airbus now makes 10% profit compare to 5% overall profit for boeing a major reason for the 5% Boeing profit margin is the union busting 787 failure of James McNerney a man scheduled to retire at age 65 just 8 months from now.
James Mcnerney has lost more profit for Boeing than any previous Boeign CEO, and in a decade of huge opportunity he is single handidly responsilbe for costing the 30 billion over expected 787 cheap outsourcing budget, 3 years late to delivery, 3 month grounding. Both the IAM and the SPEEA unsion worked together to make both the 737 andd the 777 each now make over 15% annual profit all done prior to James McNerney, James doe get credit for being late on improving both the 737 and the 777 due to focusin on his monumental failure the 787.
,Can James McNerney, a Harvard Graduate apply the lesson here , LOL. The 777X customers can apply the lessong to the 777X,the customers' of the 777X have been clear no more 787 cheap workers with no experience so boeing has no options but to scare the experienced great workforce into voting themsleves a huge total pay and benefits take away , my hunch, the workers are a lot smarter than James McNerney they will not vote away their retirement, benefits or pay while they have a better contract until 2016 and the strike option in 2016. Boeing can not get the 777X up and running for the customer with a new factory any place in the world except Everett expecially with a all new workforce , the custoler has made it clear with the 100 billion dollar order no more 787 break the union crapola , Jmes McNerney will retire in 2014 the Everett workers will make the 777X and hopefully a better replacement will be found for James McNerney