Boeing to Assemble 787-10 Dreamliner in South Carolina

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The Boeing Co. (BA) is planning to build its longest version of the much-hyped 787 Dreamliner exclusively in North Charleston, SC.

Scheduled for delivery in 2018, the 787-10 will be the first Boeing jetliner to be built exclusively in South Carolina. The two earlier versions of the 787 family – the 787-8 and 787-9 – will continue to be assembled in both Everett and North Charleston.

Boeing sated that it will be more efficient to wrap up the whole work on the plane in South Carolina rather than to fly the long fuselage sections of the 787-10 to Everett, Washington, as it is done for the earlier versions. Apart from logistics, the decision mainly reflects the aerospace major’s attempt to keep its dream project out of the unionized facility in Washington.

The non-unionized plant in North Charleston is Boeing’s attempt to diversify from its conventional commercial manufacturing hub in the Puget Sound region. Boeing has had a tenuous relationship with its unions in Washington State.

In Jan 2014, members of the International Association of Machinists and Aerospace Workers struck a new eight-year deal with Boeing to ensure that the company would manufacture its new 777X plane in the Puget Sound area. Boeing has been looking for ways to cut costs by balancing its production at its unionized base in Washington and California with expansion of its South Carolina facility.

At a length of 224 feet, the third and longest version of the Dreamliner will carry 323 passengers. This stretched aircraft is 15% longer than the 787-9 and 33% than the original 787-8. As for fuel consumption, the latest Dreamliner version scores highly against current-generation jets of comparable size.

Production at the North Charleston facility would increase to five per month in 2016 from three currently. Production is expected to reach seven a month by the end of the decade. Boeing has accumulated 132 orders from four airlines. This represents roughly 13% of total 787 orders, which amount to 1,031 planes.

Boeing’s 787 Dreamliner despite setbacks and technical snags remains a popular choice for major airlines, roughly doubling its deliveries in the second quarter of 2014.

Boeing came out with impressive second-quarter results beating the Street estimates on earnings buoyed by strong commercial aircraft deliveries and production.  Though it missed on the revenue part and booked some charges related to its KC-46A Tanker program, the company raised both the low-end and upper-end of its 2014 adjusted earnings guidance.

Boeing currently has a Zacks Rank #2 (Buy). Investors can also look into Embraer SA (ERJ), General Dynamics Corp. (GD) and Northrop Grumman Corp. (NOC). All these stocks carry a comparable rank as Boeing.

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