Excerpt from Wall Street Journal, May 6
Boeing Co. has started selling off giant equipment from its military-jet plant in Southern California, in an unusual factory auction that will close a chapter in the region’s history as a center of U.S. aerospace manufacturing.
For more than 20 years, the plant has produced the C-17 Globemaster III, a military transport jet capable of carrying 82 tons. But Boeing is ending production at its plant in Long Beach, Calif., because of a lack of international orders after the U.S. Air Force stopped buying the plane.
The C-17 is the last big jet still assembled in Southern California, whose aerospace industry dates back more than a century and, at the height of the Cold War, was home to 15 of the 25 biggest U.S. aerospace companies, according to the Los Angeles County Economic Development Corp., a regional business group.
Many of those companies have merged or moved, although the area also has drawn big new names, including Elon Musk’s rocket venture Space Exploration Technologies Corp., and in 2012 still accounted for about a fifth of U.S. aerospace-industry revenue, according to consultants A.T. Kearney. Boeing also has moved some product support jobs to Long Beach as it scales back manufacturing.
Boeing’s Long Beach facility, which sits just south of Los Angeles, dates to 1941 when it was opened by the Douglas Aircraft Co. The plant, whose production area covers approximately 25 acres, has built planes including the B-17 bomber and MD-80 jetliner in addition to the C-17. Boeing took ownership in 1997 when it acquired McDonnell Douglas Corp.
Chicago-based Boeing has delivered 267 C-17s, about 80% to the U.S. Air Force, with the rest to international customers including Australia and India. The company announced plans in September 2013 to cease production amid shrinking defense spending world-wide.
Richard Aboulafia, vice president at Teal Group Corp., an aerospace consultancy, said Airbus Group NVs newer, cheaper turboprop transport, the A400M Atlas, is undercutting the C-17. For the U.S. government, “there probably was a creative way to save the [C-17] line a few years ago, but it’s gone now,” he said.
In a few years, the U.S. may find itself with no strategic-transport production line and an aging fleet of C-17s and Lockheed MartinCorp.-built C-5Ms military transport planes, Teal Group said in a September report.
The Long Beach plant has nine C-17s in various stages of final assembly, with the last to be completed this year, Boeing spokeswoman Tiffany Pitts said.
The company said last month it was confident of selling the five jets yet to secure buyers. It is still deciding what to do with the factory site itself.
Boeing said when it announced plans to end the C-17 that it expected to book a charge of less than $100 million, and would have to eliminate 3,000 positions connected with the program, including about 2,200 in California.