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Boeing 777 site in play, union nixes contract

Keywords: Tags  aerospace, Boeing, International Association of Machinists and Aerospace Workers, IAM, 777, 777X, Raymond Conner, Cowen & Co. Cai von Rumohr

LOS ANGELES — A final assembly site for the newest version of the Boeing 777—as well as the location of its new composite wing—is once again in play as the company’s latest union has turned down an extended contract that could have kept production in Washington state.

Members of the International Association of Machinists and Aerospace Workers (IAM) District 751 this week voted overwhelmingly to reject a proposed contract that would have extended the current agreement into 2024, eight years beyond the current 2016 expiration.

The proposed contract included a number of concessions for Boeing workers, including pension benefits and health-care costs, that would have given the company’s Puget Sound facilities the lead role in building the 777X, as well as the plane’s planned new composite wing (, Nov. 6).

Chicago-based Boeing is building 777s at a rate of 8.3 planes per month at its Everett, Wash., facility.

Acceptance of the new contract would have enabled Boeing to build the next version of its 777 twin-aisle airliner, the 777X, as well as its new composite wing in the Puget Sound area, while creating a "competitive structure" for Boeing in the region.

The 777 is considered among the largest commercial aircraft consumers of titanium, accounting for about 150,000 pounds of buy weight, including both the airframe and engines. This amount could rise with the 777X, since the new composite might contain additional titanium, which is generally more compatible with composites than aluminum, although the wing’s material makeup has yet to be finalized.

"But without the terms of this contract extension, we’re left with no choice but to open the process competitively and pursue all options for the 777X," Conner said in a statement.

"All of our options are back on the table at this stage," a Boeing spokesman in Seattle said. Without citing any specific site, he said these will include options "both inside and outside" the company.

Boeing’s expanding facility in South Carolina, which already is one of the two final assembly sites for Boeing’s 787 Dreamliner, has been considered a leading candidate if Washington state doesn’t work out.

Cai von Rumohr, an analyst at New York-based investment firm Cowen & Co., said in a note to investors that the Puget Sound area could "get a portion of 777X work," although it is unlikely this would include final assembly and production of the composite wing.

The Boeing spokesman said the company still intends to formally launch the plane "by the end of the year." Speculation is that this could occur as early as next week at an air show in Dubai.

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