Boeing Adding Workers to Address Dreamliner Production Problems: WSJ

The Wall Street Journal 

By  Jon Ostrower

Updated Jan. 22, 2014 6:40 p.m. ET

Boeing Co. is adding hundreds of contract workers at its South Carolina plant to help deal with production problems as it builds its flagship 787 Dreamliner jets.

The aerospace giant is hiring more than 300 contract mechanics and inspectors immediately at the factory in North Charleston, S.C., and could increase that number to between 500 and 1,000, according to three people familiar with the hiring. Those workers would assist the more than 7,000 people Boeing employed in South Carolina as of the end of last year, a figure that includes existing contract workers but predominantly Boeing staff employees.

The move is a reversal by Boeing, which early last year let go of hundreds of contract workers in an effort to reduce costs at North Charleston. Contract workers are generally paid more than staff employees, not including benefits. It reflects the company's continued struggle to ramp up production of the advanced, widebody jetliner while also reducing costs.

The North Charleston plant does final assembly of some Dreamliners and produces mid and rear sections of the plane's carbon-fiber composite fuselage for all of the jets, including those made in Washington state. Last year North Charleston assembled 14 of the 65 total Dreamliners delivered. Boeing aims to increase that to a third of the 120 Dreamliners it plans to build and deliver in 2014.

Four people familiar with the situation said that, as North Charleston workers have doubled production over the past year, the mid-body sections of the jet—which are 84 to 104 feet long—are being shipped to final assembly lines with more final tasks that still need completion. One of those people, a production staffer in North Charleston, said that incomplete work on mid-body sections now exceeds the level in July 2011, when the plant suspended shipments for a month to catch up.

A Boeing spokesman confirmed a "surge" in hiring of contractors in North Charleston, but declined to share details. The spokesman said they are needed to "stabilize" its production of the Dreamliner mid-body sections while it introduces a new, longer version of the Dreamliner dubbed the 787-9, which seats more passengers.

Boeing said it has no plans to slow production or pause shipments from North Charleston to its final assembly lines, at a rate of ten a month. "While we have some challenges to address, we see no risk to the program's ability to meet its commitments," it said.

To enable high rates of production, Boeing designed the Dreamliner's supply chain to install parts like the passenger doors, hydraulics, electronics and plumbing earlier so that the final assembly process could be faster. That makes the production of the body sections like those made in North Charleston more complicated.

Boeing started production in 2011 at the nonunion North Charleston plant to supplement its unionized final assembly factories in Washington. The site's nonunion status permits the company to add contractors as needed "to address these work surge requirements as they arise," Boeing said. The company said it also is shifting some staff from its other sites elsewhere in the country to assist in North Charleston.

Boeing last February disclosed it was cutting hundreds of the more than 6,700 workers it then had at the North Charleston plant, with the cuts mostly among contract laborers, many of whom had been part of the operation there for years. Boeing has since added hundreds more staff employees there.

Many experienced workers have been diverted from the two smaller facilities on the North Charleston campus that produce the mid and aft-body of the Dreamliner to speed up deliveries of the assembled 787, said two of the people familiar with production. Many of the incomplete tasks on the mid-body of the Dreamliner are slowing final assembly and delivery of the jets there, they added.

The remaining staff working on the mid- and aft-body have been stretched thin with increased overtime and the increasing rate.

Boeing has struggled to quickly attract experienced contractors to assist, said a person familiar with the hiring. According to public job listings for contract positions, staffers are being offered an hourly rate of $23 for assembly mechanics and inspectors. That is higher than what staff employees typically make, but well below the $28 to $45 an hour offered for the same positions in 2009, said a former contractor at the site who was approached by a recruiter to reapply for his old job after his contract was canceled as part of last year's cuts.

Boeing has staked much of its commercial future on the 787 and Wall Street is closely watching the company's initiatives to both keep pace with demand for the jets and its cost-cutting plan to meet its profitability targets.

Boeing next week is expected to report record earnings for its commercial unit, in part based on its accounting for the 787, which allows it to spread its early high costs over 1,300 deliveries and book future profits today.

Source:  http://online.wsj.com