This month's completion of the merger between Boeing Co. and McDonnell-Douglas Corp. has answered few questions about the fate of the Douglas Aircraft factory in Long Beach, although city officials and aerospace analysts say they do not expect any immediate layoffs.
The Douglas factory, which Boeing now calls the Douglas Products Division, has about 10,000 employees in Long Beach while its neighboring Transport Aircraft division has about 8,500 workers.
In 1990, McDonnell-Douglas employment in Long Beach where the two divisions were then combined was at its peak of about 45,000 employees.
Since the merger was announced earlier this year, there has been uncertainty over whether the new owner would scale back, ramp up or close down the plant.
Boeing spokesman Don Hanson said firm decisions about what the facility will and won't produce can be expected some time in November, giving time for Boeing officials to fully review Douglas files and facilities.
Long Beach Mayor Beverly O'Neill, however, said she is not worried.
"We have had nothing but positive indications from Boeing about maintaining and possibly enhancing the workforce," said O'Neill.
Even so, O'Neill said she has not had any formal talks with Boeing officials about the fate of the plan. She did say she was aware that engineers from the facility were recently sent to Boeing's headquarters in Seattle to help the company brass assess what to do with the facility and its products.
"With the orders for planes that Boeing has, and with the work continuing on McDonnell Douglas planes, I believe employment will stay at its current level or increase," the mayor said.
On Aug. 7, Boeing chairman and chief executive Phil Condit took a tour of the facility and told employees they should be confident about their jobs. At the same time, he said that the future of two Douglas planes for which Boeing has counterparts the MD-11, MD-80 and MD-90 will depend on their sales, and that Boeing will insist on profits.
This contradicted reports from the Paris Air Show in June, when Boeing Capital Airgroup President Ron Woodard was quoted as saying that Boeing plans to discontinue Douglas planes, including its flagship MD-11 freight carrier.
However, Boeing spokesman Hanson said last week that those quotes were a product of faulty reporting.
So far, there is only one area where Condit and industry analysts converge in predicting the plant's future. This has to do with the MD-95, a newly designed mid-range, 100-seater now beginning production beginning production in Long Beach. Condit said the MD-95 either in its current form or a modified version has strong potential to be kept in production long-term, as it fills a gap in Boeing's line of planes.
Paul Nisbet, an analyst with JSA Research in Newport, R.I., is somewhat optimistic about McDonnell Douglas' future. More than 100 airlines around the world have McDonnell-Douglas fleets, he noted. While they may have been hesitant in recent years to buy new planes from the company because of uncertainty over its future, they may resume buying the planes now that they will be backed by Boeing.
"It would be very expensive for an airline to go from Douglas planes to Boeing planes," Nisbet said. "They would have to retool their mechanic operations and reinvest in all new spare parts lines, things like that, and it's expensive."
Ultimately, the MD-11 (a freight plane), the MD-80 and MD-90 (both mid-range planes with about 150 seats) will have to prove profitable through those cycles, and he predicts those three will eventually be phased out after the current cycle runs through, leaving the Long Beach facilities as a producer of the MD-95 and possibly other components.
Nisbet and other analysts say that in almost any scenario, the plant will be used to build sections or components of Boeing planes, but there is as yet no telling what.
"As we all know, Boeing has a lot of back orders, and Long Beach will help the pace of filling them but it's too early to say how," said Louis Marckesano, an analyst for Roffman Miller Associates in New York.
The global market for new commercial jets is known to be cyclical, Nisbet said, with the stretch from peak to peak running about 12 years. 1997 is the second year of the usual six-year upswing he said, so orders for new jets can be expected to continue strongly for some years to come, he said.
For reprint and licensing requests for this article, CLICK HERE.