After decades as one of the world's leading aircraft manufacturers, the aging Douglas Aircraft facility in Long Beach could see its fate decided by a short-hop, 106-seat jet that has yet to make a single flight.
Within less than two years, Boeing Co.'s 717 jetliner, test models of which are still being assembled, may be the last commercial aircraft being produced at the World War II-era facility.
Douglas' MD-80 and MD-90 jets both of which compete with Boeing's 737s will be phased out by 2000. The fate of the other commercial jet made there, the MD-11, rests on whether there is sufficient demand for the wide-body jet.
In January, Boeing renamed McDonnell Douglas' MD-95 the 717 and at Boeing's annual shareholders meeting, President and Chief Operating Officer Harry C. Stonecipher said he expected the Douglas division eventually to produce 10 copies a month.
That is twice the number of planes including MD-80s, MD-90s and MD-11s currently produced in Long Beach.
"We really think the market for that airplane is large enough that we will be building more airplanes of that type in Long Beach than we have built there in a long, long time," Stonecipher said. "We haven't seen 10 a month out there for quite a long while."
Still, it's not the greatest news for Douglas employees, whose fate has been unclear since their company was taken over by the Renton, Wash.-based aircraft giant.
Of the 11,500 workers employed by Douglas Products, only about 1,500 are part of the 717 program. Another 500 workers might be added as demand grows, according to Boeing officials, but that won't make up for layoffs likely to result from cancellation of the MD-80 and MD-90 aircraft or the possible cancellation of the MD-11.
About 3,400 employees work in the MD-80 and MD-90 programs, and an additional 3,000 employees work in the MD-11 program.
Prior to Boeing's acquisition of Douglas, 50 firm orders, as well as 50 options, had been placed for the 717 by AirTran Airlines, formerly ValuJet. Last week, Boeing announced that Bavaria International Aircraft Leasing Co. ordered five 717s, with deliveries scheduled in late 1999 and 2000.
Also last week, a conference was held in Berlin to market the 717 to 33 European airlines and leasing companies that might be interested in the short-hop plane.
"There's a lot of activity in the marketplace a lot of things going on," said Jerry T. Callaghan, director and development program manager for the 717.
Boeing projects worldwide demand of between 2,000 and 2,500 aircraft in the 717's class over the next 15 to 20 years.
Demand is likely to come from an increase in short trips between nearby cities as well as a need to replace aging DC-9s that serve the same purpose. Close to 1,000 twinjet DC-9s were built between the mid-1960s and the early 1980s also at the Douglas facility in Long Beach.
European consortium Airbus Industrie, Boeing's prime competitor in the commercial aircraft market, is developing a similar jet, but it's believed to be several years behind Boeing. "Today there's only one new aircraft in that market, and that is the 717," said Callaghan.
Boeing has had some problems with delivery of parts the most serious involving an engine designed and built by BMW Rolls-Royce in Germany. In high-altitude tests, blades on the engine cracked. Although the problem has since been corrected, it pushed back the first flight of the test model from June to late summer.
But Boeing officials are quick to note that other parts of the aircraft are coming in on time or even early.
Gary Roberts, director of final assembly on the 717, said a wing for the second production model came in last week before it was even needed.
Roberts said his team is also using new technology and production techniques to speed up assembly. For example, a new laser system is being used to fit together parts of the plane's body allowing an entire plane to be assembled in four hours (as opposed to four days without the lasers).
Boeing also is considering an assembly-line process for the 717 rare in the aerospace industry in which most aircraft are assembled in stages with the ultimate goal being to whittle the process down to 20 days.
Paul Nisbet, president of JSA Research Inc., a Newport, R.I.-based aerospace investment research firm, said the goal of producing 10 717s a month could pose a challenge to Boeing.
"Lines usually don't move quite that fast," he said. "Typically it's seven or eight at full capacity without overtime. But this aircraft is coming in very assembled, so it should be quite doable."
The bigger challenge is making money. The new plane has a sticker price of between $30 million and $34 million, but Boeing is believed to have taken a loss on its AirTran sale. Douglas spokesman Warren Lamb would not comment on that except to say, "AirTran got a good price."
Jon Kutler, president of Los Angeles-based Quarterdeck Investment Partners Inc., said the way for Boeing to make a profit is by keeping the number of hours devoted to assembling each plane low.
"How fast can you get this aircraft out and how much lead time do you need to order components? This is basically still a very labor-intensive process," Kutler said.
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