Boeing Moves 787 Production to South Carolina to Cut Costs

Following the failure of the Boeing 737 MAX and the onset of coronavirus, Boeing faces some challenging blows to its commercial aircraft production.

The latest of which: moving production of its 787 Dreamliner jet completely to North Charleston, South Carolina instead of building the wide-body jet in two different facilities. The large aircraft manufacturer confirmed on Thursday that it will end 787 production at its plant in Everett, Washington, by mid-2021.

This move has been long-rumored, but was only now officially announced, and it not only comes as a blow to the Washington aerospace industry but suggests a lower expectations for a rise in 787 production to return to pre-COVID-19 levels anytime soon.

Boeing 787 Dreamliner

Last year, Boing increased the production of its 787 family to meet high demand. The small and medium wide-body jets were being built at a rate of 14 per month in 2019, up from 12 per month the previous year. 

This was the highest production rate for a wide-body jets in history, and to keep up Boeing experimented with building the Dreamliner in two different facilities: at its main wide-body plant in Washington headquarters, and in its newer factory in South Carolina.

The sharp downturn in long-haul commercial travel due to the pandemic quickly made this production rate unsustainable for an industry that has now grounded hundreds of aircraft. In fact, Boeing has fleets of mint-condition commercial aircraft sitting undelivered on the tarmac due impacts of the COVID-19 pandemic.

As a result, Boeing has sharply decreased its 787 Dreamliner production plans. It has already reduced output from 14 aircraft per month to 10 per month, and it plants to cut back to only 6 per month in 2021.

This decision came after Boeing's second quarter earnings report, in which CEO David Calhoun said the company would "prudently evaluate the most efficient way to product the 787 to include the studying the feasibility of consolidating our 787 production into one location" in response to the decline in production.

While earlier in the pandemic Boeing management seemed optimistic that business would go back to normal within a few years, this decision to consolidate all 787 production to South Carolina speaks otherwise.

The North Charleston plant is the more economic choice of the two plants, but it can only build seven or eight 787 Dreamliners per months with its current infrastructure. If production rates were to increase, it would require significant investments to hire new workers, tooling, and factory space that already exists in Everett.

Next year, the plant will be down to building just five or six aircraft per month. We can only assume that the move to North Charleston foreshadows production rates will stay below eight 787s per month for years to come, because Boeing would not justify a major shift to underutilize one of its largest plants if this was not the case.

Some distributors have seen a similar curve in the demand for commercial parts as the production ramped up and slowed down because of COVID-19 impacts, but an aircraft parts boom from dismantling grounded planes may boost the industry.

For now, providers of commercial aircraft parts can expect to make many more shipments to North Charleston than Everett.