Boeing plans to ratchet up 737 production to 38 per month
Boeing Co., seeing a resurgence in demand for jetliners as air travel recovers, plans to boost production of its bestselling, $69 million 737 single-aisle airplane by 8.6 percent to another record starting in 2013.
Boeing will make 38 of the jets a month as of the second quarter of 2013, up from a planned boost to 35 in 2012, according to a statement today. It's the third increase announced this year as Chicago-based Boeing works down a growing backlog of more than 2,000 orders for the 737. The model has won 250 orders so far this year, including 15 announced today, compared with 178 in all of 2009.
The company plans to buy new tooling for itself and its suppliers and will hire several hundred employees at its Renton, Washington, plant with each increase, Beverly Wyse, the 737 program chief, said in an interview. She declined to give a figure for the capital expense and added that some of the extra capacity will come through efficiency improvements.
Boeing is counting on revenue from its existing models to help offset delays to the new composite-plastic 787 Dreamliner, which is almost three years behind schedule. Commercial-aircraft division President Jim Albaugh has also said he aims to regain Boeing's spot as the world's biggest commercial-jet builder by next year. Airbus SAS has held that title since 2003.
Since the latest production boost announced in June, Boeing executives including Albaugh have said that they were studying the supply chain's capacity to build more parts before deciding on a further increase to what might be as high as 40. Boeing now builds a record 31.5 of the planes a month. Another increase may still come, Wyse said.
'Growth Market'"We're in a growth market, so there will be steps" after the increase announced today, she said. "We're not looking to announce anything in the near term."Airbus is increasing monthly output of its single-aisle A320 this year to 36 from 34. The Toulouse, France-based planemaker is also considering lifting A320 production to as many as 40 a month starting in 2012, newspaper La Tribune reported last month.The narrowbody aircraft are the workhorses of the air- travel industry and are used chiefly on domestic routes and by low-cost carriers. Both companies also plan to decide this year whether to offer new engines to refresh the models and improve operating costs, or to develop replacement planes."This rate increase tells us there is significant demand still out there for the 737NG," Wyse said. "We've sold out slots through 2012, and even beyond that. Right now if you were going to come in and ask for a new stream of aircraft it would be more like the 2015 timeframe."'Detailed Planning'The 737's aluminum fuselage is built by Spirit AeroSystems Holdings Inc. in Wichita, Kansas, and sent atop rail cars for final assembly in Boeing's plant in Renton. That factory, near Boeing's commercial headquarters in Seattle, was shut for a month in 1997 to untangle supply-chain disruptions when the company tried to boost production too quickly.Wyse said the company is engaging in "more detailed planning a lot earlier in the process" to avoid a similar problem now. Boeing is watching raw-material availability as the economy improves and keeping an eye on even the smallest suppliers to make sure they have the right facilities, she said."We've had issues in the past with fasteners -- it's amazing that can be something that can stop the delivery of an aircraft," Wyse said. "So we've made sure we understand where the constraints in the supply chain are and that we're giving them earlier notification and visibility so they have capacity to bring this online."