Boeing Gears Up for Retooling of Long Beach Site

After 30 years without upgrading, which has left the Douglas aircraft complex in Long Beach outdated, new owner Boeing Co. is preparing a modernization plan that will transfer in additional work and bolster the operation’s jetliner programs.

The stakes have seldom been higher for Southern California’s aerospace industry, which dates back to 1909, than in Boeing’s upcoming decision on how to improve the efficiency and profitability of the 450-acre Douglas plant.

“We realize we need a presence there,” said a Boeing official, who asked not to be named. “The question is not if we are going to move anything there, but what we are going to move there.”

The outcome probably will not involve the transfer of an existing aircraft assembly line into the Long Beach plant. Rather, Seattle-based Boeing will probably either create a large-scale machining center or assemble major sections of Boeing planes there.

More than any other existing plant in Southern California, the Douglas complex is a cornerstone of the still-vital aircraft industry, and its 10,000 direct jobs are still a potent economic force.

Even before Boeing makes its announcement, which is expected early this year, aircraft subcontractors across California are investing heavily in modern equipment and added capacity. It reflects both the ongoing boom in commercial production and a conviction that Boeing will expand activity in Long Beach. That conviction is shared widely by union officials, Wall Street analysts and state economic development officials.

State officials have put together a multimillion-dollar package of incentives for Boeing to invest in the Long Beach plant, including tax abatements, training programs and infrastructure improvements. Boeing officials have reacted favorably to the state proposals.

“We have positive momentum,” said Chris Holben, undersecretary for the California Trade and Commerce Agency.

Boeing, which suffered through it own embarrassing problems in the Puget Sound production area last year, sees long-term value in the Long Beach operation’s products and capabilities. Boeing Chairman Phil Condit acknowledged in a recent interview that much of the plant is outmoded, but said that he considers the skilled work force an important resource in an era when experienced labor is in short supply.

The firm last week made a long-term commitment to continue producing the newly developed MD-95, and conferred full-fledged Boeing status on the product by renaming it the Boeing 717. The company has also decided to continue long-term production of the MD-11, the jumbo jet that is proving popular in the cargo business.

With the decision made to operate the Long Beach complex for the long term comes the next step: making sure it meets Boeing standards for efficiency, quality and technology. Condit frankly admits that it does not meet those standards.

“If there is going to be significant commercial activity, then there is going to be more investment,” Condit said. “If you don’t invest in it, over time you are not going to get the kind of return you want.”

Doug Griffith, an official with the United Auto Workers, which represents Douglas’ hourly employees, says Boeing executives have confided the need for a $2-billion outlay to update the plant. But Condit says the company first must decide what to move into the plant before it can determine the level of investment.

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Although Boeing officials insist that the decision will be based on economic factors, there is clearly a political dimension to the issue. Shortchanging the Long Beach facility would win the company few friends in California, where Boeing has 40,000 employees and billions of dollars in assets.

Investing in the Long Beach facility “is something they have to do, politically,” said Jack Modzelewski, an aerospace analyst at PaineWebber.

But Boeing’s plans are based on far more than politics. Southern California has emerged from the post-Cold War bust with a smaller but stronger aerospace industrial base that includes the largest precision machining and metalworking capability in the nation. Hundreds of shops across the region are hiring workers, scheduling extra shifts and installing new equipment.

“Our business has quadrupled,” said Gary Churchill, quality and sales manager at Aerocraft Heat Treating Co. in Paramount.

The company is modernizing and expanding capacity in its 17 heat treating furnaces, which specialize in preparing aluminum and titanium bar stock for aircraft structures and jet engines.

Northrop Grumman Corp., which makes Boeing 747 fuselages in Hawthorne, is investing $100 million in automated machinery to improve its accuracy and efficiency, according to Vice President Ralph D. Crosby.

Meanwhile, David Goodeau has installed four new high capacity American-made machining centers and scheduled production 20 hours a day at his Neumann Machine Works in Burbank. The only limit, Goodeau said, is finding qualified machinists, who are commanding salaries of up to $100,000 a year. Goodeau, chairman of the Small Manufacturers Assn. of California, said he would hire seven more machinists if he could find them.

In Anaheim, Sonfarrel Inc., which had attempted to convert itself into a spa- and hot-tub-parts maker in the aftermath of the Cold War, has veered sharply back into aerospace. It is adding new machines to produce rubber injection molded parts and machined metal parts.

“It’s a boom,” said Frank Power, general manager at Sonfarrel, a key Douglas supplier. “There has been a solid turnaround at Douglas in the last 12 months. They are already much more efficient.”

Until Boeing purchased McDonnell Douglas in 1996, the prospects for the Long Beach operation appeared dismal. The operation had not developed a new commercial aircraft since the introduction of the DC-10 in the 1970s, and it had been years since any significant investments had been made in modern equipment.

After acquiring McDonnell, Boeing officials got a detailed look at the plant. Although they knew the facility was out of date, they were shocked at how bad conditions were, according to a senior aerospace industry executive.

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It was a tribute to the Douglas work force that with such pathetic equipment and outdated information technology systems it could even survive against wealthy rivals such as Boeing and Airbus Industrie.

“Our people hold incredibly tight tolerances on machinery that is incredibly sloppy,” said Griffith, the union representative.

Boeing began a lengthy review process to see what it could salvage from the Douglas operation. The company had promised that the merger would be good for both firms, but social commitments could go only so far, Condit said.

“A business that loses money and goes out of business can’t honor any social commitment,” Condit said. “The bottom line: You have to be here 10 years from now.”

For many years, Boeing engineers had taken a disdainful attitude toward Douglas, believing strongly in their company’s technical superiority. At Boeing, only graduates of an accredited engineering university can hold the title “engineer.” But at Douglas, anybody--even high school graduates who can prove they have the skill and aptitude--can be engineers. And, indeed, some patent holders at Douglas do not have degrees.

Boeing has sought to not insult that Douglas tradition and to not make the same mistakes as the McDonnell family when it took over Douglas in 1967. In that merger, the McDonnells drove a wedge between the Long Beach and St. Louis divisions that was never repaired.

Boeing moved Walter Orlowski, long the technical design brain behind Douglas products, to take over some of Boeing’s advanced design work in Seattle. And even Condit says that Boeing’s way of doing things isn’t always the right way.

“Boeing’s criteria would say we couldn’t hire Bill Gates in a technical job because he didn’t finish college,” Condit said. “You have to be open to change.”

Still, the upcoming decision comes at a difficult juncture for Boeing. It is still trying to work its way out of the production problems that began last year at its Puget Sound assembly plants that forced a halt in production of the 747 and 737 models.

Condit said he does not believe that the problems were caused by a lack of assembly capacity. That is one reason why it is unlikely he will opt to assemble the 737 or 757 aircraft in Long Beach, as some Douglas boosters had hoped.

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Whatever Boeing invests in Long Beach will probably trigger jealous responses. Outside vendors argue that they could perform subassembly work cheaper than the Douglas Products Division. And some have suspected that Boeing union officials are leaning on the company not to put anything in Long Beach, an allegation they deny strongly.

“There can be a happy medium,” said Bill Johnson, president of Aerospace Machinists Lodge 751, the wealthy and politically powerful union that represents Boeing workers. “There is a mix that could go to them [Douglas] that wouldn’t affect us at all. My job is to protect our members in the Puget Sound. But I am compassionate about the fact that there are union members down there.”

Boeing has plenty of work to spread around. It is doubling its production rates, a result of its massive order backlog, an effort that is reverberating across the aerospace industry. And despite the still lackluster defense business, the aircraft industry is in high gear.

Northrop Grumman, for example, is attempting to create a flexible manufacturing system that can better handle boom and bust production that caused the current snafus, said Crosby, the vice president.

Under a Boeing program called accurate fuselage assembly, Northrop Grumman has started a computer-controlled drilling system that can calibrate rivet holes in fuselage panels to within three-thousandths of an inch. The fuselage drilling machine, larger than a typical residential garage, is performing in 23 minutes what used to take eight hours.

Automated machinery will ultimately allow producers like Northrop greater flexibility in responding to production surges, which have long been the bane of the aerospace industry.

“Our systems were so inflexible and our suppliers’ systems were so inflexible that our [lack of] ability to handle change was killing us,” Crosby said. “Our results [in the new systems] have been very positive.”