(FROM THE WALL STREET JOURNAL 5/6/15)
By Tarun Shukla
Boeing Co. has started selling off giant equipment from its
military-jet plant in Southern California, in an unusual factory
auction that will close a chapter in the region's history as a
center of U.S. aerospace manufacturing.
For more than 20 years, the plant has produced the C-17
Globemaster III, a military transport jet capable of carrying 82
tons. But Boeing is ending production at its plant in Long Beach,
Calif., because of a lack of international orders after the U.S.
Air Force stopped buying the plane.
The C-17 is the last big jet still assembled in Southern
California, whose aerospace industry dates back more than a century
and, at the height of the Cold War, was home to 15 of the 25
biggest U.S. aerospace companies, according to the Los Angeles
County Economic Development Corp., a regional business group.
Many of those companies have merged or moved, although the area
also has drawn big new names, including Elon Musk's rocket venture
Space Exploration Technologies Corp., and in 2012 still accounted
for about a fifth of U.S. aerospace-industry revenue, according to
consultants A.T. Kearney. Boeing also has moved some product
support jobs to Long Beach as it scales back manufacturing.
Boeing plans to close its Long Beach plant this year and has
tapped Heritage Global Partners Inc. to sell off the machines that
make the Globemaster's wings -- which span 170 feet -- its
174-foot-long fuselage and other parts.
Heritage specializes in such industrial auctions. Other
offerings recently advertised on its website include laboratory
equipment from biotech company Amgen Inc. and the contents of a
distribution facility from clothing retailer American Eagle
Outfitters Inc., including forklifts and mailroom furniture.
But David Barkoff, Heritage's director of sales, says few sales
involve machinery on the scale of the six items it is selling for
Boeing in the sealed-bid auction, which began last month and ends
June 23. Among the pieces is the Broetje Robotic Flexible Assembly
Cell, which rivets together sections of the fuselage that are about
as wide as a two-lane highway. "This is a unique sale in terms of
how large these machines are and what they are used for," he
said.
Boeing's Long Beach facility, which sits just south of Los
Angeles, dates to 1941 when it was opened by the Douglas Aircraft
Co. The plant, whose production area covers approximately 25 acres,
has built planes including the B-17 bomber and MD-80 jetliner in
addition to the C-17. Boeing took ownership in 1997 when it
acquired McDonnell Douglas Corp.
Chicago-based Boeing has delivered 267 C-17s, about 80% to the
U.S. Air Force, with the rest to international customers including
Australia and India. The company announced plans in September 2013
to cease production amid shrinking defense spending world-wide.
Richard Aboulafia, vice president at Teal Group Corp., an
aerospace consultancy, said Airbus Group NVs newer, cheaper
turboprop transport, the A400M Atlas, is undercutting the C-17. For
the U.S. government, "there probably was a creative way to save the
[C-17] line a few years ago, but it's gone now," he said.
In a few years, the U.S. may find itself with no
strategic-transport production line and an aging fleet of C-17s and
Lockheed Martin Corp.-built C-5Ms military transport planes, Teal
Group said in a September report.
The Long Beach plant has nine C-17s in various stages of final
assembly, with the last to be completed this year, Boeing
spokeswoman Tiffany Pitts said.
The company said last month it was confident of selling the five
jets yet to secure buyers. It is still deciding what to do with the
factory site itself.
Boeing said when it announced plans to end the C-17 that it
expected to book a charge of less than $100 million, and would have
to eliminate 3,000 positions connected with the program, including
about 2,200 in California. A spokeswoman said Boeing has moved some
of those people to other sites, and that retirements also have
helped mitigate layoffs.
There aren't many companies that assemble big airplanes, and
Heritage wouldn't say who might be buyers for the Boeing
equipment.
But Mr. Barkoff said the machinery can be repurposed to
manufacture other aircraft. "We expect tremendous response from
aerospace manufacturers and contractors," he said.
Access Investor Kit for The Boeing Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0970231058
Subscribe to WSJ: http://online.wsj.com?mod=djnwires