Monday, November 2, 2015

Amping Up The 737 Build Rate

Currently Boeing has two Renton lines building 42 737's a month. Soon a third line will reach the same capacity producing another 21 737's a month. It is natural to assume, an ultimate rate can be obtained with a fourth line somewhere beyond Renton. Many believe China is the ripe field for expansion. “Winging It” believes there are other spots in the world for that distinction for a fourth plant. It must be located in a region that has a long range production prospectus for the single aisle builds. China once again percolates up in discussions.

 Image result for 737 Production lines

The difficulties are plentiful is the grand scheme of things for building a new assembly plant with all the ancillary businesses required supporting such a production aspiration. Once again China proves it could be an answer. The cost of a long range supply chain to China would be the biggest issue, followed by having trained employees capable of handling continuous change on the production floor. 

Boeing has developed a sweet 737 supply chain spanning North America going to Renton Washington. No such sweet supply chain would exist in a China operation initially. The Chinese would have to install a Boeing body assembly as found at the Spirit plant. An engine supply center or production center for the CFM engine would land in China. However, the hundreds of thousands technological parts are relatively small and lightweight. They can come via air cargo from around the world.

The possibility of a China operation is real and necessary for Boeing Marketing having a Boeing sponsored, Chinese built single aisle aircraft plant. The region buys hundreds of 737's every year and would keep shipping 737 going out to all of the Asian market. The Renton Plant if it maxes to 63 a month production limit could continue as the North American-South America and European supplier for the 737. They would need 2,000 aircraft Backlog. The China plant needs about a 1500 unit back-log with a 42 a month build rate. The ultimate rate for both plants would be 105 737 a month pouring into the market. This would meet the single aisle demand for the next ten years. 

However, don't count Charleston out of this venture. It has room to build a 42 a month 737 production plant within its property. The convenience is obvious, but it not known how it would affect the Asian market if Boeing did not have a footprint in the Asian region. That study of course would be secret to Boeing. If the Chinese offered Boeing a deal it couldn't refuse. Boeing would want leveraging points over Airbus in the single aisle Asian market, if it goes further west than Renton, WA, and not go east with Boeing's Charleston, SC.