McDonnell Douglas Corp., confirming weeks of speculation, said Tuesday that its newest jetliner will be built in Texas and not in Long Beach, home of the company's Douglas Aircraft division.
It marks the first time in Douglas' 74-year history that one of its commercial airplane production lines will be based outside California.
The new MD-95, a 100-seat model that will compete in the small-jetliner market, will be assembled at Dallas' Love Field by closely held Dalfort Aviation, aided by $73 million in city-arranged financing that will help Dalfort expand its facilities there.
McDonnell had previously indicated that Long Beach was out of the running because of Southern California's high business costs. Nonetheless, the decision is another setback for the region's dwindling aerospace industry, because about 5,000 jobs will be created in the Dallas area when the MD-95 is in full production.
"We believe this is the largest one-time job creation in the history of the city of Dallas," Dallas Mayor Steve Bartlett said. "It will have an enormous impact on the city."
Douglas still employs about 10,000 people in Long Beach--who build its MD-80, MD-90 and MD-11 jetliners--but that's down from 42,000 only four years ago because of a sharp drop in Douglas' sales.
In a telephone interview, Bartlett said McDonnell's decision is "not a negative consequence" for Long Beach because "these are all new jobs. They're not coming from somewhere else."
He also dismissed recent published reports that suggested McDonnell delayed its announcement until Tuesday to bolster Gov. Pete Wilson's bid for reelection in California, speculation both Wilson and McDonnell have denied.
"I can absolutely verify that the (timing of the) decision was not politically driven," Bartlett said.
McDonnell has yet to formally launch the MD-95, which is expected to sell for $20 million to $25 million. The company is peddling the plane to airlines in search of enough orders to start production.
In the meantime, McDonnell has signed up vendors from around the world to provide components and help pay the plane's development and tooling costs.
The suppliers include Israel Aircraft Industries (landing gear), Korean Air Aerospace (nose assembly) and Italy's Alenia (fuselage), along with U.S. suppliers such as AlliedSignal Aerospace in Torrance (environmental control system).
McDonnell and other plane makers use suppliers from various nations partly to bolster the airplane's sale in those countries.
"It's to their advantage to involve countries worldwide that have their own airlines," said Paul Nisbet, an analyst with the consulting firm JSA Research Inc. in Newport, R.I. "All the manufacturers play that game."