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Boeing Delays Start-Up of Long Beach 737 Line

Aerospace: Move comes as jetliner maker undertakes major study of its operations amid production problems, Asian economic crisis.


Boeing Co. executives have delayed the start-up of a new 737 jetliner assembly line in Long Beach and are reconsidering the project altogether under a companywide review spearheaded by Alan Mullaly, the new head of Boeing's commercial airplane business.

The Seattle-based aerospace firm is under pressure to reverse heavy losses and stabilize its mammoth commercial jet business, which has been faltering under production line woes and economic troubles in Asia.

With a renewed sense of urgency, the company has recently announced aggressive cost-cutting plans, including job cuts and the consolidation of many of its far-flung facilities.

Mullaly, former president of Boeing's Information, Space and Defense Systems Group, replaced Ron Woodard last month as head of the commercial airplane group.

Mullaly's appointment has triggered a major shake-up within Boeing's most crucial business and a top-to-bottom review of all the unit's projects, including the plans for a new production line in Long Beach.

"When you have as massive an organizational and management change as we have had, and you have a new boss who is laying down some stringent cost and profit goals, you have to look at everything," said Craig Martin, a Boeing spokesman.

"There are dozens and dozens of projects that have to be looked at, and Long Beach is one of them," Martin said. "But it's not being singled out. . . . We're turning over our whole business plan."

Long Beach employees are used to the ups and downs of the aerospace business. But if the 737 project evaporates under Boeing's new leadership, it would be a particularly cruel blow.

Just two months ago, Boeing pledged to add a specialty 737 line at the former McDonnell Douglas facility--a move expected to offset thousands of looming job cuts there.

The August announcement had come after Boeing completed six months of intensive study and forged an agreement to placate Boeing's Seattle-area labor union, which was fighting Boeing's plan to add work outside Washington state.

Boeing's review included a detailed cost analysis and test shipments of mock plane parts over railroad lines linking Long Beach and Wichita, Kan., where the 737 jet bodies are built.

Under the original plan, the Long Beach work force would this month begin assembling specialty versions of Boeing's popular 737 jets--including a modified 737-700 called the Boeing Business Jet--with delivery deadlines in 1999. The production rate would grow to about three jets per month, and the project was set to save about 600 jobs.

Employees in Long Beach learned Monday that Mullaly delayed the start of the line to at least February. The switch is designed to keep employees in both Long Beach and the Seattle area focused on planes promised to customers in 1998, Boeing executives said.

Still, the mood remains upbeat, according to Kedrick Legg, president of United Aerospace Workers Local 148, which represents workers at the Long Beach plant.

"They're still moving forward, the budget is still there [for the line] and the preparation work's still progressing," he said. "I would be very surprised if they canceled the whole thing."

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