Guy Norris/LOS ANGELES
McDONNELL DOUGLAS (MDC) is to build MD-11 fuselage barrels at its Long Beach final-assembly site after a coalition of California state, local city, union and local utility officials agreed a cost-saving package worth up to $138 million over the next five years.
The move back to Long Beach follows the 1994 decision to cease fuselage production at General Dynamic's Convair division in San Diego, California.
The return to California represents a surprise reversal of the company's policy of moving production away from the costly state. Before the cost-cutting package was agreed, it considered moving production to Alenia in Italy, or to a Douglas Aircraft (DAC) site in Salt Lake, Utah.
"There's one reason why we did it...cost," says DAC president, Bob Hood. The company has committed to reducing the cost by 15% of MD-11s and MD-90s delivered in 1997. "What we're doing today assures us we'll meet that target."
Hood adds that the MD-11 decision does not spell the end for DAC's search for low-cost subcontracting of subassemblies abroad. "We will continue to look globally for places where we can build parts and assemble them in California," he says.
The package includes a $36.6 million reduction in labour costs. In return for the promise of 1,350 new jobs at Long Beach, the local union has agreed to a new classification scheme under which some employees will perform more than one job.
Other contributions include $7.8 million in state-supported employee training, $25 million in tax incentives and more than $10 million in reduced power costs. A further $27.4 million could come from "reduced regulatory costs", if proposed reductions in legislative and regulatory "red tape" are adopted. About $31.1 million could also be realised from a proposed 15% cut in California's corporate income-tax rate.
Work on re-locating the production jigs from the Convair site began on 15 February. Construction of the first fuselage barrel will begin at Long Beach in September, with completion scheduled for January 1996 coinciding with delivery of the last Convair-built section.
Source: Flight International
