Boeing Buys a Vought Aircraft Plant


Taking control of the South Carolina manufacturing facility may speed takeoff of Boeing's much delayed 787 Dreamliner

Editor's Note: An earlier version of this story incorrectly reported when Vought fired a 787 project executive and the date of an analyst's site visit. Both occurred in 2007.

Boeing (BA), frustrated with repeated delays on its 787 Dreamliner jet, dropped the other shoe on July 7 and said it would spend $580 million to purchase a Vought Aircraft Industries plant in South Carolina.

The big planemaker just last year bought the outfit's stake in a joint venture with an Italian company, Alenia Aeronautica, that helps in construction of the 787, which was unveiled to the public two years ago but has suffered an embarrassing series of manufacturing missteps since then. The move helps seal Boeing's control over the delay-hampered assembly process for the mostly carbon fiber plane.

Boeing executives recently announced a sixth and so far indefinite delay in the plane's first flight. The company says the Vought acquisition in South Carolina should speed up production efforts. "Integrating this facility and its talented employees into Boeing will strengthen the 787 program by enabling us to accelerate productive and efficiency improvements as we move toward production ramp-up," Boeing Commercial Airplanes CEO Scott Carson said in a company statement.

Overwhelmed But Relieved

For their part, Vought leaders suggest they've been financially overwhelmed by the effort and are relieved at Boeing's takeover. Vought CEO Elmer Doty said in the same Boeing statement that "the financial demands of this program are clearly growing beyond what a company our size can support."

Boeing has been pressing hard on Vought, an outfit based in Irving, Tex., and owned by private equity firm The Carlyle Group, as the repeated delays in the Dreamliner have cost it orders for the jet and public embarrassment. Vought's plant assembles structures and installs various systems in aft fuselage sections. Vought in 2007 sacked its top 787 project executive, and Boeing sources told the Seattle Post-Intelligencer that his firing was linked to problems in delivering work on the plane. That same year, analysts complained of "unfinished" facilities. Vought officials say they have "fully facilitated" the factory now.

For critics of Boeing's outsourcing program on the jet, the move to take a big part of the production line effectively in house is confirmation that Boeing's efforts to rely on suppliers for a large amount of work on the new plane was misguided. Vought and Alenia North America, the Italian company with which Boeing is now allied in the Global Aeronautica joint venture, are supplying more than 60% of the fuselage, the Post-Intelligencer has reported.

The 787 was last supposed to undertake its first flight in June. But Boeing delayed that schedule, citing a structural problem.

Weber is BusinessWeek's chief of correspondents, based in Chicago.

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