Dennis Muilenburg, chief executive officer of the world’s largest aerospace company, Boeing Co (NYSE:BA), denies that moving some of the company’s aircraft completion work to China and other markets will affect its U.S. manufacturing workforce.
In a recent interview, Muilenburg said the overseas facilities, including a new plant its building with a Chinese partner near Shanghai, isn’t directly harming U.S. jobs. The new plant in China will focus on painting and furnishing jets used in China.
Interestingly, Boeing is building the plant in partnership with state-owned Comac, which produces the “C919” jetliner, which is a direct competitor to Boeing’s top-selling “737.” Comac also supplies Boeing with parts for its jets, but is looking to produce a range of its own. Comac recently inked a deal with a Russian aerospace company to develop a new wide-body plane–the most profitable part of the industry.
Muilenburg said that opening plants overseas is an essential part of doing business in China. But he also conceded that, “We know as we’re investing there we’re also creating a competitor.”
Muilenburg is looking to reshape Boeing and increase the profitability of its core commercial jetliner business and increase defense exports while trimming costs with job cuts and additional automation. To that end, at the end of May, Boeing’s workforce fell to around 145,000 from 175,000 in 2012.
Boeing is shipping jobs overseas at a time when U.S. manufacturers are under pressure from President Trump to boost employment in return for tax and regulatory changes. But changes in trade policy do not sit well with major exporters like Boeing.
Boeing, which has retained close ties with the White House, supported the Trans-Pacific Partnership trade deal which the Trump administration walked away from. As the White House looks to strengthen U.S. jobs, Boeing has been securing contracts with the provision that some of the work will be completed overseas.
The company recently secured a potential $50.0 billion in commercial and defense sales from Saudi Arabia. As part of the deal, some of the Boeing “Apache” attack helicopters must be completed in Saudi Arabia. Boeing is also looking to assemble fighter jets in India.
While Boeing doesn’t say how many jobs will be created in China, Lockheed Martin Corporation (NYSE:LMT) also recently signed lucrative defense deals with Saudi Arabia that come with the same caveat. The company is selling 150 “Black Hawk” helicopters that will be assembled at a new plant in Saudi Arabia, creating 450 jobs there.
“Boeing Chief Says Overseas Plants Won’t Hit U.S. Jobs,” The Wall Street Journal, June 8, 2017.
“U.S.-Saudi Defense Deals Open Up Jobs,” The Wall Street Journal, May 21, 2017.