Inside the 112.5ha Boeing factory in Renton, near Seattle, the massive fuselages of unfinished 737-800s gleam under bright industrial lights as workers slowly put on wings, engines and seats to give shape to the aircraft.
One of these planes belongs to Singapore’s SilkAir and is starting its first day on the assembly line.
“It will go through 10 flow days — each day essentially a specific stage — before it’s completed. And then weeks of testing come before delivery,” Boeing Commercial Airplanes Director of Manufacturing Erik Nelson told TODAY as he led reporters on a tour of the factory.
“Here in Renton, we are making a record high of 38 737s every month. By April next year, we will push that up to 42 planes each month, as we upgrade our production line here to build the 737-MAX,” he added, referring to the next-generation Boeing aircraft that will be delivered in 2017.
Around 70 per cent of the aeroplanes built in Renton serve the international market, especially Asia, where many airlines are ramping up capacity to meet demand from a growing middle class. Some of the biggest buyers in the region include Indonesia’s Lion Air and China Southern Airline, which have received 22 and 27 737s respectively this year. SilkAir is also a major customer: Last year, it placed an order for 54 B737s — including 31 737-MAX aircraft — as part of the airline’s fleet transition to Boeing.
But with demand expanding so rapidly, the plane manufacturer is now facing the challenge of dealing with a massive backlog of more than 3,400 unfilled orders across the entire short-haul 737 family, despite its best efforts to meet the voracious global appetite for its workhorses.
Boeing is not the only company in the industry with a backlog issue, said Mr Mike Nunes, Director of Asia Business Development at Boeing.
“If an airline orders a 737 today, it won’t receive it for many years. But our main competitor Airbus is also in the same situation — it has just as big a backlog. So each sales campaign becomes a battle of pricing and offering,” he said. “We will continue to push up our production rate to satisfy market demand and, hopefully, burn up that backlog.”
This will be achieved mainly by improving efficiency and processes at the Renton factory via technology, added Mr Nelson. “Currently, we have no plans to expand our production facilities or build more factories, but that hasn’t stopped us from ramping up production here.
“If you came to the Renton factory two years ago, we could produce only 31 planes each month. We continue to break that record and eventually will be able to produce 47 737s in a month by 2017,” said Mr Nelson.
And, by then, the first 737 MAX aircraft will also enter the market. The next-generation 737s will be the pinnacle of Boeing’s fuel-efficient technology, with the planes capable of reducing fuel use and CO2 emissions by 14 per cent. They will also be part of the firm’s plan to stand out among its competitors, which not only include Airbus, but smaller manufacturers such as China’s Comac, Canada’s Bombardier and Brazil’s Embraer.
“Today, we roughly have a 50:50 split of the market share with Airbus. How that split will look like exactly, going forward, we can’t predict, especially with new competitors coming online. But our hope is to maintain that share going forward by providing our customers with the industry’s most fuel-efficient products and services,” said Mr Nunes.
Meanwhile, Boeing remains very bullish on its business outlook, particularly in the Asia-Pacific region.
“Even through the recessions, global air travel has been growing by 5 per cent annually on average since 1980,” he added.
“From now till 2032, US$4.8 trillion (S$6 trillion) worth of new planes will be delivered, 47 per cent of which will be single-aisle models like the 737. Within the Asia-Pacific, air travel will grow by 6.2 per cent annually in the next 20 years, during which the region will account for 69 per cent of the aircraft delivered worldwide. Despite the competition, Boeing still represents three quarters of the world’s fleet. Our position is very strong in the market.”
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