Boeing Resumes 747 Production, Struggling to Meet Delivery Goal

Boeing Co. on Tuesday said it resumed production of its 747 jumbo jets after the company temporarily closed its assembly line last month because of parts and labor shortages.

During the 747 shutdown, Boeing said it reduced parts shortages, cut the number of jobs behind schedule by 80% and reduced disruptive out-of-sequence work--when parts are assembled out of order.

Boeing’s announcement was the first monthly update on a plan adopted in October to get production back on schedule as it struggles to fill record aircraft orders. The production bottlenecks are so severe that Boeing last month took a $1-billion, third-quarter charge, and warned that it may take another $1 billion in pretax charges to cover more assembly line problems into 1998.

“They’re ahead of where they thought they would be at this time,” said Peter Musser, senior portfolio manager with Rainier Investment Management Inc. “It looks pretty positive.”

Shares of Seattle-based Boeing rose $1.75 to close at $51.38 on the New York Stock Exchange.

Boeing said it expects to deliver 335 planes by the end of 1997, close to its original projections of 340 to 350. The company expects to deliver 550 more planes in 1998.

“We’re pretty pleased with the progress that we have made, but certainly we are apprehensive about how we hold onto that progress,” Boeing President Harry Stonecipher said.

In early October, Boeing announced it was taking several steps to correct problems caused by unprecedented customer demand for its commercial jets.

Part of the plan called for stopping the 747 jumbo-jet production line for 20 days and slowing final assembly of about 737 airplanes. The production slowdown was designed to allow employees to finish work that was running behind schedule and to give parts suppliers--inside and outside the company--a chance to catch up.

In its status report, the company said things are slowly falling into place. The 747 line resumed full production in mid-November, and work is picking up on the next-generation 737 line.

“We continue to track the situation daily, but our factories may not be back to where they should be until the second quarter of next year,” said Bob Dryden, executive vice president for airplane production for Boeing Commercial Airplane Group.