Seven years after making its last serious attempt to shut down production of its C-17 Globemaster III transport aircraft in response to flagging orders, Boeing (BA +2.37%) says the program is finally nearing its end.
With 22 planes ordered and in backlog, for the time being, Boeing is still producing C-17s at its factory in Long Beach, Calif., at the rate of 10 planes per year. Orders on hand, however, will only suffice to keep the factory operational through the rest of this and next year, and into 2015. And so, on Wednesday, Boeing confirmed that it intends to wrap up production of its final C-17 in 2015 -- and then shutter the factory.
Thereafter, Boeing's C-17 business will be restricted to after-delivery support of the global C-17 fleet, which includes some 257 C-17s scattered around the globe in the air forces of Australia, Canada, India, Qatar, the United Arab Emirates, the United Kingdom, NATO, and of course, the U.S. Air Force (home to 223 Globemasters).
Boeing says that closing down production could affect nearly 3,000 employees who work on the plane in Long Beach, Macon, Ga., Mesa, Ariz., and St. Louis, and will certainly result in some "workforce reductions" beginning in 2014. For the company itself, closure should cost less than $100 million, and Boeing intends to take a charge to earnings for this amount in the current earnings quarter.
In a statement, Boeing Defense, Space & Security President and Chief Executive Officer Dennis Muilenburg lamented: "Ending C-17 production was a very difficult but necessary decision."
