Boeing may end cargo plane production in 2009

Plane maker says decision to keep making C-17 plane will be contingent on orders from armed forces; shutting production line could cost 5,500 jobs.
NEW YORK (Reuters) -- Boeing said on Friday it would end production of its C-17 military cargo plane in mid-2009 if it did not receive any further orders from the U.S. armed forces.
Boeing said in a widely expected announcement that it told suppliers to stop work on four planes for which there is no firm funding, which it said was the first step in the long process of shutting down its supply chain.

Boeing, which has been lobbying Congress to continue production of the plane, said the last C-17 would roll off its Long Beach, California production line in mid-2009 unless it won new Department of Defense orders.
The Chicago-based company said shutting the production line could ultimately cost 5,500 Boeing jobs in California, Missouri, Georgia, and Arizona.
The aircraft, with a list price of about $200 million, is designed to carry large equipment and troops to hard-to-reach airfields. It has been in service since the 1990s.
It is one of Boeing's most significant projects, bringing in about $3 billion in annual revenue. Boeing's defense unit is on track to post about $30 billion in revenue this year.
The company said it is evaluating the financial impact of closing production and may incur costs which are not recoverable from the U.S. government.
Boeing's stock fell 1.2 percent on the New York Stock Exchange.
Executives said a letter was sent to all 700 supplier companies on the aircraft, directing them to stop work on planes that lack funding.
Boeing said it made the decision to begin winding down its supply chain now because some components on the aircraft must be ordered 34 months before assembly of the plane.
"No one questions its (the C-17's) operational value," said Ron Marcotte, general manager of Boeing's Global Mobility Systems unit, in a statement. "But we can't continue carrying the program without additional orders from the U.S. government."
Boeing has orders on its books to build 44 more of the aircraft. Twenty-six are being built for the Air Force, rounding off its order for 180 of the planes.
A further 18 are to be built mostly for international customers, including Australia, Canada, Britain and NATO.