October 6, 2014 / 5:19 PM / in 3 years

Boeing to build some 777X parts in St. Louis

WASHINGTON/PARIS (Reuters) - Boeing Co (BA.N) on Monday announced plans to start building some parts of its 777X commercial airliner at a huge weapons facility in St. Louis, a move that Missouri Governor Jay Nixon said would add up to 700 jobs in the region in coming years.

Boeing said it would expand its composites facility in St. Louis, which is home to its defense business, to manufacture some 777X parts now built by suppliers or at other Boeing locations outside the United States.

The move, first reported by Reuters, marks the first time Boeing will build commercial aircraft parts in St. Louis, and comes as the company prepares to end fighter jet production there. It also highlights Boeing’s increasing reliance on booming commercial deliveries as U.S. budget cuts erode its defense business revenues.

The news came just days after Boeing announced plans to shift defense services and support work out of Washington state, a separate decision that will bring up to 500 jobs to the St. Louis area. In total, the company has announced plans to bring up to 2,000 new jobs to Missouri, Nixon said in a statement.

Boeing said the St. Louis facility will start building 777X parts in 2017, supporting work at the new 1-million-square foot composite wing center under construction in Everett, Washington. The 777X, an upgraded version of Boeing’s most profitable wide-body jet, is due to start flying in 2020 with 406 passengers.

“Boeing has outstanding capability, resources and experience across the company and the 777X program will leverage that skill base,” said Bob Feldmann, who runs the 777X program for Boeing’s commercial division. “A program of this size requires that we bring together all of the talent that Boeing has to offer.”

Nixon told reporters in St. Louis the decision marked a “huge win” for Missouri, and was a direct result of tax breaks and other legislation passed in 2013 by the Missouri legislature as the state competed to win the 777X assembly plant. Boeing earlier this year opted to build the 777X airframe and wings in the Seattle area after workers agreed to a new labor contract.

The move will help offset a dearth of orders for Boeing’s F/A-18 fighter jets and EA-18G electronic attack planes, which are built in the city. Production of those jets is due to wrap up at the end of 2016, although Congress is poised to fund 12 more aircraft that could stretch that production line through 2017.

The company also builds F-15 fighter planes at the facility, with that work set to continue through 2019.

Shifting 777X work to St. Louis will help Boeing reinforce its industrial and political presence in an area hit hard by the downturn in U.S. military spending, said Richard Aboulafia, analyst with the Virginia-based Teal Group.

He said the decision also reflected Boeing’s desire to build more commercial parts in-house after it ran into quality and schedule problems with 787 parts made by outside suppliers. “This will reduce risk on commercial jet programs,” he said.

Boeing employs some 15,000 people in St. Louis. The company is the largest manufacturer in Missouri, and the state’s third-largest employer, according to Nixon’s office.

But that work is overwhelmingly focused on shrinking defense markets, whereas the market for commercial air travel is predicted to grow sharply over the next 20 years.

Reporting by Tim Hepher and Andrea Shalal; Editing by Meredith Mazzilli and Richard Chang

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