Boeing-Wichita on sales block

Aircraft giant puts future of 9,000 Kansas jobs in question

Boeing Co., the state’s largest private employer, wants to sell its commercial jet parts and support operations in Wichita and Oklahoma, the company said Thursday in a memo to employees.

“It’s been no secret that we’ve been studying options for the future of commercial airline operations in Wichita, Tulsa and McAlester (Okla.),” the memo from four Boeing executives said. “We’ve now reached the point where the next logical step is to see whether there is market interest in these operations and, if so, how they might be valued.”

A sale would put in question the future of about 9,000 commercial aircraft jobs in Wichita, where the Chicago-based company employs about 12,400 workers. It would also affect an additional 1,200 workers at Boeing sites in Oklahoma.

The company’s defense division, which also has several projects in Wichita, and its 3,400 workers there apparently would not be part of the sale.

Such a loss would send shockwaves through Wichita’s landmark aviation industry — and its reverberations would be felt in Lawrence and at Kansas University.

Lawrence, KU impact

“Boeing is like the anchor tenant in the aviation industry down there, and I’m sure that is a big reason why KU has been able to maintain such a healthy aerospace school,” said Bruce Lalonde, director of administration for Kohlman Systems Research, 319 Perry, a Lawrence-based aviation testing and engineering firm. “The school is why we’re here in Lawrence.”

According to a recent ranking by U.S. News and World Report, KU has the 24th-best public aerospace engineering graduate program in the country.

Mark Ewing, chairman of the KU aerospace engineering program, said engineering school officials would be watching closely how a sale developed.

The school has had a strong relationship with Boeing, he said, and the company is a major employer of KU engineering graduates. If another company were to purchase the Wichita facility and do subcontracting work for Boeing, it could make it more difficult for engineers to find work in the area.

“If you are doing subcontract work, you still need engineers but you need fewer of them,” Ewing said.

‘Important relationship’

Exact dollar totals weren’t immediately available, but he said the school had a contract to do research work for Boeing. Even if such business and in-state hiring connections were lost as a result of Boeing reducing its Kansas presence, Ewing said, KU would continue to work with the aviation giant.

“We probably send five engineers to Boeing’s Seattle operations for every one that we send to Wichita, so we’ll continue to have an important relationship,” he said.

The school also has a strong relationship with Alan Mulally, Boeing executive vice president and president and chief executive of the company’s commercial airplanes division. Mulally is a Lawrence native and a graduate of KU and Lawrence High School.

The company acknowledged in January it was considering the possibility of selling its Wichita operations in internal strategic planning documents. The memo said the process could take months.

Boeing spokesman Craig Martin said Thursday the company wasn’t ready to discuss actually selling its commercial operations but was gauging market interest in the possibility, which he called only one possible alternative.

Shifting focus

“What we’re asking is, ‘Here are the facilities. Are you interested or would you be interested in them, and how would you value them?”‘ Martin said.

The company wants to focus more on design, sales and marketing and less on some of its manufacturing operations, he said.

In Thursday’s memo to employees, the company officials wrote, “None of us can predict the future. We can tell you, though, that the Wichita/Tulsa division will remain a critical supplier to Boeing under any of the scenarios under study.”

The operations could fetch “a couple of billion” dollars, according to aerospace analyst Paul Nisbet of Rhode Island-based JSA Research. Widespread rumors that prospective buyers have been inspecting the sites in recent weeks probably prompted Boeing’s memo, he said.

One of those thought by analysts to be a potential buyer is British conglomerate GKN Aerospace Services, which has acknowledged it was seeking to buy more plants in U.S. military and commercial aircraft manufacturing. GKN purchased Boeing’s Hazelwood, Mo., facility near St. Louis in 2001.

Streamlining operations

Another prospective buyer is Vought Aircraft Industries Inc., a Dallas-based manufacturer of large aircraft structures and key Boeing supplier, said Richard Aboulafia, an analyst with the Teal Group.

Messages left Thursday with GKN spokeswoman Leigh Forrester and with Voughton were not immediately returned.

Nisbet said Boeing’s possible shedding of the operations was no surprise to industry experts.

“They’ve been slowly but surely getting out of the more concentrated manufacturing efforts and concentrating on systems integration and final assembly,” Nisbet said. “They sold a plant to GKN in St. Louis a couple of years ago, and there’s been talk of others in the Washington state area.

“It’s a continuing endeavor of theirs to streamline their operations so that there aren’t the ups and downs of hiring and firing to the degree that they’ve had and to concentrate on what they think they do best.”

Boeing employs 12,400 people — down 5,000 from pre 9-11 levels — at its landmark Wichita plant. The company is the largest aviation employer, and largest overall employer, in Wichita, which touts itself as the “Air Capital of the World.”

Title in jeopardy?

But that title may be in jeopardy if Boeing pulls up stakes, said William Anemaat, vice president of DAR Corp., 120 E. Ninth St., a Lawrence-based aviation design company.

Like Kohlman, DAR does not have any specific contracts with Boeing’s Wichita division, but Anemaat said its presence helped the company land new business.

“It is definitely a positive to have a big name like Boeing in the state,” he said. “We use that connection all the time when potential clients contact us and ask us what’s in Kansas.”

Boeing produces parts for all its commercial jetliners except the 717 in Wichita.

The Tulsa plant builds wing parts for Boeing 737, 747 and 777 models and has about 1,000 workers. Boeing said in November it would bring 500 more jobs for work on wing components of the company’s new airplane, the 7E7 Dreamliner. McAlester has about 200 Boeing jobs.

Shares of Boeing stock fell 41 cents to close at $41.35 Thursday on the New York Stock Exchange. In after-hours trading, the shares fell another 35 cents.