Economy

Boeing announces new plant in Illinois but gives no details

WASHINGTON — Rumors were flying through the nation's defense and aerospace communities Thursday morning as an announcement neared on a new production plant at an airport in southern Illinois. It was no secret that it would be a Boeing plant, but beyond that little was known.

Some speculated that the plant would be used to overhaul retired 747s that the airlines were buying from desert graveyards, where they'd sat for years. Others thought it would be used to convert secondhand 767s into Air Force refueling tankers. There was even speculation that the plant would make parts for Boeing's new 787 Dreamliner.

When the announcement finally came, Boeing had nothing to say about what would be manufactured at the plant at MidAmerica Airport in Mascoutah, Ill.

Given its proximity to Boeing's production facilities in the St. Louis area — and the fact that the head of Boeing's defense, space and security division was at the news conference — there seemed little question that it would be defense-related, however.

Some analysts said it would give Boeing a presence at Scott Air Force Base, whose Air Mobility Command is one of the company's biggest customers.

"If you are a company doing significant business with the mobility command, it makes a lot of sense to have a major presence nearby," said Loren Thompson, an analyst with the Lexington Institute, a northern Virginia defense and national security research center.

The Air Mobility Command, which coordinates the global movements of aerial refueling tankers and Air Force cargo planes, flies everything from aging Boeing KC-135 tankers and newer C-17 airlifters to AWACS, JSTARS and the Flying Command Posts, Thompson said.

"If Boeing expects to continue doing that type of business, it's not a bad idea to have a facility there," he said.

Boeing also has bid on a $35 billion contract to build a new generation of aerial tankers for the Air Force. The Boeing plane would be based on a 767 airframe built at the company's plant in Everett, Wash., and converted for tanker use at its Wichita, Kan., facility. The contract eventually could be worth $100 billion. The European Aeronautic Defense and Space Company — a European defense contractor that's the parent of Airbus, Boeing's chief competitor in the commercial airline market — has submitted a tanker bid based on an Airbus A330 airframe.

With $23.5 billion in contracts, Boeing was the nation's third largest defense contractor in 2008. It trailed only Lockheed Martin, with $35.7 billion, and Northrop Grumman, with $24.9 billion.

While Boeing's corporate headquarters is in Chicago and its commercial airplane division is based in Seattle, its defense work is centered in the St. Louis area, where 16,000 workers build F-15s, F-18s and C-17s. Boeing acquired much of McDonnell Douglas' defense operations when it took over that company in the late 1990s.

The MidAmerica Airport plant would be Boeing's first manufacturing facility in Illinois.

The company said the new plant would house assembly and subassembly work.

A spokesman for Boeing in northern Virginia, Dan Beck, said the company was well aware that Scott Air Force Base and the Air Mobility Command were nearby.

"We always like to be close and responsive to our customers," Beck said. "But that didn't drive this thing."

Beck said the decision to put the plant at MidAmerica was due to the proximity to Boeing's St. Louis defense plants and the fact that there was a highly skilled work force in the area.

"What we are looking at are defense programs," he said. "The possibilities are unlimited."

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