Boeing to open 737 plant in China

Chicago-based plane maker will inaugurate its completion and delivery centre in Zhoushan today

Boeing Co. is poised to open its first 737 finishing plant in China, underscoring the company’s commitment to the world’s largest aircraft market amid simmering trade tension.

The Chicago-based plane maker will inaugurate its completion and delivery centre in Zhoushan, 90 miles southeast of Shanghai, today after more than a year of construction.

The facility marks a rare industrial foray outside of the US for Boeing and a joint venture with state-owned plane maker Commercial Aircraft Corp. of China Ltd.

While the plant was set in motion before US President Donald Trump was elected, the ribbon-cutting risks being overshadowed by his titfor-tat on duties with China on products ranging from cars and machinery to meat and About one of every four jets that Boeing builds is bound for China, while the country’s airlines are the biggest buyers of the 737, the manufacturer’s largest source of profit. China is expected to need about 7,700 commercial planes over the next two decades to connect an increasingly mobile middle class. That represents a $1 trillion market opportunity for Boeing, Airbus and home-grown rivals like Comac.

Handing off light manufacturing to the new completion centre could also free up valuable capacity as Boeing charts 737 production increases well beyond the 57-month rate set for 2019. The company only builds the narrow-body jets at a single site in Renton, Washington. soybeans. A three-month truce announced earlier this month has been under threat since the arrest of Huawei Technologies Co.’s chief financial officer in Canada after the US sought her extradition on allegations of violating Iran sanctions.

The Zhoushan facility, with roots on both sides of the Pacific, is emblematic of the balancing act for Boeing in China.

History

The planemaker’s ties date to President Richard Nixon’s 1972 arrival in China aboard a Boeing 707. Chinese workers at the new plant will put the finishing touches on US-built planes flown over from a Seattle-area factory, before delivering them to local customers.

“It’s difficult to overestimate the importance right now of China as a customer,” said Ken Herbert, analyst with Canaccord Genuity.

Boeing’s commercial stronghold in China is increasingly threatened by Airbus’s large industrial investment, as well as the trade warfare stoked by President Trump. While aerospace has largely been excluded from the wrangling, China has sent subtle reminders that the sector remains at risk.