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Boeing to Expand Production Facility

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Aerospace and defense major The Boeing Company (BA - Free Report) has decided to expand its production facility in Helena, Mont. by 50%. This would bring the size of the manufacturing facility to 167,099 square feet. The expansion will come at a cost of $35 million and create 20 to 24 new jobs.

The construction work will begin in the fall of this year and is expected to be completed by the latter half of 2014. This facility plays an important role in Boeing’s production process. The Helena facility uses hard metal like titanium to manufacture complex parts of the 737,747, 767 and 787 variants.

Boeing’s industry study report in June suggested that in the next 20 years there will be demand for 35,280 commercial airplanes valued at $4.8 trillion. Boeing with its distinguished product offering is likely to grab the lion’s share of the pie. However, delivering airplanes on time at the current production rate will pose a big challenge for aircraft manufacturers.

Boeing’s decision to expand its manufacturing facility addresses this problem. This facility will also manufacture parts of the 787-10 aircraft, the latest addition to Boeing’s enviable product offering. The 787-10 model has already received 40 orders. The production of important parts will help Boeing’s assembly unit to churn out new airplanes faster and meet delivery deadlines.

Boeing exited the second quarter with a healthy backlog of 4,800 airplanes valued at $339 billion. The order book for the current year is also good with the company receiving net orders of 786 airplanes as on Sep 10, 2013.

Boeing’s archrival Airbus is also trying to penetrate the U.S. commercial market. The prospect of rising demand in the next two decades has led Airbus to open an A320 assemble plant in Mobile, Ala.

Boeing currently has a Zacks Rank #3 (Hold). In addition to the commercial airplane market, Boeing is also an important operator in the defense space. Well-placed defense operators at the moment are Lockheed Martin Corp. (LMT - Free Report) , Alliant Techsystems Inc. and Northrop Grumman Corporation (NOC - Free Report) . Lockheed and Alliant currently retain a Zacks Rank #1 (Strong Buy) while Northrop has a Zacks Rank #2 (Buy).

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