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Boeing to Expand South Carolina Facility

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One of the largest commercial airliner manufacturers The Boeing Company (BA - Free Report) decided to expand its existing South Carolina Facility. The expansion of the existing facility will allow the company to churn out its 787 Dreamliner at a much faster pace.

Boeing will begin construction of a new paint facility in its existing North Charleston, S.C. campus in the second half of 2014. The goal is to get the fully assembled 787 Dreamliners painted in South Carolina from mid 2016.

At present, after a Boeing Dreamliner is assembled in its South Carolina facility, it is flown to Fort Worth, Texas, for final paint and then flown back to South Carolina for customer delivery. This unnecessarily delays the delivery of the aircraft to the customers.

The 787 Dreamliner is a popular variant well accepted by the airline industry for its fuel efficiency and comfort. Though plagued by delays and technical glitches, the Dreamliner hardly witnessed any slowdown in demand. As of Nov 2013, Boeing received 1,012 orders for the Dreamliner with only 103 delivered since its launch.
Year to date the company received orders for 182’ 787. To cope with the brisk demand, the company needs to spur the production rate. This new 230,000 square foot paint facility will do precisely that.

Boeing also decided to add another 468 acres (189 hectares) in North Charleston, S.C. through a long-term lease. The company will take the lease from Palmetto Railways, a division of the S.C. Department of Commerce. The company has an option to purchase all of the 468 acres (189 hectares) at the end of the initial lease term at 2027 end. This move will take care of any future expansion plan of the company.

Apart from its presence in the commercial airline sector, Boeing has a large exposure in the defense sector. Boeing currently has a Zacks Rank #2 (Buy). Other stocks from the sector worth considering are Alliant Techsystems Inc. , HEICO Corporation (HEI - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) . While Alliant Techsystems and HEICO Corporation carry a Zacks Rank #1 (Strong Buy), Huntington Ingalls holds a Zacks Rank #2 (Buy).  

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