Boeing begins selling its new P-8 'sub killers' overseas
When Boeing delivered its first P-8 "submarine killer" to India's navy May 15, the delivery added an international customer to what is already Boeing's largest active military project in the Puget Sound region.
The P-8's increasingly busy production line suggests that the Puget Sound area will continue to be home to significant Boeing defense work, despite some drift of commercial aircraft manufacturing out of the region.
About 1,200 Boeing workers - split between Boeing's Renton plant and a site near the Museum of Flight in Seattle - are turning 737s into deadly aircraft able to find and destroy submarines and some surface ships. Instead of passengers, the P-8s carry sonars, racks of Harpoon missiles and a belly full of underwater torpedoes.
Boeing has signed three initial contracts with the U.S. Navy totaling $5.2 billion for 24 of the Navy's version, the P-8A Poseidon. On April 25, Boeing delivered the eighth P8-A out of 117 the Navy intends to buy, said Egan Greenstein, Boeing's director of P-8 business development.
Currently, the production line is running at a 12-per-year rate, and that will rise to 14 for fiscal 2014, toward a full annual production rate of 24.
While the Navy's P-8A remains under some threat from budget sequestration, Teal Group analyst Richard Aboulafia thinks, as do others in the industry, that the combination of strong Pentagon demand, potential international demand, and smooth execution by Boeing bodes well for the P-8 program's survival.
"You've got the rarest oddity: a new defense program that's probably been executed pretty well," he said.
And while India is the first international customer for the aircraft, other nations are lining up.
"Australia is very interested. Canada is very interested too; that would really be helpful," Aboulafia said, adding that Malaysia and Korea are among other potential customers.
The P-8 will supply equipment needed by many nations with coastlines to defend, to detect vessels or submarines from unfriendly neighbors and to take them out if needed, Boeing's Greenstein said.
Another reason for the program's good prospects is that the Pentagon is replacing turboprop P-3s, some of them more than 40 years old. A fleet of those now operate out of Naval Air Station Whidbey Island.
"You have a strategic shift going to the Pacific, an airplane designed to fly and fight in that environment, replacing a plane whose reliability is going down and cost going up," Greenstein said. "There is a lot of pressure to save money and support national strategic objectives, and P-8 is right in the middle of it."
But for all the aircraft's power, the factory floor of the 171,000-square-foot Mission Systems Installation and Checkout building, near Seattle's Museum of Flight, has a pristine, almost cathedral-like atmosphere.
The floor is a shiny and light gray, and the gray, windowless aircraft are lined up nose-to-tail.
A key to the aircraft's success has been its multi-step assembly process, designed so the fuselage and wings are fabricated for the military aircraft from the beginning, with no expensive retrofits needed. The 737-800 fuselages are assembled at Spirit Aerosystems in Wichita specifically for the P-8, with no windows, heavier skins in some areas and special cutouts for the torpedo-bay doors, oversize exit doors and sensing equipment.
Earlier adaptations of commercial airframes to military use have required expensive rebuilding of those aircraft once they were fabricated.
"The Navy estimate is that they think about $1 billion was saved in the development of this airplane by incorporating everything in line, rather than buying an airplane and tearing it apart and modifying it," Greenstein said. "It makes the production more efficient, higher quality, and it lets us learn things on the commercial side, and carry those efficiencies over to the military side."
Once the fuselages arrive by rail in Renton, traveling with civilian 737 fuselages, the air frames are assembled with heavily reinforced 737-900 wings. This is done on a special high-security production line, in a building separate from Boeing's two 737 commercial lines.
Then the painted but empty P-8 aircraft are flown to nearby Boeing Field, and rolled across East Marginal Way in the middle of the night into the final assembly building. There, workers install the sensors, five side-by-side consoles for operators, and the control systems for the Harpoon missiles, torpedoes, and sonar buoys the aircraft can drop in the ocean to find submarines.
While the operational core of the P-8A is military equipment, as much of the aircraft as possible is kept just like any 737, to reduce the cost of acquisition, assembly and repair.
The increasing efficiencies show in the numbers. The 2011 Navy contract was for six aircraft at $267 million each, but for the current September 2012 contract for 11 aircraft, the cost has dropped to $173 million.