Boeing hopes to minimize the impact of job cuts on the C-17 line following its decision to slow the airlifter production rate by a third, but acknowledges that some losses are inevitable.

Production is being pared back in a bid to extend the program life beyond 2012 and to buy time for new domestic and international orders to materialize . The rate is already in the process of being reduced -- 13 aircraft are now due for delivery in 2011, compared to 15 in 2009. The line will stabilize at the slower rate in mid-2011 and, without any additional orders , continuous production will be assured to September 2012.

The 10-per-year rate, enough to sustain a two-shift system, was chosen over other options -- including a one-aircraft-per-month rate -- following recent extensive studies . "We've been looking at a lot of things over recent months and [rate reduction] is a result ," states Boeing.

Although workforce numbers will be reduced, the final tally of job losses will not be determined until later this year. The manufacturer currently employs 5,000 at its Long Beach, Calif., site. An additional 1,250 jobs are directly related to C-17 production work at Boeing sites in St. Louis, Macon, Ga., and Mesa, Ariz. The impact will also be felt throughout the supply chain, which Boeing says supports a further 25,000 jobs at companies scattered across 44 states. "We don't have the answers on that yet, though we're hoping to minimize the impact as much as possible," Boeing adds.

Relative to the workforce cuts , the manufacturer also faces keeping the aircraft relatively affordable in order to secure ongoing sales, despite the lower rate. Although considerably offset by the reduced workforce in future years, the unit cost is expected to rise given the increased charges faced by suppliers; many of them have been supported by Boeing to protect the production of long-lead items for unfunded aircraft.

A n annual production rate of about 15 per year has been maintained since 2001 . However, for the past four years Boeing has been fighting a rear-guard action to sustain the high rate against a dwindling order backlog from the U.S. Air Force -- its prime customer. Despite a significant increase in international sales, signaled most recently last month by India's request for 10 aircraft, the protracted procurement schedule for most overseas customers means the present tempo is not sustainable.

Defense Secretary Robert Gates, fresh off a slew of budget victories last year, in February promised sterner veto threats for the remaining few big-ticket items still in contention. During the Feb. 1 defense budget briefing, Gates specifically referenced the C-17 and commented that he would recommend President Barack Obama enact a veto if funding for additional airlifters was pursued by ­Congress.

Ten additional C-17 orders were included under the recently authorized Fiscal 2010 Defense Appropriations Act, but have yet to be formally ordered. These are provisionally included in the 35 firm undelivered backlog which -- if fulfilled -- will extend production through late 2012. The total orderbook stands at 250, including two options that are expected to be firmed up shortly by Qatar. Of this figure, 213 have been delivered, which will grow this month to 214 with the handover to USAF of its 195th aircraft.

Boeing is looking to international sales to sustain the line in the mid-term, particularly with negotiations now underway with India covering 10 firm orders and 10 options. The UAE Air Force and Air Defense -- the second Middle East customer for the C-17 after Qatar -- will take delivery of four C-17s in 2011 and two in 2012, while the U.K.'s Royal Air Force recently secured funding for a seventh , to be delivered in December. The rate slowdown may now provide the U.K. time to find money for an eighth and could provide an opportunity for protracted delivery schedules believed to be under discussion with other nations, including Saudi Arabia.

Boeing's long-term hopes remain fixed, however, on future Air Force business and the potential timing and numbers of further Lockheed Martin C-5A retirements. The company believes "airlift needs may be growing with the addition of more troops and more continental U.S. basing, along with the significant contribution airlift brings to humanitarian aid and disaster relief." The sticking point hinges on the outcome of debates over the final make-up of the strategic airlift fleet, the outlook for which could depend largely on a report to Congress regarding the delayed initial operational test and evaluation phase for the re-engined C-5m.

Publication of the report, due in mid-March, is a congressionally mandated pacing item controlling the C-5A retirements. The Air Force has been blocked by Congress from grounding any more of the elderly transports until a minimum of 90 days after the C-5M report. The Fiscal 2010 defense appropriations bill, meanwhile, mandates a mix of strategic airlifters totaling 316. Air Force Chief of Staff Gen. Norton Schwartz "recently reiterated that he believes 205 C-17s and 111 C-5s are needed to meet strategic airlift requirements, and that procuring C-17s above 205 should involve a like reduction/retirement of C-5A aircraft," says Boeing.

Photo: Guy Norris