Business World

Boeing to build first foreign production plant to perform final assembly work in Australia

Boeing, an American aircraft manufacturer announced plans on Wednesday for its first foreign production plant to perform final assembly work.

The plant, to be built in Toowoomba, Australia, will assemble military drones, not commercial jets, which is Boeing’s primary business. But it is an interesting step away from the United States for the company.

Boeing’s defense, space and security division has been its most solid revenue stream during the difficult past few years for Boeing. The unit has reported $26 billion in revenue every year since 2018, while the company’s commercial aircraft revenue plunged $41 billion, or 72%, in the face of the 737 Max crisis and the pandemic.

In 2020 about 83% of that defense business came from the US Defense Department. But the division does have significant foreign clients as well.

A huge part of Boeing’s main business comes from overseas. In 2018, the year the aircraft maker posted record revenue of $101 billion, 56% of those came from foreign customers.

Boeing’s Australia operations team designed the drone, known as the Loyal Wingman, to be built there. The factory is expected to create 3,500 new full-time jobs by 2028. Currently the Australian Air Force is the only confirmed customer for the drone, but Boeing plans to export it to other military customers around the world.

Boeing already had its largest non-US operation in Australia, with about 4,000 employees, some of them doing pre-assembly work on parts that are shipped to the company’s US factories.

It also has a facility in China which was set up to complete the interiors and final painting on the 737 Max commercial jets it is selling there. Part of the reason for locating the plant there was to placate the Chinese government, which must sign off on all jet sales into the country.

But that facility, which opened in late 2018, completed only a single 737 Max before two fatal crashes caused a global grounding of the plane.

Although most countries are again allowing the plane to carry passengers, the 737 Max remains grounded in China.