By Harriet McLeod NORTH CHARLESTON S.C. (Reuters) - Boeing Co (N:BA) said on Wednesday it will build its biggest Dreamliner, the 787-10, exclusively at its South Carolina plant in North Charleston, a move that marked the continuing evolution of Boeing's production strategy for its flagship jet.
Investors are banking on rising 787 production to lower the cost of making the jet and generate cash flow that can be used to reward shareholders.
The newest and longest of three 787 models, the 787-10 also is eagerly awaited by airlines seeking its increased seating. The plane will carry 323 passengers, 33 percent more than the 787-8 and 15 percent more than 787-9, with significantly lower fuel consumption than current-generation jets of similar size.
But the new plane's longer fuselage sections will be "too long to be transported efficiently" from North Charleston to Everett, Washington, where Boeing has two 787s assembly lines, Boeing said in a statement.
Systems for the mid- and aft-body sections for the smaller 787s are installed at the North Charleston plant and most of the sections are flown to Everett for final assembly. The South Carolina plant also assembles some of the smaller 787s.
"We looked at all our options and found the most efficient and effective solution is to build the 787-10 at Boeing South Carolina," Larry Loftis, vice president and general manager of the 787 program, said in a statement.
"This will allow us to balance 787 production across the North Charleston and Everett sites as we increase production rates."
The North Charleston line will continue to produce 787-8 and 787-9s, Boeing said. The site also will increase production to five a month in 2016 from three a month currently, Boeing said.
Boeing plans to ramp up 787 production from 10 a month currently to 12 a month in 2016 and 14 a month by 2020. The Everett facility now assembles seven 787s a month.
The 787-10 is being designed at Boeing's Everett factory. Assembly of mid and aft sections will begin in 2016, Candy Eslinger, spokeswoman for Boeing South Carolina, told Reuters on Wednesday. Final assembly of the 787-10 is due to begin in 2017.
The 1.2 million-square-foot South Carolina assembly building was designed for capacity increases, Eslinger told Reuters. Later this year, the plant will begin final assembly of 787-9 jets, which are currently being made exclusively in Everett. The South Carolina plant began production in 2011 and rolled out its first airplane in April 2012.
"Introducing the 787-10 in North Charleston takes advantage of that facility's capacity while allowing the Everett facility to continue improving productivity as it focuses on the 787-8 and 787-9," Boeing said.
(Reporting by Harriet McLeod; Editing by Alwyn Scott)