The msg below is circulating among Boeing's employees. A friend of mine, who works for the company, sent it to me. Of course, we have to assess and weight the comments, however it is worth to analyze such perspective.
The Downfall of a Great American Airplane Company - An Insider's Perspective
Recently, there has been much attention focused on the "Boeing brain drain" that may have contributed to the February loss of Shuttle Columbia. However, most people do not realize that a similar "brain drain" is occurring within the Commercial Airplane division of Boeing.
Because of Boeing's massive layoffs and strategy of offloading design work to foreign design centers, the company has lost control of its engineering processes. The recent actions of the Boeing Company in its Commercial Airplane division are seriously jeopardizing the quality and safety of its airplanes. Hopefully, the company's current course of action will not lead to the same tragic consequences that occurred on February 1, 2003.
Before we begin, we wish to establish our credentials. Since we are current Boeing employees, we obviously don't want to give information that can positively identify us.
This paper was composed by a group of aerospace design engineers with many years at the Boeing Company. We have been involved in several new airplane programs across a variety of functions and have intimate knowledge of the inner workings of Engineering at Boeing.
We are "in the trenches" every day, involved in the nuts-and-bolts business of designing airplanes. We have a unique and in-depth insider's view of the damage being sown at the Boeing Company by Phil Condit and his cohorts.
During the past several years, Boeing Commercial Airplanes has been offloading its design engineering work to foreign "design centers". American engineers and technical designers are being laid off by the hundreds while Russian engineers are quietly hired at the Boeing Design Center in Moscow. Many of the Russian engineers are not nearly as experienced as the American engineers being laid off. Engineering layoffs have cut so deeply into Boeing's talent pool that knowledge has been irretrievably lost. And the layoffs continue.
Soon Boeing may reach (if it hasn't already) a "point of no return" where irreversible damage has been done to the company's ability to design and build safe airplanes, even with its so-called "risk-sharing partners".
Boeing's senior management has often stated that they are not willing to "bet the company" on another new airplane program as they famously did with the 747. They are pursuing a strategy of accumulating a network of "risk-sharing partners" so Boeing can concentrate on its core competency of "large scale systems integration."
We are willing to state that Boeing's management is "betting the company" on a misguided and ridiculous outsourcing plan that is gutting the company of its hard-won knowledge base and human assets. The safety and quality of Boeing airplanes is at jeopardy because of the foolhardy actions of Boeing's senior management, and even the hint of safety and quality issues with Boeing's airplanes can have disastrous results for its Commercial Airplane business.
The former executives of McDonnell-Douglas (which arguably as a company was, in the end, a complete failure in the design and manufacture of commercial aircraft) have taken control of Boeing and seem determined to gut the commercial airplane business - all in the name of "increasing shareholder value". Harry Stonecipher, John McDonnell and Mike Sears, along with Phil Condit and Alan Mulally are destroying what was very recently a vital, dominant American company. These men will probably enjoy massive short-term gains in the value of their stock options, but there is a price; the loss of the long-term viability of Boeing in the commercial aircraft business. We have to look back less than a decade to see where these men are leading Boeing - to the once glorious McDonnell-Douglas Commercial Aircraft division which has since faded into oblivion.
The design and manufacture of commercial aircraft has been a lucrative business for the United States for many decades. The aerospace business has consistently been the largest exporter in the United States economy. Boeing is willingly and recklessly giving this business away to its future foreign competitors.
It is time Boeing's practices become public knowledge.
It is important to remember that Boeing's commercial aircraft business is a bit different from the standard manufacturing company. Boeing design airplanes - not washing machines, toasters or clock radios.
Every day, millions of people entrust their lives and the lives of their friends and family to the quality of Boeing airplanes. Every day, your and our husbands and wives, sons and daughters, fathers and mothers climb aboard a 727, 737, 747, 757, 767 or 777 with faith that experienced Boeing engineers did their job well. Although many airplane passengers pray to God for a safe flight, it is often Boeing engineers who, with their skill and knowledge, have the power to grant that prayer.
Currently, Boeing is making severe cuts in its design engineering staff. The cost savings probably look great on paper. But the real question is how do these cuts affect a company in which airplanes are designed? Airplanes - on which millions of people fly each year. Airplanes - to which we entrust our lives every time we fly. Airplanes - that can experience catastrophic failure due to engineering errors.
Due to their current strategy of off-loading design work to inexperienced engineers and laying off their own highly experienced employees, Boeing management has created an environment where these errors are much more likely to occur.
The most telling statement about the trend of engineering at Boeing is this statement, which is heard more and more often from fellow engineers: "After seeing how engineering is done here today, I'm afraid to fly on the next new Boeing airplane."
Some Facts About Airplane Design
It is obvious that an airplane, especially a large commercial aircraft, is a very complicated machine to design and build. What the general public does not understand is that, however difficult they think it is to design and build an airplane, their belief is not one-fiftieth as complicated as the reality.
It takes many years of experience to learn the intricacies of airplane design. Not only does an engineer need to understand how to design detail parts, assemblies and installations, but also where the parts are manufactured, how the parts are manufactured and how they are put together. Engineers are required to understand lead-times and scheduling to make sure drawings are released on time to support vendor requirements. The responsibilities of an engineer are immense.
In addition, engineers need to control the configuration of the airplane. The parts that go on an airplane depends on many factors:
1) The base model (737, 747, 757, 767, 777)
2) The derivative (737-700, 737-800, 737-900, 757-200, 757-300, 777-200ER, 777-300, 777-300ER, 777-200LR)
3) Standard options (Small cargo door, large cargo door, overwing exits, in-flight entertainment systems)
4) Customer-specific options (Seats, purser stations, the color of the carpet)
There are literally millions of possible configurations. Knowing which parts go on which airplanes is a very important part of an engineer's job.
The systems Boeing has implemented to control airplane configuration (as part of the DCAC/MRM effort) are immensely complex and constantly changing. There are many technical designers and engineers who spend large portions of their time just learning and understanding these systems. Most engineers only have a cursory knowledge of these systems and rely on local "experts". The problem is that these local "experts" are becoming fewer and farther between and their numbers are diminishing rapidly as layoffs continue.
Boeing is lucky that the FAA does not have an audit planned in the near future.
The Offloading of Boeing's Design Engineering
The key to Boeing's success has never been its plants, tools and buildings, but its superior engineering and its willingness to take calculated risks. Both of these assets are disappearing rapidly.
Although much emphasis has been put on such manufacturing concepts as "lean manufacturing" and "just-in-time inventory", it is important to realize that regardless of the efficiencies of the manufacturing process, an airplane or any product cannot succeed without quality engineering design. In the past, Boeing's elite engineering corps has met the challenge and produced the world's best commercial aircraft.
Currently, Boeing is rabidly pursuing a strategy of offloading engineering design work to overseas "design centers". This process began more than a decade ago with "design transfers" to the Japanese (Kawasaki, Mitsubishi and Fuji Heavy Industries). It continues today at a more rapid and frightening pace.
Boeing Design Center - Moscow
Currently, the fastest growing off-load "design center" is located in Moscow, Russia. There are around 350 engineers employed at this center. They are designing primary and secondary structures, interiors, floors and other systems.
There appears to be a common misconception that Russia is a land of promise where the streets are paved with PhD aerospace engineers begging for jobs. The belief is that not only do these brilliant engineers have doctorates, but they have decades of top-notch aircraft design experience. In addition, they are willing to work for 20 to 25% of the pay that American engineers receive. How can Boeing lose?
The reality is that BDC Moscow is manned with few experienced engineers and many, many greenhorns - inexperienced engineers who have graduated within the past few years. Boeing engineers are being pressured to off-load design work to Moscow - to these legions of inexperienced engineers.
Even if we assume that all of the Russian engineers have PhDs and are experienced, ask yourself the following questions:
1) How and where did they gain aircraft design experience? On what new Russian airplane programs have they cut their teeth in the past 10-15 years?
2) How do Russian commercial aircraft compare to the quality, efficiency and safety of Boeing's airplanes?
3) Which leads to the final question: Based on Russian commercial aviation history, do we really want to fly a commercial airplane designed by Russian engineers?
The Russian engineers have to be given some credit. They are nice guys, likeable and smart with relevant college degrees, but they lack several important traits:
1) Experience designing airplanes.
2) The ability to speak English well enough to have an in-depth technical conversation.
3) The ability to take initiative and to come up with creative solutions.
This final point is an important one. Decades of communist rule have apparently made it difficult for some Russians to make decisions. They want to be told what to do, down to the most minute detail.
Designing a new airplane with the Russians is like working with a bunch of new college hires - except these new hires don't speak English very well - if at all! Are there any volunteers for who wants to fly on their class project?
All that seems to matter to Boeing's senior management is that Russian engineers are significantly cheaper than American ones. It is important to note that although the Russians are cheaper, a number of significant inefficiencies are introduced:
1) The language barrier
a. It is difficult enough discussing technical issues with an American engineer, let alone with a Russian who has only taken 3 months of English classes.
2) Time zones
a. The only way to communicate with BDC Moscow is via e-mail, conference calls and video conferences. The problem is that there is only a 1 or 2 hour window of opportunity to hold conference calls or video conferences.
b. Because of the brevity and ineffectiveness of conference calls, Boeing engineers waste hours and even days trying to resolve issues via e-mail - when it would only take 10 minutes to walk to the next cube to explain to Phil what needs to be done.
3) Physical distance
a. Documents take days to reach Moscow. Once again, if the work was done within Boeing, it would only take 10 minutes to walk to Harry's desk and drop off the document.
b. CATIA models need to be transferred to Russia in a process that takes hours. If the work was done locally, a model could be transferred almost instantaneously.
Out-sourcing has made a complicated process exponentially more complicated. In the engineering world, complicated processes are known to produce one thing consistently - errors.
The initial results on the quality of work from BDC are frightening. Much of their work on recent programs has had to be completely re-done. Changes that were supposed to be made aren't made properly, and changes that shouldn't have been made are widespread. Luckily, (until recently) there have been enough experienced Boeing engineers to catch these errors. This is no longer the case after the last painful round of layoffs. It is only a matter of time before a potentially dangerous error slips by.
Yet another concern is that the majority of Russian engineers working at the Boeing Design Center in Moscow are contract (temporary) employees who are overseen by a much smaller number of Boeing direct employees. What keeps these engineers from remaining loyal to Boeing? There is a very real threat that Boeing will face a situation in the near future where their domestic (American) talent has been ravaged and the Russian engineers move on to other opportunities (such as contracting overseas for much higher salaries or within Moscow at Airbus' newly opened Moscow Design Center).
Is it really a wise business decision to hand over proprietary knowledge to foreign engineers or even worse, foreign contract engineers? Common sense would say no. Phil and Harry seem to think that this is the way to "increase shareholder value".
We think that they are destroying the company.
Airbus in Moscow (and Puget Sound?)
It wouldn't be fair to omit the fact that Airbus has also opened a Design Center in Moscow. However, the main difference between Airbus and Boeing is that Airbus is smart and doesn't intend to have the Russians do primary systems and structures design, instead limiting them to interiors work. Airbus isn't willing to give away the "crown jewels".
In fact, there is a large contingent of Boeing engineers who would welcome the opening of an Airbus Design Center in the Puget Sound region. What better way for Airbus to "stick it to Boeing" than to open a Design Center in Boeing's back yard and poach a large number of highly talented aerospace engineers who would willingly jump ship?
Many of us would be sorely tempted to work at the Airbus Design Center - Seattle. At least with Airbus, we would be working for management that makes rational long-term business decisions.
Boeing's "Core Competency": Large-Scale Systems Integration
Boeing has stated that they want to concentrate on their "core competency", which Phil Condit says is "large-scale systems integration".
Integration takes place at the individual engineer level, which is where Boeing is cutting. The front-line engineer is where the rubber meets the road, but Boeing has made it clear that engineers are merely "costs" to the company, not assets.
The relevant questions to ask here are:
How can Boeing hope to successfully be a "large-scale systems integrator" if they don't have enough experienced, qualified engineers to do the integration?
If Boeing's engineers no longer understand the technical aspects of the airplane's design and manufacturability, how can they integrate?
At What Point Do Boeing's Suppliers Decide They No Longer Need Boeing?
We have heard that Phil Condit's perfect vision for Boeing is where all of the design and manufacturing work is offloaded. Meanwhile, Boeing (consisting of Phil and his secretary) sits in a penthouse office in Chicago at the top of the pyramid and collects a fat profit margin, thus "enhancing shareholder value". As comic as this may seem, it is probably not far from the truth.
Boeing is throwing away thousands of irreplaceable engineers while giving away to its vendors knowledge based on decades of empirical data from Boeing's countless tests and studies. This knowledge, both in the Design Manuals and in the engineers' heads is Boeing's competitive advantage.
Boeing is training and arming its future competitors.
The Boeing vision is that eventually the "partners" will design and manufacture body sections, already "stuffed" with the required systems (electrical wire bundles, hydraulics systems, insulation, etc). All of these activities would be coordinated and "integrated" by a small staff of Boeing engineers. The body sections would then be shipped to Everett (or Wichita or Long Beach or Fort Worth), where a small group of Boeing assembly workers would button the sections together.
In all honesty, does this deserve the lion's share of the profits? How much better can the Japanese complete this function in Japan?
At what point do Boeing's suppliers decide that they no longer need Boeing?
JAI (consisting of Mitsubishi, Kawasaki and Fuji Heavy Industries) is more than capable to do the manufacturing. In addition, they can do the stress analysis and design work. Boeing has spent the last 10 years handing over their computer "templates" for stress analysis - along with books containing all of Boeing's hard-won knowledge of fatigue analysis, structural damage tolerance and corrosion prevention, which was accumulated over decades of testing and in-service experience.
If JAI is capable of doing both the design and manufacturing of airplane structural components, Rolls Royce, Pratt and Whitney and GE
provide the engines, Rockwell-Collins provides the avionics and interior components are BFE
(Buyer Furnished Equipment), what does Boeing bring to the table? Boeing's doing the easy part! Why would these companies allow Boeing to sit at the top of the pyramid and take the fattest profits? (Hint: The answer isn't "Boeing's core competency of large-scale systems integration".)
How can current employee morale, especially among Boeing engineers, be described? There is no hyperbole too outlandish to describe how low morale has fallen.
There is a strong adversarial feeling that has developed among engineers against management - especially upper management. Engineers believe that management would like nothing more than to eliminate the entire Boeing engineering department. Perhaps they're right.
There is a pervasive feeling of doom and fatalism. Engineers believe that there is no future for them at Boeing. The engineers with 20 or more years at Boeing are stoically waiting for that golden day when they will retire and wash their hands of the mess that Phil Condit and Harry Stonecipher have created.
It is frightening to see how few experienced engineers are left in the company. When the company is forced to bring in contractors to do high-level design work, it is indicative of a major problem. There are not enough people left to do even a small development program. How will Boeing handle the 7E7?
In addition, Boeing is handing out WARN notices to direct employees while these same employees are surrounded by on-site Russian and Japanese engineers!
One of Boeing's criteria in its "Performance Management" is to measure how front-line
management and lead engineers are offloading work to Moscow. The more work the lead engineers and managers are willing to offload and the bigger the smile on their faces as they do so, the more likely they will not be laid-off but will be promoted and given raises.
Can you imagine it - having your career depend on how willing you are to give your job away and to train your replacement in the process? Even if you are cheerful in supporting the offloading of engineering work, your reward may still be a WARN notice. How's that for a morale-builder? How's that for an environment in which airplanes are designed?
The 7E7 and Future Airplane Programs
It can arguably be stated that Boeing has cut their engineering staff so deeply that they do not have enough remaining talent to tackle a new airplane program.
It is well-known that Boeing's engineering staff is greying. Many of the engineers are within 10-15 years of retirement age - and most of those are counting the years, months, days, hours and minutes until that magical time. Trust us when we say that there has already been a huge loss of "tribal knowledge" that can never be recovered. In 5-10 years, when these greying engineers begin to retire, the resulting knowledge loss may well prove fatal to Boeing Commercial Airplanes.
Boeing is rapidly approaching, if they have not already passed, the "Point of No Return". The layoffs have been so deep that knowledge and engineering ability has been irrecoverably lost.
The Effect of Development Cost on Product Quality
There were a series of lessons supposedly learned from the fantastic success of the 777 airplane program. A tremendous amount of money was spent developing this airplane, much of it on trail-blazing new techniques such as:
?? Concurrent Product Design
?? Digital Pre-Assembly/Mockup
?? Co-location of personnel (i.e. designers, stress analysts, manufacturing engineers)
?? Integration of customers into the design process
This "front-loading" of cost, where money was spent on the engineering/ development of the airplane, paid off spectacularly. The rework in the factory dropped precipitously, saving millions in ongoing manufacturing costs. The number of rejection tags dropped by over 50%. The factory said that building the 777 was like putting together Tinker Toys.
Today, the 777 is one of Boeing's two best-selling airplanes.
However, now Harry Stonecipher and John McDonnell want to cut development costs on the 7E7 to 40% of 777 levels. Do they expect to get an airplane of similar quality to the 777 for that price?
Engineers are already forced to make unpleasant compromises with their design because of the shocking scarcity of resources - compromises that threaten the quality, safety and performance of the airplane.
We believe that Boeing Commercial Airplanes is headed down the same path as McDonnell-Douglas. Tight-fisted executives dole out miserly portions of budget to "save money" and "increase shareholder value". What they end up with are inferior products that fail in the marketplace.
If proof is required, ask yourself: "What is left of McDonnell-Douglas' commercial aircraft business?"
Isn't that proof enough of where Boeing is being led?
Are we willing to entrust the future of Boeing's Commercial Aircraft business to the same people who destroyed McDonnell-Douglas?
The Boeing Company is headed down a dark and dangerous path. It is heading down this path at a reckless pace with little regard to long-term consequences. High-level executives are making decisions that, on paper, may look promising, but are in truth destroying the company. The safety and quality of Boeing airplanes is at jeopardy because of the foolhardy actions of Boeing's senior management.
There has been little discussion about this in the media. Perhaps this story is not newsworthy. However, everyone with whom we have spoken has been...let's say "shocked" (although that does not do it justice)...when told of what is going on. We am not prone to exaggeration. We are engineers. We live and breathe logic and facts. We are witnessing first-hand the destructive effects of Phil Condit's "Vision 2016". There may not be a Boeing Commercial Aircraft Company in 2016 because of Phil Condit.
What has been described herein is truth. We can only hope it also turns out to be "newsworthy".
The fastest way to become a millionaire in the airline business is to start as a billionaire.