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Amiga500
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 10:03 am

A modern commercial aircraft is such a complex machine with so many disparate suppliers of both parts and assemblies from so many different locations around the globe that there is no one "right" answer.

Any airframer has enormous scope for cost savings through rejigging of where (and who) parts are sourced from, where sub-assemblies are constructed (and by whom if not the airframer), where they are then shipped to, where they are then made into assemblies and further shipping to where the FAL is located.

Add to that political considerations - no use the most cost efficient place to build and assemble every widget and bit on an airliner being Antarctica if half the world says "we won't buy those as we want to (be seen to) support at least some local jobs" - and it becomes even more convoluted.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 10:13 am

9Patch wrote:
WayexTDI wrote:
It's such inefficient that Boeing basically copied the process for the 787: subcontract the subassemblies to suppliers all over the world and fly all those to 2 places for final assembly...

Boeing took the Airbus process and improved upon it.
Airbus admits they need to cut costs to compete.
Why is there so much denial?

Yes, keep in mind Airbus's new CCO said "we're too complex".

I think it's fair to ask what complexity he was referring to.
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texl1649
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 11:34 am

It’s really simple, the A350 production ramp up was as slow as the 787, or more, and today the production system is comparatively immature vs. the latter. It’s also a larger aircraft. It needs fit a 787-10 would anyone expect an A350 to be offered for less or to have a similar operating cost? It’s pinched by the 787 and 77X.

Airbus benefited for over a decade vs. the 767 when the A330 had needed capability the former didn’t. Today, they are sort of in a pincer vs. the competition but the A350 (especially the larger version) rarely has needed/critical lift/capacity/range the 787 family doesn’t. That’s not a fanboy attitude, it’s borne out by the sales data for the A350-1000 since it was offered. The A330, by comparison, has had slots available and is cheaper to produce, so it has also taken opportunities from the XWB.
 
Amiga500
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 11:55 am

Revelation wrote:
9Patch wrote:
WayexTDI wrote:
It's such inefficient that Boeing basically copied the process for the 787: subcontract the subassemblies to suppliers all over the world and fly all those to 2 places for final assembly...

Boeing took the Airbus process and improved upon it.
Airbus admits they need to cut costs to compete.
Why is there so much denial?

Yes, keep in mind Airbus's new CCO said "we're too complex".

I think it's fair to ask what complexity he was referring to.


He's discovering aeroplanes are more complex than garden strimmers. ;)

[but he's not wrong - there is far too much fking about moving stuff around the world for not enough added benefit. i.e. large sub-assemblies (or large single piece components) like wing skins requiring transport over thousands of miles before even becoming a wingset? Crazy.]
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 1:34 pm

An economic note: because pension, education and medical costs are high (and maybe housing costs), and a necessary part of being in the middle class, to accurately compare different countries it really is necessary to group these together and add them to wages. I have not seen a comparison for typical Boeing and Airbus workers. Anybody have any insight into this?
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 1:38 pm

jeffrey0032j wrote:
9Patch wrote:
WayexTDI wrote:
It's such inefficient that Boeing basically copied the process for the 787: subcontract the subassemblies to suppliers all over the world and fly all those to 2 places for final assembly...

Boeing took the Airbus process and improved upon it.
Airbus admits they need to cut costs to compete.
Why is there so much denial?

Not really though, Boeing took Toyota's manufacturing system instead of Airbus's. Toyota's production system uses the Kaizen philosophy and in Kaizen, transportation is one of the things considered as wastage.


Interesting.
I've often wondered why 787 center sections are made by Alenia in southern Italy.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 2:24 pm

9Patch wrote:
I've often wondered why 787 center sections are made by Alenia in southern Italy.

The Boeing management of the time wanted to minimize capex spending pretty much above every other metric, so they were happy to find others willing to make the investments needed to bootstrap Boeing's new manufacturing ideas. They soon found out that they saved on capex but lost in many other ways. Now we see things like 777X wings being made in-house right at KPAE rather than sub'd out to the Japanese heavies like 787 wings were.
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PW100
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 3:07 pm

Revelation wrote:
9Patch wrote:
I've often wondered why 787 center sections are made by Alenia in southern Italy.

The Boeing management of the time wanted to minimize capex spending pretty much above every other metric, so they were happy to find others willing to make the investments needed to bootstrap Boeing's new manufacturing ideas. They soon found out that they saved on capex but lost in many other ways. Now we see things like 777X wings being made in-house right at KPAE rather than sub'd out to the Japanese heavies like 787 wings were.

Ah yes, the RONA discussion. And John Hart Smith . . .
It was good to see that Boeing took back control on design and production with the 777X wings.

Decisions, by Gerard H. Gaynon wrote:
It took Boeing executives several years to acknowledge that perhaps their over exuberance in focusing on extensive outsourcing may be the major reason for the 3-year delay in bringing the Dreamliner to the marketplace. Jim Albaugh, BCA Chief, spoke about the lessons learned at Seattle University, where he admitted that Boeing may have gone too far with its outsourcing strategy. The negative impact on Boeing’s financial and operational performance continues to present new problems. Albaugh noted that:

* The extreme outsourcing strategy backfired
* Boeing spent more money outsourcing than if the work had been done in-house
* Boeing was forced to compensate its partners, support or buyout the partners who shared in the 787’s development costs
* The outsourcing strategy was put in place by Harry Stonecipher, then Boeing Chairman and Alan Mulally Chief of Commercial Airplanes and now CEO at Ford
* Albaugh was not part of the decision at the time and noted that in retrospect things could have been done differently
* Justification of the extensive outsourcing was guided by financial considerations known as Return on Net Assets (RONA) – RONA’s involved doing less work in-house which reduces employee and facilities assets

Albaugh continued to relate a story where a decade ago, a senior Boeing and world-renowned airplane structural engineer John Hart-Smith, predicted the risks and outcomes of extensive outsourcing in a paper presented at an internal company symposium – Hart-Smith was not allowed to join the 787 program and no one from Boeing’s leadership contacted him for further discussion about his concerns. Albaug admitted that he read the paper and concluded that it was perceptive, if not prophetic.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 3:08 pm

There is clearly benefit in having parts manufactured in different places, but transportation costs have to be weighed. It costs very little to ship a box of bolts, a computer module, or other small items. But as the size of the component rises so does the transportation cost. When you are dealing with components that can only be moved by ship or air the costs become huge, and require very significant justifications in order to rationalize them. I believe that this is a big reason why Boeing built the 777X wing plant in Everett. Airbus clearly has taken this insufficiently into account.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 5:39 pm

PW100 wrote:
Revelation wrote:
9Patch wrote:
I've often wondered why 787 center sections are made by Alenia in southern Italy.

The Boeing management of the time wanted to minimize capex spending pretty much above every other metric, so they were happy to find others willing to make the investments needed to bootstrap Boeing's new manufacturing ideas. They soon found out that they saved on capex but lost in many other ways. Now we see things like 777X wings being made in-house right at KPAE rather than sub'd out to the Japanese heavies like 787 wings were.

Ah yes, the RONA discussion. And John Hart Smith . . .
It was good to see that Boeing took back control on design and production with the 777X wings.

Decisions, by Gerard H. Gaynon wrote:
It took Boeing executives several years to acknowledge that perhaps their over exuberance in focusing on extensive outsourcing may be the major reason for the 3-year delay in bringing the Dreamliner to the marketplace. Jim Albaugh, BCA Chief, spoke about the lessons learned at Seattle University, where he admitted that Boeing may have gone too far with its outsourcing strategy. The negative impact on Boeing’s financial and operational performance continues to present new problems. Albaugh noted that:

* The extreme outsourcing strategy backfired
* Boeing spent more money outsourcing than if the work had been done in-house
* Boeing was forced to compensate its partners, support or buyout the partners who shared in the 787’s development costs
* The outsourcing strategy was put in place by Harry Stonecipher, then Boeing Chairman and Alan Mulally Chief of Commercial Airplanes and now CEO at Ford
* Albaugh was not part of the decision at the time and noted that in retrospect things could have been done differently
* Justification of the extensive outsourcing was guided by financial considerations known as Return on Net Assets (RONA) – RONA’s involved doing less work in-house which reduces employee and facilities assets

Albaugh continued to relate a story where a decade ago, a senior Boeing and world-renowned airplane structural engineer John Hart-Smith, predicted the risks and outcomes of extensive outsourcing in a paper presented at an internal company symposium – Hart-Smith was not allowed to join the 787 program and no one from Boeing’s leadership contacted him for further discussion about his concerns. Albaug admitted that he read the paper and concluded that it was perceptive, if not prophetic.

Boeing forgot how to define ICDs. The first 787 was in drawing, met ICD, and was 10.0mm shorter than Boeing expected. oops!

Ex Douglas engineers who work for my employer almost died laughing. An aircraft is deminsioned off the wingbox if you intend that or not, so it must be right. Period. Embrace reality. The dimensions that determine how well an aircraft pieces together weren't precise. (Douglas always milled the assembled wingbox versus trying to get dimensions right).

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seabosdca
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 6:02 pm

lightsaber wrote:
Boeing forgot how to define ICDs. The first 787 was in drawing, met ICD, and was 10.0mm shorter than Boeing expected. oops!


So that's how they mitigated the weight overage. :duck:
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 6:15 pm

lightsaber wrote:
.......The Air New Zealand sale should have gone A350


Lightsaber, do you think this pronouncement by Airbus on competitive pricing is a signal that they may have lost the 'Project Sunrise' contract too? I'm not hearing very good vibes for Airbus about it from the English Midlands........

I appreciate its A35k v B778 for QF, but it does give the truth to the whole Boeing line-up being more price-competitive.........
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 6:17 pm

duplicated
Last edited by SelseyBill on Wed Jun 26, 2019 6:26 pm, edited 2 times in total.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 6:24 pm

SEPilot wrote:
When you are dealing with components that can only be moved by ship or air the costs become huge, and require very significant justifications in order to rationalize them. I believe that this is a big reason why Boeing built the 777X wing plant in Everett. Airbus clearly has taken this insufficiently into account.


Indeed.

There are many Airbus folks here in the UK currently cautiously comparing house prices in Hamburg, Bremen and Toulouse, figuring that the anticipated 'perfect storm' of A380 cessation, Brexit, and a possible recession will see wing manufacturing moved onto mainland Europe.

At least Airbus will have the Beluga to move the line parts over to Europe with..........
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 6:38 pm

SelseyBill wrote:
SEPilot wrote:
When you are dealing with components that can only be moved by ship or air the costs become huge, and require very significant justifications in order to rationalize them. I believe that this is a big reason why Boeing built the 777X wing plant in Everett. Airbus clearly has taken this insufficiently into account.


Indeed.

There are many Airbus folks here in the UK currently cautiously comparing house prices in Hamburg, Bremen and Toulouse, figuring that the anticipated 'perfect storm' of A380 cessation, Brexit, and a possible recession will see wing manufacturing moved onto mainland Europe.

At least Airbus will have the Beluga to move the line parts over to Europe with..........


That is actually something that has not gotten much discussion yet. With A380 production ending Airbus is soon going to have a lot of available room in various facilities. Perhaps that is also why there is this sudden talk about slashing A350 costs- end of A380 production will be perfect time to rationalize production/supply chains that previously had to be built around the A380’s. Such rationalization may be a bit painful for some (potential layoffs, some countries having less visible “input,” etc) which requires a long game in terms of getting things done.
 
mham001
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 6:44 pm

astuteman wrote:

The set of videos I watched, and then compared to videos of the 787 barrels being manufactured suggested that there are no major differences besides the obvious one (panel vs barrels). I also struggled to see the panel manufacture itself as "labour intensive" when the only thing you see is a robot laying machine. :).


It would seem handling/fastening of dozens of panels would be more labor intensive than handling/fastening 5-6 fuselage barrels? On a side note, the speed difference between the two robot systems is notable.

astuteman wrote:

As a point of order, Boeing now has 2 737 final assembly sites.


As point of order, Boeing has one 737 final assembly site - Renton, WA.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 6:51 pm

mham001 wrote:
astuteman wrote:

The set of videos I watched, and then compared to videos of the 787 barrels being manufactured suggested that there are no major differences besides the obvious one (panel vs barrels). I also struggled to see the panel manufacture itself as "labour intensive" when the only thing you see is a robot laying machine. :).


It would seem handling/fastening of dozens of panels would be more labor intensive than handling/fastening 5-6 fuselage barrels? On a side note, the speed difference between the two robot systems is notable.

astuteman wrote:

As a point of order, Boeing now has 2 737 final assembly sites.


As point of order, Boeing has one 737 final assembly site - Renton, WA.

I believe Astuteman was referring to the completion center in China. A completed green aircraft is flown to China. Of topic, but is anyone but the Chinese taking delivery from there? I suspect Boeing is paid in full for a green airframe delivery.

I found a link (and then moved on and lost it) on how Airbus is stuffing barrels at assembly prior to join.

Efficiency is relative. I will be interested to see Airbus plans for cost containment. Boeing used a line ramp to force the issue. What will Airbus do?

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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 6:54 pm

9Patch wrote:
jeffrey0032j wrote:
9Patch wrote:
Boeing took the Airbus process and improved upon it.
Airbus admits they need to cut costs to compete.
Why is there so much denial?

Not really though, Boeing took Toyota's manufacturing system instead of Airbus's. Toyota's production system uses the Kaizen philosophy and in Kaizen, transportation is one of the things considered as wastage.


Interesting.
I've often wondered why 787 center sections are made by Alenia in southern Italy.

I thought Alenia only did 788 tails? The 789 tails were brought in house. The updated 788 will receive the lighter and more aerodynamic 789 tail as part of a cost cutting effort to win AA's order.

Lightsaber
Late edit
Then I prove myself wrong:
https://www.ainonline.com/aviation-news ... ge-section

Huh... Not efficient at first brush.

The 788 tail discussion s/b valid.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 7:03 pm

frmrCapCadet wrote:
An economic note: because pension, education and medical costs are high (and maybe housing costs), and a necessary part of being in the middle class, to accurately compare different countries it really is necessary to group these together and add them to wages. I have not seen a comparison for typical Boeing and Airbus workers. Anybody have any insight into this?


actual worker wages are not the issue although workers complain bitterly about them.. when it come to product profitability it's the wrap rate that's the killer (wages, training, benefits, management, resources, facilities etc.. Years ago the Boeing wage average was in the $25/hr range, the wrap rate was over $250/hr.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 7:10 pm

lightsaber wrote:
9Patch wrote:
jeffrey0032j wrote:
Not really though, Boeing took Toyota's manufacturing system instead of Airbus's. Toyota's production system uses the Kaizen philosophy and in Kaizen, transportation is one of the things considered as wastage.


Interesting.
I've often wondered why 787 center sections are made by Alenia in southern Italy.

I thought Alenia only did 788 tails? The 789 tails were brought in house. The updated 788 will receive the lighter and more aerodynamic 789 tail as part of a cost cutting effort to win AA's order.

Lightsaber
Late edit
Then I prove myself wrong:
https://www.ainonline.com/aviation-news ... ge-section

Huh... Not efficient at first brush.

The 788 tail discussion s/b valid.


You were right the first time.
https://www.flightglobal.com/news/artic ... -9-381078/
15 JANUARY, 2013 SOURCE: AIR TRANSPORT INTELLIGENCE NEWS BY: STEPHEN TRIMBLE WASHINGTON DC

In 2011, Boeing brought design and production of the horizontal stabiliser in-house. Workmanship errors on the same section by Alenia Aeronautica had plagued early production of the 787-8.

Boeing assigned production for the first 787-9 horizontal stabiliser to its Seattle Advanced Developmental Composites facility, which was scheduled to complete the first unit by 31 December.

As the programme transitions to production, the horizontal stabiliser will be assembled at Boeing's existing composites facility in Salt Lake City.

Boeing has now purchased another facility in West Jordan, Utah, which once was used to build kitchen cabinetry. It is converting the facility over the next two years to build internal composite components for the horizontal stabiliser, with the products shipped about 32km (20mi) to Boeing's Salt Lake City plant.
Last edited by mham001 on Wed Jun 26, 2019 7:12 pm, edited 1 time in total.
 
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kanban
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 7:11 pm

9Patch wrote:
jeffrey0032j wrote:
9Patch wrote:
Boeing took the Airbus process and improved upon it.
Airbus admits they need to cut costs to compete.
Why is there so much denial?

Not really though, Boeing took Toyota's manufacturing system instead of Airbus's. Toyota's production system uses the Kaizen philosophy and in Kaizen, transportation is one of the things considered as wastage.


Interesting.
I've often wondered why 787 center sections are made by Alenia in southern Italy.

Alenia ponied up the resources to win the contract.. engineers, facilities, and became a manufacturing partner.
 
VV
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 7:23 pm

PW100 wrote:
VV wrote:
Let's do very simple maths.
Let's take a very rounded and very conservative number as the average overall income generated by each delivered 787. Let us assume this very notional rounded conservative number to be US$ 100,000,000 (one hundred million US dollars).

Until end of May 2019, there have been 840 (eight hundred and forty) delivered 787. The revenue generated using the very conservative and rounded number is then 840 x 100,000,000 = US$ 84,000,000,000.

In reality the actual discounted price (market price) is much higher than 100,000,000 and varies according to the model.

I just cannot understand people who still believe the 787 program "has dug 23,000,000,000 US dollars" of production cost to be "paid back". I still think many people just do not understand what "deferred production cost" means.

And the same people believe with about expected 400 deliveries at the end of this year, the A350-900 and A350-1000 could make profit.

Something does not pass the straight face test, does it?


Profit =/= Cash Flow.


You can look into it the way you want, by cash flow or profit as you wish.

One case with 840 deliveries and the other with around 350 deliveries.

Then you can tell us your conclusion.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 7:43 pm

VV wrote:
PW100 wrote:
VV wrote:
Let's do very simple maths.
Let's take a very rounded and very conservative number as the average overall income generated by each delivered 787. Let us assume this very notional rounded conservative number to be US$ 100,000,000 (one hundred million US dollars).

Until end of May 2019, there have been 840 (eight hundred and forty) delivered 787. The revenue generated using the very conservative and rounded number is then 840 x 100,000,000 = US$ 84,000,000,000.

In reality the actual discounted price (market price) is much higher than 100,000,000 and varies according to the model.

I just cannot understand people who still believe the 787 program "has dug 23,000,000,000 US dollars" of production cost to be "paid back". I still think many people just do not understand what "deferred production cost" means.

And the same people believe with about expected 400 deliveries at the end of this year, the A350-900 and A350-1000 could make profit.

Something does not pass the straight face test, does it?


Profit =/= Cash Flow.


You can look into it the way you want, by cash flow or profit as you wish.

One case with 840 deliveries and the other with around 350 deliveries.

Then you can tell us your conclusion.

Folks, later this year the A350 will go out the door on a profit. Because Airbus paid prior losses as they accumulated, they have nothing to pay back

Boeing wrote an IOU to other parts of itself. It is amazing how little debt they have. So as each 787 produces cash flow surplus, that goes to paying back the general fund.

At this time Boeing is generating so much surplus cash, they are having to find uses (buying back stock). I would rather see NMA followed by NSA, but having outsourced so much, Boeing must wait for the supply chain.

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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 7:46 pm

I thought that the A350 already uses some of the production facilities initially build to produce 30-50 A380 annually. The max A380 production was only 30 annually for two years. Only for five years more than 25 A380's were delivered. Just more than half the planned production capacity.
Airbus knew at the start of the A350XWB development that the A380 factories were underutilized and this was likely to get worse. Thus AFAIK they installed A350 fooling in factories innitialy build for A380 tooling.

The rampup of the 787 was rediculausly fast. Airbus had a slower rampup plan for the A350, but this was still very fast compared to proceeding cleensheet developments.
To put things in perspective; many widebody designs were only build ~250 times. Airbus A330/A340 has been produced at a ~85 annualy for nearly a decade.

I think that the A350 production flow and reasons for the processes are discribed nicely in this article.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 7:48 pm

OK we've had today's diversion.. what about the A350's production and cost issues..

Part of the problem is inherent in Airbus's history.. there was Sud Aviationa and it's dozen or so predecessors, then Aerospatiale all operating pre WWII and early post WWII building purpose built for small post war aircraft.. manpower was cheap and plentiful so little thought was given to economic manufacturing process flows.. ( Boeing was similarly hamstrung by WII era buildings but looked at their processes when designing and building the current 737 FAL although the usage today is is drastically different from that when the 727 was built there).

Frances auto industry faced similar issues and realized that their prewar processes were inadequate for the post war era and the reluctantly shed the hand made, first and fair assemble for standardized production on linear platforms. The aircraft industry (and Boeing was a part of it) continually said "but airplanes are too big, complex and the rate too slow for such processes" history has proved them wrong. Because Airbus absorbed the management of the component companies along with the political control, there is/was a strong resistance to change. It goes on today.. Look at the new A350 complex... it's obvious that they extracted the footprint of the Toulouse market, left out the building they weren't using and plopped the result down as a new facility, no doubt designed by some world famous architect with no manufacturing experience.. so instead of researching and improving the process, they just copied it. Yes, they did make a few good changes. However it's just a rewarmed pile of....with no room for rate increases or even model stretches.

Secondly Airbus when developing the plane set down a maximum production rate that was laughably low.. since neither FAL can support a rate increase, will they have to build a 3rd?

Yes you may see this as bashing Airbus.. it is, however I am glad they are at least trying to compete and the end products are worthy competitors to Boeings designs.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 8:31 pm

@Kanban. you really have a bad take on how Airbus builds it's planes. You can say that Airbus cut corners and saved a load of investments by reusing surplus A380 facilities (nearly all sub-assembly production sites). And the A330/A350 cabin outfitting facilities at Toulouse and for the A350FAL. The A350 would replace the A330/A340 thus reusing the facilities is smart. You know that Airbus build the A340-600 at the A330/A340 FAL, right?
Building new facilities would have provided a leaned production flow, but would have cost several billion additionally. Besides the A380 factories would remain underutilized.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 8:32 pm

lightsaber wrote:
VV wrote:
PW100 wrote:

Profit =/= Cash Flow.


You can look into it the way you want, by cash flow or profit as you wish.

One case with 840 deliveries and the other with around 350 deliveries.

Then you can tell us your conclusion.

Folks, later this year the A350 will go out the door on a profit. Because Airbus paid prior losses as they accumulated, they have nothing to pay back

Boeing wrote an IOU to other parts of itself. It is amazing how little debt they have. So as each 787 produces cash flow surplus, that goes to paying back the general fund.

At this time Boeing is generating so much surplus cash, they are having to find uses (buying back stock). I would rather see NMA followed by NSA, but having outsourced so much, Boeing must wait for the supply chain.

Lightsaber


Your view is not right, but I do not want to debate it again.

A350 is far from "profit" as a program. It won't achieve the "break even" at whole program level this year or even in the next two years.

Please study again your notion of "deferred production cost".
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 8:38 pm

kanban wrote:
frmrCapCadet wrote:
An economic note: because pension, education and medical costs are high (and maybe housing costs), and a necessary part of being in the middle class, to accurately compare different countries it really is necessary to group these together and add them to wages. I have not seen a comparison for typical Boeing and Airbus workers. Anybody have any insight into this?


actual worker wages are not the issue although workers complain bitterly about them.. when it come to product profitability it's the wrap rate that's the killer (wages, training, benefits, management, resources, facilities etc.. Years ago the Boeing wage average was in the $25/hr range, the wrap rate was over $250/hr.


So as employment goes down due to automation and other efficiencies the wrap rate per employee has sky rocketed. That somehow seems perverse to me. Wrap rate could as well be assigned per square foot of manufacturing space, or per plane built. What is the logic to putting it all on labor and the labor of those actually designing and building the planes?
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 10:28 pm

frmrCapCadet wrote:
kanban wrote:
frmrCapCadet wrote:
An economic note: because pension, education and medical costs are high (and maybe housing costs), and a necessary part of being in the middle class, to accurately compare different countries it really is necessary to group these together and add them to wages. I have not seen a comparison for typical Boeing and Airbus workers. Anybody have any insight into this?


actual worker wages are not the issue although workers complain bitterly about them.. when it come to product profitability it's the wrap rate that's the killer (wages, training, benefits, management, resources, facilities etc.. Years ago the Boeing wage average was in the $25/hr range, the wrap rate was over $250/hr.


So as employment goes down due to automation and other efficiencies the wrap rate per employee has sky rocketed. That somehow seems perverse to me. Wrap rate could as well be assigned per square foot of manufacturing space, or per plane built. What is the logic to putting it all on labor and the labor of those actually designing and building the planes?

Something is wrong there with $25 to $250.
I know my wrap rate and it is about the rate mentioned.

My pay
My benefits, a mere $15/hr + 4% of pay.
Workers comp, about $30/hr
Taxes on me, increases cost about 35%. That gets to
About 60% of the wrap rate. The other half is support, buildings, management, executives, other taxes, etc.

So it is bad. I know my technician wrap rate is lower than quoted. Floor labor is cheaper, but you still have heafty benefits and workers comp. If that is Boeing's low paid worker wrap rate, they are in trouble.

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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Wed Jun 26, 2019 10:58 pm

Polot wrote:
SelseyBill wrote:
Indeed.

There are many Airbus folks here in the UK currently cautiously comparing house prices in Hamburg, Bremen and Toulouse, figuring that the anticipated 'perfect storm' of A380 cessation, Brexit, and a possible recession will see wing manufacturing moved onto mainland Europe.

At least Airbus will have the Beluga to move the line parts over to Europe with..........

That is actually something that has not gotten much discussion yet. With A380 production ending Airbus is soon going to have a lot of available room in various facilities. Perhaps that is also why there is this sudden talk about slashing A350 costs- end of A380 production will be perfect time to rationalize production/supply chains that previously had to be built around the A380’s. Such rationalization may be a bit painful for some (potential layoffs, some countries having less visible “input,” etc) which requires a long game in terms of getting things done.

I thought I read Airbus UK designed the wings but the wing manufacturing side was sold off to GKN, so it is GKN who will end up with a lot of space once A380 wing production ends, no?
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Thu Jun 27, 2019 3:40 am

mham001 wrote:
astuteman wrote:

The set of videos I watched, and then compared to videos of the 787 barrels being manufactured suggested that there are no major differences besides the obvious one (panel vs barrels). I also struggled to see the panel manufacture itself as "labour intensive" when the only thing you see is a robot laying machine. :).


It would seem handling/fastening of dozens of panels would be more labor intensive than handling/fastening 5-6 fuselage barrels? On a side note, the speed difference between the two robot systems is notable.

It will be. But
a) in the grand scheme of the cost of an a350 it is vanishingly small, and
b) it is one thing Airbus aren't going to change

astuteman wrote:

As a point of order, Boeing now has 2 737 final assembly sites.


As point of order, Boeing has one 737 final assembly site - Renton, WA.



If you want to argue one is a completion centre, fair enough.
The irony for this conversation about the A350 is that the 787 has two in two completely different places.

I'm sure that Kanban can now quote you about "pre-stuffing" minimising the impact, but don't forget that Airbus pre-stuff sections too.

I'm not going to argue against the reality that for historical reasons, Airbus move too much stuff about - its clear they do.
That is only one small part of the overall picture.
It clearly makes good print though :)
If we were to build a model about how an A350 (or 787) cost is constructed, primary structures will be a relatively small part of that, and within that, materials costs and corporate overheads will be a large component.

frmrCapCadet wrote:
An economic note: because pension, education and medical costs are high (and maybe housing costs), and a necessary part of being in the middle class, to accurately compare different countries it really is necessary to group these together and add them to wages. I have not seen a comparison for typical Boeing and Airbus workers. Anybody have any insight into this?


I know how the comparison works for professional engineers in my industry.
The USA is an expensive place to employ professional people.
A number of things that get wrapped into the rate in the USA get picked up by government in Europe and come out of workers taxes.
Which makes the cost to the business, and the workers disposable income, lower in Europe
Also we find professional and exec personnel receive much higher bonuses than we do, but that is a bit specific - I don't know how that works bwtween Boeing and Airbus

Rgds
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Thu Jun 27, 2019 4:21 am

astuteman wrote:
The irony for this conversation about the A350 is that the 787 has two in two completely different places.


The Carolina plant was more political than efficiency. It was a response to the adversarial Union in the Seattle area.

Now with some hind sight it is some what a blessing for Boeing as current economics in the Seattle with Amazon, Microsoft, and a hot bed of biomedical research, the labor market is very tight and the housing market is atrocious. The only thing that is keeping Boeing here is the core of their Engineering talent do not want to go to somewhere else.

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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Thu Jun 27, 2019 8:29 am

Wow, six pages already. :eyepopping: I wouldn’t have expected that a manager saying „we have to cut cost and we are too complex“ leads to a six-pages+ thread on a.net. I worked in three different organizations under an army of different managers but everywhere sooner or later all managers would say “we have to cut cost” and “our processes are too complex”. Usually, the last thing they checked to find cost savings was the coffee for free for all employees (is it for free at Airbus? It’s a very good indicator. Someone once said to me if the management asks its employees to pay for the coffee it’s high time to change the Company :coffee: ).

Nevertheless, when speaking of a “widy body price war”, could it be that Schöllhorn refers to the BA Request for Proposals they lost against Boeing?
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Thu Jun 27, 2019 6:54 pm

CFRPwingALbody wrote:
@Kanban. you really have a bad take on how Airbus builds it's planes. You can say that Airbus cut corners and saved a load of investments by reusing surplus A380 facilities (nearly all sub-assembly production sites). And the A330/A350 cabin outfitting facilities at Toulouse and for the A350FAL. The A350 would replace the A330/A340 thus reusing the facilities is smart. You know that Airbus build the A340-600 at the A330/A340 FAL, right?
Building new facilities would have provided a leaned production flow, but would have cost several billion additionally. Besides the A380 factories would remain underutilized.


Airbus has yet to prove they understand the economics of manufacturing processes... It is true on all models.. I've picked on the A320, A380 and the A350 because -0they are current.. The A330/A340 are past the point of salvaging and have little relevancy in the long term except when the phase out Airbus should bulldoze there assembly halls and consider a new generic purpose built FAL that could accommodate all proposed aircraft sizes.

Repurposing the A380 buildings while proving some production relief, continues to exacerbate the problems of single purpose bucket shops. Their continual dabbling in robotics for PR gain where the gains are minimal and the technology is not uniformly applied across all effected lines and FALs is another short coming. Awhile ago there was a thread on the A320 FAL improvements in Germany.. an arial view of the plant showing the process movements was a proverbial Gorgan Knot, as are most of the Toulouse processes including the A330/A340. If they truly want to repurpose the A380 buildings, they will gut them entirely other wise you will see A320 fuselages jacked up to A380 deck levels and massive extension plates to span the gap. Yes I'm hard on Airbus, however I'd rather see a strong competitor than a inattentive bumbler.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Thu Jun 27, 2019 7:22 pm

A thought just occurred to me.. how much of Airbus's convoluted process flows are a direct or indirect response the the EU VAT tax requirements? Does Airbus foist expensive processes of to countries/areas with lower VAT taxing rates? and perform process that have little value added in high VAT areas?
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Thu Jun 27, 2019 7:33 pm

bikerthai wrote:
astuteman wrote:
The irony for this conversation about the A350 is that the 787 has two in two completely different places.


The Carolina plant was more political than efficiency. It was a response to the adversarial Union in the Seattle area.

Now with some hind sight it is some what a blessing for Boeing as current economics in the Seattle with Amazon, Microsoft, and a hot bed of biomedical research, the labor market is very tight and the housing market is atrocious. The only thing that is keeping Boeing here is the core of their Engineering talent do not want to go to somewhere else.

bt


bt, while I partially agree with the political part of your comment, the Vought production and fuselage prep functions were there before the union issue surfaced.. moving the FAL to the same site made major production sense and now we see the slow transition to it eventually becoming the major 787 site and Everett becoming the overflow back up.. I think we'll seethe move complete with the next new plane.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Thu Jun 27, 2019 8:41 pm

N14AZ wrote:
Nevertheless, when speaking of a “widy body price war”, could it be that Schöllhorn refers to the BA Request for Proposals they lost against Boeing?

I would say:
Boeing won: HA, AA, BA (incl. 777x)
Airbus won: AirAsia, EK, DL

Split: LH group

All evidence I see suggests a brutal price war among products with less difference in sales price than many here want to believe. Of course a value is placed on near term slots.

This has been building and I believe an intentional side effect of the ramp up of the 787, sales campaigns for the 777x, and A330NEO.

The A350 sales cannot be a bystander.

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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Fri Jun 28, 2019 12:40 am

lightsaber wrote:
N14AZ wrote:
Nevertheless, when speaking of a “widy body price war”, could it be that Schöllhorn refers to the BA Request for Proposals they lost against Boeing?

I would say:
Boeing won: HA, AA, BA (incl. 777x)
Airbus won: AirAsia, EK, DL

Split: LH group

All evidence I see suggests a brutal price war among products with less difference in sales price than many here want to believe. Of course a value is placed on near term slots.

This has been building and I believe an intentional side effect of the ramp up of the 787, sales campaigns for the 777x, and A330NEO.

The A350 sales cannot be a bystander.

Lightsaber

You have to put an asterisk by the Airbus “win” with EK. Most of us assume it never would have happened as it did if it were not for A380 deposits that would otherwise be lost.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Fri Jun 28, 2019 3:40 am

Well the EK order is a conversion from the A380 - something that is normal activity.

We don't make too much of a fuss when airlines upgauge but when they downgauge, it seems to be a big deal.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Fri Jun 28, 2019 2:54 pm

flee wrote:
Well the EK order is a conversion from the A380 - something that is normal activity.

We don't make too much of a fuss when airlines upgauge but when they downgauge, it seems to be a big deal.

Well, it was airlines downgauging that killed the A380 program, so it is a big deal.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Fri Jun 28, 2019 9:26 pm

lightsaber wrote:
Once five events happen, the 787 will be far more competitive:
1. Differed costs paid off or enough sales happen to extend the block.
2. 787-10 production ramps up. There are still links in the transition.
3. Weight reduction PIP occurs (rumored 2.5 tons)
4. MTOW increase occurs (rumored 6 tons)
5. GE CMC PIP from GE9x happens (I assume RR will follow, but when?)

I also believe the 778/9 will pressure A350-1000 pricing. We can debate until we are blue, but Boeing has sandwhiched the A350

Perhaps partly offset by re-work / re-design required as part of the ever broadening MAX investigation spilling over into other model families?
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Fri Jun 28, 2019 9:36 pm

kanban wrote:
A thought just occurred to me.. how much of Airbus's convoluted process flows are a direct or indirect response the the EU VAT tax requirements? Does Airbus foist expensive processes of to countries/areas with lower VAT taxing rates? and perform process that have little value added in high VAT areas?

Not sure about all areas of Europe; but in France, Airbus does not pay VAT, companies do not (actually, they do but get reimbursed at the end of the year is they paid more that they took in). So, this is a false argument.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sat Jun 29, 2019 4:40 am

lightsaber wrote:
rheinwaldner wrote:
It seems the pendulum swings back and forth. Last time Boeing was pushed to the wall and Airbus had the upper hand with efficient production:
“Their biggest weapon that they’re using in the competitions today is price,” Conner told employees. “They are attacking us with price in every single campaign. And as a result of that, you know, we’re being pushed to the wall,” Dominic Gates of The Seattle Times wrote, citing a transcript of Conner’s internal comments."
Source from 2016: https://leehamnews.com/2016/03/31/airbu ... t-cutting/

lightsaber wrote:
If the 787 empty weight is significantly reduced (just the 3D printed stuff going on at the end of this year should remove about 500kg), this will nicely open up the payload/range charts.

You know which plane is called "the most 3D-printed plane in history”? It is the A350.

Source 1: https://www.abwtec.com/news/2016/5/16/i ... ufacturing
Source 2: https://webcache.googleusercontent.com/ ... clnk&gl=ch

The 3D printing in the engine is what matters. I would assume the T1000/7000 has the equivalent vparts? As your link notes, many plastic 3D printed parts.

My posts were on cutting costs on the structural parts as Boeing is in the process. If the 787 was behind on 3D printing, that only highlights the sub-assemblies and integration needs a cost cut.

Could I be off? Certainly. I am a thermo/controls engineer, not a manufacturing or structural, I just am exposed via work.

So the question is, what major costs will Airbus remove. I can believe it is the most 3D printed plane.

Now explain the high cost per aircraft. Some of that is maturity. Some might be the American philosophy to over communicate to ensure efficiency targets are met.

As I stated before, the A350 will sell. I have posted my evidence on how the 787 cut costs. I was lucky enough to witness a vendor briefing on their proposal to cut $1 million per A350 and about 180 kg of weight with further proposals for more 3D printing in titanium to cut weight and cost.

In no way do I think Airbus is sloppy. What I do think that at this time, the 787 has a per unit manufacturing cost advantage that gives Boeing a slight sales advantage.

The Air New Zealand sale should have gone A350. Besides performance improvement packages, I believe sales price played a role.

But I have seen assemblies in the A350 where the vendor walked us through as we were buying 3D printing for defense aircraft where we won't share the design with the vendors. Perhaps Airbus already selected a vendor and just hasn't announced the PIP?

Lightsaber



I haven’t followed this thread however I’m just curious about your Air NZ Comment.
Are you saying that NZ would have chosen the A350 if the manufacturing costs were lower? Reading the NZ thread which I part take in a lot more regularly it was said by many the A350 was the better aircraft which I’m not arguing with except they didn’t order it. I was always of the opinion the 787 would be improved which it will be and given the relative small size of NZ’s fleet and the fact they are fragmenting the market with more P2P the 787 made more sense to me.

Just curious.

With aircraft like the 787/A350 airlines now have more flexibility to have a single type fleet.

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