smartplane wrote:lightsaber wrote:Every doubling of production decreases cost 10% to 13% (13% if automation is fully embraced, 10% just because managing higher production volumes cut costs). Many times management of declining sales aircraft reduce production in the vain hope sales will pick up later. We saw that with the L1011 (which, ironically, had a later sales spike), 767 (wait... I'm eventually going to make my point), 717/MD-80&90, A300, 747, A380, and 757.
And a reduction in production has the inverse effect, plus more.
Boeing has invested far more heavily in volume production compared to Airbus, which if as successful as claimed, translated to lower unit costs of production at higher volumes. Both OEM's are producing below their respective production sweet spots, but Airbus must now be far closer than Boeing.
Boeing have a further problem with component contractors. Great contracts for Boeing at static production levels. Even better when production is rising, with prescribed volume pricing discounts. Great flexibility for Boeing if the supplier is considered to be making too much profit, with an exit clause to bring inhouse, with prescribed compensation. Bad for Boeing, the exit clause and compensation can also be invoked by the supplier, as they discovered with the 748 and MAX.
Boeing conundrum. Inflate component orders and stockpile - buys time, and allows Boeing to move inhouse or find a new supplier. Or risk triggering an exit. Or re-negotiate the contract.
We are discussing the A330NEO at 2/month, was to be 6 month:
https://leehamnews.com/2019/02/04/ponti ... -emirates/
So at this time, the A330NEO is going down the line at a third of the planned rate. Now investment in automated production, including 3D printing, has a process payoff. Neither plane will undo production process gains. So the downside actually has less penalty in costs than the upside if automation was used.
The issue will be for both to cut labor (yes, sad and painful). You cannot have the staff to produce 62 on payroll for 25 per year. In some specialties, you drop from 9 to say 5 workers while Boeing would drop from 21 to say 9. Airbus dropped A330NEO production to minimal skillset retention, there is little cost savings in cutting production any more.
Ironically, the shared engines are helping both. If the A330NEO had a custom engine, that program would be bankrupt.
Yes, the 787 dropped from 14 to soon 6 per month (big production chains cannot drop production instantly). Boeing might be constrained by one site production (a topic for another thread).
https://www.heraldnet.com/business/trou ... ion-in-2q/
I'm afraid the A330NEO's economy of scale is dependent upon AirAsiaX with a little boost by Delta. There is a viable reason to be concerned about the A330NEO.