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ADent
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Re: Boeing Considers Closing 787 Production in WA

Tue Aug 25, 2020 10:23 pm

Revelation wrote:
No, there never was a plan to assemble a 787 in just four days. The plan was for one to leave the factory every three days, and given there were four positions in the original FAL pan, a total of 12 days to produce one plane from start to finish ( ref: https://www.flightglobal.com/lean-mean- ... 78.article ).


From that article
Assembly time for the first 787 is expected to be around seven weeks. Boeing plans to reach a six-day flow by line number 100, and a three-day flow by 2010, when it will be assembling 10 aircraft a month.


There is also a WSJ article
the plane is so modular that the last stage of assembly takes just three days


The impression of building a plane in 3 days was given in some press, esp if you just skim the articles. Paying attention clearly referred to 10 planes a month though.


I did find a “It will be like Fisher-Price on Christmas Eve. The parts just snap together.” quote.
 
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Revelation
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Re: Boeing Considers Closing 787 Production in WA

Tue Aug 25, 2020 10:53 pm

ADent wrote:
From that article
Assembly time for the first 787 is expected to be around seven weeks. Boeing plans to reach a six-day flow by line number 100, and a three-day flow by 2010, when it will be assembling 10 aircraft a month.


Flow = output = one every three days as I said.

ADent wrote:
There is also a WSJ article
the plane is so modular that the last stage of assembly takes just three days


Last stage = 3 days, but there are four stages, so each plane was planned to take 12 days.

ADent wrote:
The impression of building a plane in 3 days was given in some press, esp if you just skim the articles. Paying attention clearly referred to 10 planes a month though.

3 planes per day, 30 days per month gives 10 planes per month.

Kind of amazing 2019 had 158 deliveries or 13.1/month ( ref: https://en.wikipedia.org/wiki/List_of_B ... deliveries ).
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Wake now, discover that you are the song that the morning brings
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 2:02 am

747classic wrote:
On top of that, since the introduction of "program accounting", a sort of "creative" accounting, that is producing inflated profits at the start of new aircraft programs, hoping that the long term (over-optimistic) predictions about the to be produced number of aircraft will become true.
In the first years these profits are already consumed by the shareholders and by excessive bonusses of the top ranking employees (they reached their targets !) .
After a few years reality kicks in and large extra write-off's have to be made, at the expense of the normal (lower level) workforce and/or the quality control.
Finally the " cutting corners" mentality back fired with the 737MAX (and the KC-46A) and on top of that Covid-19 gave another blow.


Boeing did not invent nor introduce "program accounting". Its and historic accounting practice dating way way back. It used to be other industries used it as well. General accounting standards limited it to "officially" just aviation some years ago - and Boeing retained it. However, you will actually find something very similar used both in the USA and in fact worldwide for the construction of nuclear power plants and other very high initial cost infrastructure items (special accounting rules are usually passed by the various states or countries in which these plants are built - on a plant by plant basis with the approval of the construction of the plant).

All "Program Accounting" does is amortize the early high production cost over the expected number of units to be sold, instead of over a fixed time period. Assuming there are no unusual upsets in production plans all it normally does is shift when profits and tax liabilities occur. As long as the tax laws stay the same it does not change how much tax is paid (or reduced) - just when.

Have a great day,
 
JayinKitsap
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 2:12 am

lightsaber wrote:
Revelation wrote:
Noshow wrote:
So what will the new composite wing factory in Everett do then? Low rate 777X and no rate 787 and NMA?
"We" need some big CFRP program for Everett fast. Otherwise moving away the 787 from Everett feels like moving away the future.
767, 777 classic, 747 and one day the 737 MAX/Renton will close one day. Still most of the brains are in Seattle area. And there is no Embraer anymore to step in with development.

787 wings are manufactured by partners, it's hard to see Boeing pull that work back in house.

It will be a challenge to keep the brains.

The old game plan read NMA would prove out tech needed to make NSA, work for a solid decade or so.

Now, no NMA even before COVID19 struck, and not enough market demand to justify a NSA any time soon.

People who need more mental engagement and/or want better career prospects will be hard to keep.

The tasks at hand consist of cleaning up MAX mistakes, getting 777X, MAX10, and MAX7 certified, and not much else.

Maybe the 764F freighter at some point, but not a huge engineering challenge I would think.

Maybe on-going R&D on the manufacturing tech for the next clean sheet, but probably those chairs are already filled.

You just officially scared me. Boeing had so many 787 issues because, in my opinion, they went to long between commercial program launches.

I personally didn't see much 737 MAX risk because of rules relearned. No NMA... that means the design leads will promote out and future programs will have issues.

By the way, if Airbus sits idle too long, this applies to their Engineering too. The A350 benefitted, in my opinion, if a fear of repeating Boeing 787 errors. (Seriously, the wing box dimension... My undergraduate education pounded in our heads how that is the most important dimension of the entire aircraft by a Douglas lead design engineer brought in to ensure we received a real education).

Lightsaber


To keep the Brains, it may be needed to actually start designing the NMA/NSA once cash flow allows, 1/3 the staff 3x as long could produce a better design. The new cockpit requirements will take some time to come up with the right solution, best not done on a tight schedule.

Assuming the Everett 787 line shuts down gives a bay to do some preliminary work it, along with all the 747 space. The reductions in the workforce is going to trim the highest seniority (early outs) and lowest, leaving only the middle to upper in terms of seniority. Run that 5 years and really only the middle will be left, a huge knowledge base just gone. Changes the business equations as increasing production will require lots of training, might as well be the newer tech structures.

So true about the wingbox height in particular, increasing that 4" changes the entire wing airflow, structures, etc. May as well start from scratch.
 
iamlucky13
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 2:35 am

Lootess wrote:
Nah they can since -10 is wholly made at CHS and cannot be flown to Paine. That will be the study outcome, do it all at CHS.


This also strikes me as the most likely scenario, but another possibility is they expect demand to ultimately recover beyond what Charleston can produce with the existing facilities. If they believe that will be the case, they might choose to keep Everett running rather than invest in enlarging Charleston.

Instinctively, it doesn't seem like consolidation to Everett only stands much chance, but I think it will be looked at anyways, because the Everett leadership team is likely to insist on it out of self-interest, and a few thousand labor hours of analysis is cheap in the grand scheme of this industry (especially if projects on hold or slowed down are freeing up more people than have been laid off).

I also think it is worth mentioning that the Machinist's union has a notice to members on their website indicating that they have been led to expect Boeing will soon try to negotiate concessions from them. Asking for concessions only make sense if Boeing has something to offer in return. On the other hand, such offers could be security for the 737, 777X, or even NSA/NMA instead of the 787.

scbriml wrote:
As we all know, that didn't go too well and Boeing ended up having to buy out Vought and their Charleston factory for $580m in 2009. So it ended up with Boeing building their own 787 fuselages in Charleston. The -10 came along later and its fuselage was too long to fit inside the Dreamlifters, so the second production line came into being.


Boeing bought half of the Vought factory in 2008, and the other half in 2009, followed a few month later by the Charleston final assembly line announcement. The -10 was officially launched in 2013, so I presume there was some leeway defining details like which barrel to lengthen or whether to use a fully separate plug through at least 2011. The Charleston dependence of the -10 was disclosed in 2014. It is possible that Boeing planned an assembly line next door to Vought all the way back in 2003 when the 1st tier suppliers were announced. However, they had much loftier ambitious originally for the throughput of the Everett line, and the motivation driven by the 2008 strike was clearly not a factor at that time, so I don't think it was considered necessary.

Considering those factors, my assumption is that their baseline plan in 2003 was that the -10 stretch would be implemented in a manner compatible with the Dreamlifter. Later on, with the Charleston assembly line already in existence to make up for the production issues, they ended up not being limited to plans that included moving the -10 center section cross-country.

Also, I think we might be collectively misunderstanding the constraint somewhat. I was confused and thinking the long center fuselage section was solely a Charleston product. Here is what I just researched to find clarification for myself:

Charleston does not fabricate the barrels for the 787 center fuselage section. Those come from Alenia (sections 44 and 46), Fuji (Center wingbox), and Kawasaki (section 43). Those sections are transported to Charleston, sub-assembled together, stuffed and painted, and then moved as one piece to the Everett or Charleston final assembly lines.

Therefore, if Boeing were going to consolidate the 787 back to Everett only, they would have to build at least a -10 center fuselage assembly station in Everett to join the sections and install the systems that need to be in place before final assembly. Optionally, they could include enough capacity to make the -8 and -9 center fuselage assembly, too. They would not have to install the composite layup equipment, autoclaves, trim machines, and frame installation jigs, as those were never located in Charleston (except for the aft fuselage)

scbriml wrote:
AFAIK, it's not impossible that manufacture could be moved to Everett, but it would presumably be horribly expensive.


For a single section using already designed tools and equipment, it would be significant, but not horribly expensive. My wild guess is over $100 million, and 18-36 months lead time. The time to implement and juggling space with the 747 shutdown could actually be a bigger problem than the cost.
 
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lightsaber
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 3:01 am

JayinKitsap wrote:
lightsaber wrote:
Revelation wrote:
787 wings are manufactured by partners, it's hard to see Boeing pull that work back in house.

It will be a challenge to keep the brains.

The old game plan read NMA would prove out tech needed to make NSA, work for a solid decade or so.

Now, no NMA even before COVID19 struck, and not enough market demand to justify a NSA any time soon.

People who need more mental engagement and/or want better career prospects will be hard to keep.

The tasks at hand consist of cleaning up MAX mistakes, getting 777X, MAX10, and MAX7 certified, and not much else.

Maybe the 764F freighter at some point, but not a huge engineering challenge I would think.

Maybe on-going R&D on the manufacturing tech for the next clean sheet, but probably those chairs are already filled.

You just officially scared me. Boeing had so many 787 issues because, in my opinion, they went to long between commercial program launches.

I personally didn't see much 737 MAX risk because of rules relearned. No NMA... that means the design leads will promote out and future programs will have issues.

By the way, if Airbus sits idle too long, this applies to their Engineering too. The A350 benefitted, in my opinion, if a fear of repeating Boeing 787 errors. (Seriously, the wing box dimension... My undergraduate education pounded in our heads how that is the most important dimension of the entire aircraft by a Douglas lead design engineer brought in to ensure we received a real education).

Lightsaber


To keep the Brains, it may be needed to actually start designing the NMA/NSA once cash flow allows, 1/3 the staff 3x as long could produce a better design. The new cockpit requirements will take some time to come up with the right solution, best not done on a tight schedule.

Assuming the Everett 787 line shuts down gives a bay to do some preliminary work it, along with all the 747 space. The reductions in the workforce is going to trim the highest seniority (early outs) and lowest, leaving only the middle to upper in terms of seniority. Run that 5 years and really only the middle will be left, a huge knowledge base just gone. Changes the business equations as increasing production will require lots of training, might as well be the newer tech structures.

So true about the wingbox height in particular, increasing that 4" changes the entire wing airflow, structures, etc. May as well start from scratch.

I agree the best 1/3rd of the people given 3X the time will produce a better plane. To keep only the middle seniority is the opposite of what I've seen. There are very few engineers of my seniority due to the 9/11 cuts. Unfortunately, a few of those very senior are the rare gems. They must be protected until a new engineer is found who can do the job. For example, I can solve problems few can. Either you pick it up in undergrad, or you don't. Few can. So I agree with your idea, except you need to keep 10% of the senior engineers, about 40% of the middle (I'm biased, that is where I am), but you need the enthusiasm of the young. Keep about 40% of them too. Unfortunately, management usually protects the less capable (as, unfortunately, only about 20% of the managers get their by knowing how to do great engineering, most are process followers and don't know how to form process nor have the skills to suggest how to do it).

Lightsaber
Winter is coming.
 
klkla
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 3:03 am

Opening the Charleston plant was a union busting move to begin with and when they made it so that the -10 could only be produced there it was only a matter of time before they would find an excuse to end production in Washington State.
 
Jetport
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 3:39 am

enzo011 wrote:
Jetport wrote:
??? How in the world are share buybacks in any way related to deferred production/development costs? You can't use cash to "pay off" a non-cash accounting entry. Boeing already paid all the cost’s years ago, they are just accounting for it over time. You don't just let cash sit on you bank account at zero interest to cover deferred costs, that is truly crazy. Any management team that tried to would be rightfully fired immediately. You can debate if share buybacks were a good use of Boeing's cash, but no rational person would suggest they just sit on billions of excess cash to cover deferred accounting entries. Boeing could write down all their deferred costs tomorrow (they may actually do this) and it would have virtually no impact on anything.



Because the company works as a whole and not just isolated programs? Because they use program accounting they are able to defer production cost which frees up cash, which they used to buy back shares. This all works out if there are no risks to the program or your projections on future sales or production cost. Then the MAX debacle hit and then Covid-19.


I should just give up, but once again program accounting and deferring production costs does not free up any cash, none, zero, zilch. You can't pay yourself cash to cover a non-cash balance sheet entry. Why is this so hard to understand?
 
Jetport
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 3:49 am

Sokes wrote:
Jetport wrote:
...You don't just let cash sit on you bank account at zero interest to cover deferred costs, that is truly crazy. Any management team that tried to would be rightfully fired immediately. You can debate if share buybacks were a good use of Boeing's cash, but no rational person would suggest they just sit on billions of excess cash to cover deferred accounting entries. Boeing could write down all their deferred costs tomorrow (they may actually do this) and it would have virtually no impact on anything.

Going back to end of financial year 2018, before the Max grounding:
Share buybacks 2013 - 2018 around 40 billion $,

Suppose 23 billion $ of share buybacks would have been used to write off deferred production costs:
94,4 billion $ assets = 94 billion $ liabilities + 0,4 billion $ equity

Suppose the remaining 17 billion $ of share buybacks would have been used to further reduce debt:
94,4 billion $ assets = 77 billion $ liabilities + 17,4 billion equity
17,4 billion $ / 94,4 billion $ = 0,18 ..............................


Once again, you cannot use cash to write off deferred production costs, it is not possible. There is no one to pay it to. How can you not comprehend this? Deferred production costs are just an accounting entry on a balance sheet.

Now you can use cash to pay off debt, that is possible. You can certainly argue with 20/20 hindsight Boeing should have paid down some debt instead of buying back stock. But in Boeing's defense, they could borrow so cheaply at the time, why pay down low interest debt early when buying back stock seemed like the best way to give their owners (stockholders) the best possible return.
 
JayinKitsap
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 7:32 am

lightsaber wrote:
JayinKitsap wrote:
lightsaber wrote:
You just officially scared me. Boeing had so many 787 issues because, in my opinion, they went to long between commercial program launches.

I personally didn't see much 737 MAX risk because of rules relearned. No NMA... that means the design leads will promote out and future programs will have issues.

By the way, if Airbus sits idle too long, this applies to their Engineering too. The A350 benefitted, in my opinion, if a fear of repeating Boeing 787 errors. (Seriously, the wing box dimension... My undergraduate education pounded in our heads how that is the most important dimension of the entire aircraft by a Douglas lead design engineer brought in to ensure we received a real education).

Lightsaber


To keep the Brains, it may be needed to actually start designing the NMA/NSA once cash flow allows, 1/3 the staff 3x as long could produce a better design. The new cockpit requirements will take some time to come up with the right solution, best not done on a tight schedule.

Assuming the Everett 787 line shuts down gives a bay to do some preliminary work it, along with all the 747 space. The reductions in the workforce is going to trim the highest seniority (early outs) and lowest, leaving only the middle to upper in terms of seniority. Run that 5 years and really only the middle will be left, a huge knowledge base just gone. Changes the business equations as increasing production will require lots of training, might as well be the newer tech structures.

So true about the wingbox height in particular, increasing that 4" changes the entire wing airflow, structures, etc. May as well start from scratch.

I agree the best 1/3rd of the people given 3X the time will produce a better plane. To keep only the middle seniority is the opposite of what I've seen. There are very few engineers of my seniority due to the 9/11 cuts. Unfortunately, a few of those very senior are the rare gems. They must be protected until a new engineer is found who can do the job. For example, I can solve problems few can. Either you pick it up in undergrad, or you don't. Few can. So I agree with your idea, except you need to keep 10% of the senior engineers, about 40% of the middle (I'm biased, that is where I am), but you need the enthusiasm of the young. Keep about 40% of them too. Unfortunately, management usually protects the less capable (as, unfortunately, only about 20% of the managers get their by knowing how to do great engineering, most are process followers and don't know how to form process nor have the skills to suggest how to do it).

Lightsaber


The nearby Puget Sound Naval Shipyard has its ebb and flows of employees, but different, they went up with 9/11 and down other times. I worked with retired engineers that were real gems. One knew high pressure steam so well, we were designing a valve test facility able to do any relief valve in the navy. A technology that is thankfully disappearing, except for nuclear.

A gem from early in my career - on a steel mill project we had a bent and buckled crane girder. My boss called in this expert on heat straightening, said he was magical. This teetering old man up on the platform telling several old salt Ironworkers how to do the heating. One could sense their derision. This guy knew tricks with flame heating that the Ol Salts couldn't believe, but they quickly learned. We had him return to teach our fab shop how to camber and straighten beams.
 
Sokes
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 7:54 am

Jetport wrote:
Once again, you cannot use cash to write off deferred production costs, it is not possible.

True, it's not possible.
If one billion $ of deferred cost is written off, assets and equity get reduced by that amount. Nothing to do with cash.

In a next step one can use profits to pay back liabilities, increase cash or buy back shares.

Did Boeing management ever hear of the pharaoh who dreamt of seven lean cows which devoured seven fat cows?

Deferred costs are deferred, not cancelled.
Boeing shifted the book keeping costs from the fat years to the lean years.
Yes, costs were already paid. But by credit, not by profits. The profits were used to buy back shares. Now it's time to pay back the credit.
Which is done with more credit. But this time the credit doesn't have an asset (deferred costs) on the other side of the equation.

Maybe the central banks turned financial markets into a garden of Eden for Boeing.
Lot of temptations in the garden of Eden.

You have the last word.
Why can't the world be a little bit more autistic?
 
USAirKid
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 9:02 am

Sokes wrote:
Jetport wrote:
Once again, you cannot use cash to write off deferred production costs, it is not possible.

True, it's not possible.
If one billion $ of deferred cost is written off, assets and equity get reduced by that amount. Nothing to do with cash.

In a next step one can use profits to pay back liabilities, increase cash or buy back shares.

Did Boeing management ever hear of the pharaoh who dreamt of seven lean cows which devoured seven fat cows?

Deferred costs are deferred, not cancelled.
Boeing shifted the book keeping costs from the fat years to the lean years.
Yes, costs were already paid. But by credit, not by profits. The profits were used to buy back shares. Now it's time to pay back the credit.
Which is done with more credit. But this time the credit doesn't have an asset (deferred costs) on the other side of the equation.

Maybe the central banks turned financial markets into a garden of Eden for Boeing.
Lot of temptations in the garden of Eden.

You have the last word.


Ugh. Please read a little bit about accrual accounting and how it works. Here would be a good starting point:
https://www.investopedia.com/terms/a/ac ... unting.asp
And related to accrual accounting is the cash flow statement:
https://www.investopedia.com/terms/c/ca ... tement.asp

They are two separate ways of describing the same business. You can’t take something from one and put it on the other.
 
Noshow
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 9:21 am

Could the new 777X-line in Everett be converted to build both 777X and 787 at high pace? Would this make sense and save any money?
(Thinking about future 787 high demand scenarios where maximum production rate at only one site might be needed)
 
Sokes
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 10:42 am

USAirKid wrote:
Ugh. Please read a little bit about accrual accounting and how it works.
...
And related to accrual accounting is the cash flow statement:
...

Don't say ugh, show me if I'm wrong.

Boeing may have a lot of cash lying around by taking credit = bloating their balance sheet.
I'm not impressed, whatever their cash flow.
Why can't the world be a little bit more autistic?
 
sxf24
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 12:05 pm

Sokes wrote:
USAirKid wrote:
Ugh. Please read a little bit about accrual accounting and how it works.
...
And related to accrual accounting is the cash flow statement:
...

Don't say ugh, show me if I'm wrong.

Boeing may have a lot of cash lying around by taking credit = bloating their balance sheet.
I'm not impressed, whatever their cash flow.


You’re wrong because deferred production costs are an asset, not a liability.
 
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Phosphorus
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 12:38 pm

sxf24 wrote:
You’re wrong because deferred production costs are an asset, not a liability.

That's the rub, huh?
If your balance sheet is full of assets like these (instead of cold, hard cash, or equivalents), your position is slightly less rosy than it could be, correct?
AN4 A40 L4T TU3 TU5 IL6 ILW I93 F50 F70 100 146 ARJ AT7 DH4 L10 CRJ ERJ E90 E95 DC-9 MD-8X YK4 YK2 SF3 S20 319 320 321 332 333 343 346 722 732 733 734 735 73G 738 739 744 74M 757 767 777
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kalvado
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 12:49 pm

JayinKitsap wrote:
lightsaber wrote:
Revelation wrote:
787 wings are manufactured by partners, it's hard to see Boeing pull that work back in house.

It will be a challenge to keep the brains.

The old game plan read NMA would prove out tech needed to make NSA, work for a solid decade or so.

Now, no NMA even before COVID19 struck, and not enough market demand to justify a NSA any time soon.

People who need more mental engagement and/or want better career prospects will be hard to keep.

The tasks at hand consist of cleaning up MAX mistakes, getting 777X, MAX10, and MAX7 certified, and not much else.

Maybe the 764F freighter at some point, but not a huge engineering challenge I would think.

Maybe on-going R&D on the manufacturing tech for the next clean sheet, but probably those chairs are already filled.

You just officially scared me. Boeing had so many 787 issues because, in my opinion, they went to long between commercial program launches.

I personally didn't see much 737 MAX risk because of rules relearned. No NMA... that means the design leads will promote out and future programs will have issues.

By the way, if Airbus sits idle too long, this applies to their Engineering too. The A350 benefitted, in my opinion, if a fear of repeating Boeing 787 errors. (Seriously, the wing box dimension... My undergraduate education pounded in our heads how that is the most important dimension of the entire aircraft by a Douglas lead design engineer brought in to ensure we received a real education).

Lightsaber


To keep the Brains, it may be needed to actually start designing the NMA/NSA once cash flow allows, 1/3 the staff 3x as long could produce a better design. The new cockpit requirements will take some time to come up with the right solution, best not done on a tight schedule.

Assuming the Everett 787 line shuts down gives a bay to do some preliminary work it, along with all the 747 space. The reductions in the workforce is going to trim the highest seniority (early outs) and lowest, leaving only the middle to upper in terms of seniority. Run that 5 years and really only the middle will be left, a huge knowledge base just gone. Changes the business equations as increasing production will require lots of training, might as well be the newer tech structures.

So true about the wingbox height in particular, increasing that 4" changes the entire wing airflow, structures, etc. May as well start from scratch.

It was brought up many times that it is not how the system works these days. Engineers are seen as a commodity these days. No long career with the company, they are hired per project and fired as project stages wind down. There is nothing to retain.
 
Sokes
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 1:17 pm

sxf24 wrote:
You’re wrong because deferred production costs are an asset, not a liability.

That's why I said:
"If one billion $ of deferred costs are written off, assets and equity get reduced by that amount. "

In which sentence did I say that deferred costs are a liability?
Why can't the world be a little bit more autistic?
 
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Revelation
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 2:40 pm

A far simpler question: what is the relevance of accounting methodology to the decision to only keep one 787 FAL?

We have plenty of statements in Leeham and elsewhere saying 787 will never pay back all the deferred costs even before the COVID crisis.

So, 787 may have to take a write down early (it has already said 787 is close to loss forward position due to COVID) or it may take it when the program finally produces its last aircraft, but I'm not seeing how it influences the decision to be made in the near future.

If we feel Boeing runs the company on cash flow, it'll chose to keep KCHS open because it has the best cash generation potential.

Program accounting and/or deferred cost is at best a second order consideration, no?
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
dagKentWA
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 4:08 pm

Jetport wrote:
enzo011 wrote:
Jetport wrote:
??? How in the world are share buybacks in any way related to deferred production/development costs? You can't use cash to "pay off" a non-cash accounting entry. Boeing already paid all the cost’s years ago, they are just accounting for it over time. You don't just let cash sit on you bank account at zero interest to cover deferred costs, that is truly crazy. Any management team that tried to would be rightfully fired immediately. You can debate if share buybacks were a good use of Boeing's cash, but no rational person would suggest they just sit on billions of excess cash to cover deferred accounting entries. Boeing could write down all their deferred costs tomorrow (they may actually do this) and it would have virtually no impact on anything.



Because the company works as a whole and not just isolated programs? Because they use program accounting they are able to defer production cost which frees up cash, which they used to buy back shares. This all works out if there are no risks to the program or your projections on future sales or production cost. Then the MAX debacle hit and then Covid-19.


I should just give up, but once again program accounting and deferring production costs does not free up any cash, none, zero, zilch. You can't pay yourself cash to cover a non-cash balance sheet entry. Why is this so hard to understand?


Jetport, you're spot on. I work in Accounting, and there is a huge difference between GAAP/Accrual accounting, which allows Program Accounting for airliner manufacturing, and cash flow. That is way published financial statements include both the Income Statement that annually reflects a charge-off of a portion for the deferred costs and a Statement of Cash Flows that reconciles the income statement to the change in cash position. Property, Plant & Equipment is handled the same way - the full cost is an asset on the balance sheet and then the cost gets spread over the life of the asset as Depreciation Expense on the income statement.

Bankers and financiers care more about cash flow and the ability to service debt. I know, because I work with them regularly, if not daily.
 
Bricktop
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 4:21 pm

klkla wrote:
Opening the Charleston plant was a union busting move to begin with and when they made it so that the -10 could only be produced there it was only a matter of time before they would find an excuse to end production in Washington State.

Some excuses are more plausible than others though, and in these times they are pretty easy to come up with even for the dopiest Boeing executive. And frankly if I was a worker right now with the choice was between Charleston and Seattle, the former wins hands down.
 
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 4:57 pm

kalvado wrote:
It was brought up many times that it is not how the system works these days. Engineers are seen as a commodity these days. No long career with the company, they are hired per project and fired as project stages wind down. There is nothing to retain.

Nothing? So every engineer fired, start all over from scratch every time with newbies from the street? That suggestion is contradictory to the Seattle Times article that started this thread. Regardless, it'd reinforce the idea that career prospects are poor in the industry and those involved should consider seeing if their talent can be applied in other ways.
Wake up to find out that you are the eyes of the world
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klkla
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 5:08 pm

Bricktop wrote:
klkla wrote:
Opening the Charleston plant was a union busting move to begin with and when they made it so that the -10 could only be produced there it was only a matter of time before they would find an excuse to end production in Washington State.

Some excuses are more plausible than others though, and in these times they are pretty easy to come up with even for the dopiest Boeing executive. And frankly if I was a worker right now with the choice was between Charleston and Seattle, the former wins hands down.


My point is that it was a strategy on their part from the beginning.

Everyone has their own opinions. The Seattle workers get paid more and live in the beautiful Pacific Northwest. The Charleston workers get paid less for doing the same work and have no representation. Charleston is beautiful but is a humid swamp for half the year.
 
MIflyer12
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 5:10 pm

Revelation wrote:
A far simpler question: what is the relevance of accounting methodology to the decision to only keep one 787 FAL?


I don't think it's relevant at all.

As noted above, apart from choosing which facility to keep is the matter of two underutilized facilities (for some unknown period of time, maybe for product life) or one with higher utilization (and thus lower fixed costs per plane). What delivery rate Boeing would need to forecast (and achieving that how soon?) to be comfortable keeping both lines?

If we really thinks there's diminished need for 787/A350 even three to four years out it's pretty ridiculous to talk about more federal support to maintain 100% carrier employment at 100% wage rates, isn't it?
 
iamlucky13
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 5:11 pm

Noshow wrote:
Could the new 777X-line in Everett be converted to build both 777X and 787 at high pace? Would this make sense and save any money?
(Thinking about future 787 high demand scenarios where maximum production rate at only one site might be needed)


Effectively no. This would not actually provide much if any benefit because they would still need different tools and equipment for mating the different size structures and fastening the joints of different materials and geometries. Parts management would become more difficult with intermingled lines, and the workers would still be following different work plans and procedures. The complications could actually make things less efficient rather than more.

The automotive industry has parallels to what you're describing, I think, but those are enabled by designing from the start around common platforms for several models. That concept does not translate easily to the lower volume, higher complexity field of aircraft manufacturing.

The 767 program has demonstrated the possibility of achieving very good production efficiency at low volumes through gradual improvements over time. I think the same focus will apply to the 787 regardless of whether the lines are consolidated.
 
bhill
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 5:54 pm

frmrCapCadet wrote:
The underlying economics problem is that Airbus exists to build planes and hire Europeans, plus make a little profit. Boeing exists to make suits and Wall Street happy, and then build planes that are OK. I have used harsher terms, but they weren't acceptable. Boeing announcing an NMA and moving 787 production would probably keep both Seattle and Charleston happy, but I am not expecting that. See 2nd half of first sentence.

As my mom was wont to say..."if you believe that, you have another thing coming..." NO company exists to create jobs...labor is an expense ANY company would rather NOT have....especially companies with share holders....
Carpe Pices
 
bhill
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 5:58 pm

And I do not see the Lazy B retooling the Everett plant for anything. The suits have made it VERY clear that labor is cheaper in the South...The City of Everett is going to have a ginormous piece of untaxed property on its hands after the dust settles on this...big hit to the IAM members here in Pugetopolis...
Carpe Pices
 
DenverTed
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 5:58 pm

I thought the program accounting was for tax purposes, to erase profit with losses over the long term as much as possible to minimize tax burden. Is there any other benefit?
If the 787 line at Charleston was closed, what would thy do with the facility? Seems like it would be more beneficial to spread out at Everett for the time being with th 747, 767, 777, and 777x and work try to work more efficiently with more space without the 787, and wait for the next project to fill in the 747 space in future years. Why were they flying aircraft to Portland to be painted? Was that because Everett was overcapacity?
 
sxf24
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 6:37 pm

Sokes wrote:
sxf24 wrote:
You’re wrong because deferred production costs are an asset, not a liability.

That's why I said:
"If one billion $ of deferred costs are written off, assets and equity get reduced by that amount. "

In which sentence did I say that deferred costs are a liability?


The obsession of discussing the “repayment” of deferred production costs infers they’re being viewed as a liability.
 
iamlucky13
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 6:53 pm

Revelation wrote:
kalvado wrote:
It was brought up many times that it is not how the system works these days. Engineers are seen as a commodity these days. No long career with the company, they are hired per project and fired as project stages wind down. There is nothing to retain.

Nothing? So every engineer fired, start all over from scratch every time with newbies from the street? That suggestion is contradictory to the Seattle Times article that started this thread. Regardless, it'd reinforce the idea that career prospects are poor in the industry and those involved should consider seeing if their talent can be applied in other ways.


It is a simplistic viewpoint, although one that understandably arises out of the frustration over the regular boom and bust cycles in the airline industry. And the suggestion is not that engineers are laid off wholesale at each program transition, because we all know that programs generally overlap and the majority transfer from program to program. Rather, the suggestion is that there is little to no attempt to buffer excess engineering headcount in the low utilization times between the peaks of the overlapping programs.

For the present scenario, that would mean the layoffs will cut engineers to the minimum for the current work scope, which would be an unprecedented massive cut.

In reality, not just in aerospace, but across all the industries I've had exposure to in my career, engineering cuts are generally smaller and occur later in the business cycles than production cuts, yet even with the production cuts, Boeing is moving slowly and shallowly (they could easily have justified more than the 10% first round cut, and they could have started during the MAX production stoppage).

I wouldn't say that purely make-work projects are common in such situations, but pursuing what in other circumstances would be viewed as low value projects is. For Boeing, one manifestation of this will probably be that while before, engineering efforts would be prioritized on activities that accomplish rate increases, they'll now be prioritized towards activities that minimize cost. It may even be that while in ordinary times, an individual cost-savings project would obviously be expected to return over 100% of its implementation costs in production savings, a partial payback could be rationalized by treating some of those costs as overhead necessary to maintain program readiness.

Boeing and Airbus both have to figure out how to do this on a larger scale now, although Boeing seems to be in the more challenging position. Ultimately, I think it will segue into a new program, but we won't hear much public until cash flow stabilizes. The 2Q earnings call left me with the impression that will take through the end of 2021 or more, based on the combination of cost reductions taking effect and in particular 737 production ramping up towards 31/month.
 
2175301
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 7:26 pm

The real unknown for any of us on this thread is what does Boeing and its Customers see as realistic 787 deliveries in the next 2-4 years. If one line can meet those needs than the economic case for shutting down a line is a "no brainier."

The next question is do they see the production level increasing to a point where they would need 2 lines again after that? Only then can you debate is it better to "mothball" the other line in place and restart it later; or empty the building and restart a 2nd line sometime in the future - with location undetermined.

Boeing may actually have ongoing plans for future use of Everett building space... and perhaps having a year to recondition that building area may play to long term plans. It has been discussed that the 747 building area is really archaic and needs substantial overhaul for future use.

Have a great day,
 
kalvado
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 7:39 pm

Revelation wrote:
kalvado wrote:
It was brought up many times that it is not how the system works these days. Engineers are seen as a commodity these days. No long career with the company, they are hired per project and fired as project stages wind down. There is nothing to retain.

Nothing? So every engineer fired, start all over from scratch every time with newbies from the street? That suggestion is contradictory to the Seattle Times article that started this thread. Regardless, it'd reinforce the idea that career prospects are poor in the industry and those involved should consider seeing if their talent can be applied in other ways.

As a matter of fact.... My wife works as an engineer in a big company - with product as challenging, if not more challenging than Boeing. She's with the company for 7 years, and most, if not all those who worked there 7 years ago are no longer there. People are pretty mobile these days
 
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Re: Boeing Considers Closing 787 Production in WA

Wed Aug 26, 2020 8:22 pm

iamlucky13 wrote:
It is a simplistic viewpoint, although one that understandably arises out of the frustration over the regular boom and bust cycles in the airline industry. And the suggestion is not that engineers are laid off wholesale at each program transition, because we all know that programs generally overlap and the majority transfer from program to program. Rather, the suggestion is that there is little to no attempt to buffer excess engineering headcount in the low utilization times between the peaks of the overlapping programs.

For the present scenario, that would mean the layoffs will cut engineers to the minimum for the current work scope, which would be an unprecedented massive cut.

In reality, not just in aerospace, but across all the industries I've had exposure to in my career, engineering cuts are generally smaller and occur later in the business cycles than production cuts, yet even with the production cuts, Boeing is moving slowly and shallowly (they could easily have justified more than the 10% first round cut, and they could have started during the MAX production stoppage).

I wouldn't say that purely make-work projects are common in such situations, but pursuing what in other circumstances would be viewed as low value projects is. For Boeing, one manifestation of this will probably be that while before, engineering efforts would be prioritized on activities that accomplish rate increases, they'll now be prioritized towards activities that minimize cost. It may even be that while in ordinary times, an individual cost-savings project would obviously be expected to return over 100% of its implementation costs in production savings, a partial payback could be rationalized by treating some of those costs as overhead necessary to maintain program readiness.

Boeing and Airbus both have to figure out how to do this on a larger scale now, although Boeing seems to be in the more challenging position. Ultimately, I think it will segue into a new program, but we won't hear much public until cash flow stabilizes. The 2Q earnings call left me with the impression that will take through the end of 2021 or more, based on the combination of cost reductions taking effect and in particular 737 production ramping up towards 31/month.

Yes, this is a better characterization. I realize there is a boom-to-bust-to-boom side to the business, but there is almost always a core cadre that passes from project to project.

The real question I have, is if you are an up-and-comer at BCA, why would you want to stick around? Management isn't talking up any interesting work coming down the pike, and it's pretty clear the financials are such that you should expect to see nice fat stock options with lots of equity growth, or juicy bonuses in your future. In fact you can reach the opposite conclusion: there won't be much if any interesting work for the better part of a decade and the financials are toast so I should really be looking for other options.

2175301 wrote:
The real unknown for any of us on this thread is what does Boeing and its Customers see as realistic 787 deliveries in the next 2-4 years. If one line can meet those needs than the economic case for shutting down a line is a "no brainier."

The next question is do they see the production level increasing to a point where they would need 2 lines again after that? Only then can you debate is it better to "mothball" the other line in place and restart it later; or empty the building and restart a 2nd line sometime in the future - with location undetermined.

Boeing may actually have ongoing plans for future use of Everett building space... and perhaps having a year to recondition that building area may play to long term plans. It has been discussed that the 747 building area is really archaic and needs substantial overhaul for future use.

That's why I found Ostrower's tweet so interesting. If his source is correct the question being investigated is can CHS handle the whole project. This suggests they know they will be shutting down PAE and the only open question is should they mothball PAE in case CHS can't handle future needs. I think the 'future location' is known, it's CHS. What's not known is how much its footprint could grown, what would need to be relocated there if they needed it to grow beyond its current footprint, etc.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
Sokes
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Re: Boeing Considers Closing 787 Production in WA

Thu Aug 27, 2020 5:45 am

sxf24 wrote:
The obsession of discussing the “repayment” of deferred production costs infers they’re being viewed as a liability.

It's an asset that's a headache to get rid of.
I guess people not familiar with US accounting would consider it a liability. So you are right.
Why can't the world be a little bit more autistic?
 
AirlineBob
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Re: Boeing Considers Closing 787 Production in WA

Thu Aug 27, 2020 3:41 pm

I don't follow some of this stuff as closely as others. But my gut says that, if it's being announced in the public media (Seattle Times, etc) that Boeing is "considering" moving all 787 work to Charleston, then that means it's a done deal.
 
ILNFlyer
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Re: Boeing Considers Closing 787 Production in WA

Thu Aug 27, 2020 4:01 pm

lightsaber wrote:
ikramerica wrote:
2175301 wrote:
I think consolidation was always a long term given, although I expected it not to be considered for another 5-10 years.

I also expected that the NMA/797 would take over one of the production lines at the Everett Plant. With that being delayed and sent back to study in 2019 that may be a long way out now (especially with Covid-19).

The real question will be how much 787 demand is expected to bounce back in another year or two? I expect that an answer to that might not yet be known for another year.

It is appropriate that Boeing is studying the issue. I suspect that it won't be a quick study - they need to let things play out for most of another year to know the best answer.

Have a great day,

With 787 demand reduced, the case for a middle market aircraft is stronger in the future. The 787 production line being replaced with NMA line makes sense long term.

Long term, I agree. The concern is getting through the near term. With all the other issues, I believe all production moves to Charleston to save money.

Everett will have to cut overhead, brutally. So will Charleston.

I look forward to the classy problem of demand exceeding more than 8 per month. I think the lowest cost option is to slightly expand Charleston. But aircraft demand lags passenger demand by 2 years. So we are discussing 2025 at the earliest.

I feel for everyone losing their job. Boeing must maximize cost cutting.

With Engineering in Washington, I expect the NMA to be produced there.

Lightsaber


Chicago will also likely have to cut overhead, just as brutally.
 
jagraham
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Re: Boeing Considers Closing 787 Production in WA

Thu Aug 27, 2020 5:40 pm

lightsaber wrote:
JayinKitsap wrote:
lightsaber wrote:
You just officially scared me. Boeing had so many 787 issues because, in my opinion, they went to long between commercial program launches.

I personally didn't see much 737 MAX risk because of rules relearned. No NMA... that means the design leads will promote out and future programs will have issues.

By the way, if Airbus sits idle too long, this applies to their Engineering too. The A350 benefitted, in my opinion, if a fear of repeating Boeing 787 errors. (Seriously, the wing box dimension... My undergraduate education pounded in our heads how that is the most important dimension of the entire aircraft by a Douglas lead design engineer brought in to ensure we received a real education).

Lightsaber


To keep the Brains, it may be needed to actually start designing the NMA/NSA once cash flow allows, 1/3 the staff 3x as long could produce a better design. The new cockpit requirements will take some time to come up with the right solution, best not done on a tight schedule.

Assuming the Everett 787 line shuts down gives a bay to do some preliminary work it, along with all the 747 space. The reductions in the workforce is going to trim the highest seniority (early outs) and lowest, leaving only the middle to upper in terms of seniority. Run that 5 years and really only the middle will be left, a huge knowledge base just gone. Changes the business equations as increasing production will require lots of training, might as well be the newer tech structures.

So true about the wingbox height in particular, increasing that 4" changes the entire wing airflow, structures, etc. May as well start from scratch.

I agree the best 1/3rd of the people given 3X the time will produce a better plane. To keep only the middle seniority is the opposite of what I've seen. There are very few engineers of my seniority due to the 9/11 cuts. Unfortunately, a few of those very senior are the rare gems. They must be protected until a new engineer is found who can do the job. For example, I can solve problems few can. Either you pick it up in undergrad, or you don't. Few can. So I agree with your idea, except you need to keep 10% of the senior engineers, about 40% of the middle (I'm biased, that is where I am), but you need the enthusiasm of the young. Keep about 40% of them too. Unfortunately, management usually protects the less capable (as, unfortunately, only about 20% of the managers get their by knowing how to do great engineering, most are process followers and don't know how to form process nor have the skills to suggest how to do it).

Lightsaber



In aerospace you need to keep between a third to a half of the senior people. There are so many specialties in aerospace (the landing gear guy will not be working on the floor beams, for example) and there has been so much turnover, consolidation, and turmoil, that there aren't that many graybeards in any given area in any given company. And the consolidation means that very few companies can handle airplane manufacture (if in doubt, see Bombardier), and not many more can be prime suppliers. Most wells have run dry. The condition of the industry is precarious.
 
Lootess
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Re: Boeing Considers Closing 787 Production in WA

Thu Aug 27, 2020 6:23 pm

AirlineBob wrote:
I don't follow some of this stuff as closely as others. But my gut says that, if it's being announced in the public media (Seattle Times, etc) that Boeing is "considering" moving all 787 work to Charleston, then that means it's a done deal.


Practically. Also the media spiel of the study being contingent on IAM is trying to dangle a carrot that really doesn't exist. What are they going to do? Cause a work stoppage in Everett? Never would happen in Charleston.

Boeing Seattle will still be fine even if the 787 leaves. Renton is safe, the future with NMA, the MAX will fly again, and 777X is happening albeit a sluggish but once the industry fog clears up those parked A380s out there aren't coming back.
 
StTim
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Re: Boeing Considers Closing 787 Production in WA

Thu Aug 27, 2020 6:52 pm

Deferred costs are on the books as an asset BUT they cannot be sold they can only be handled in one of two ways. Firstly as a reduction in profit on current 787’s being delivered. This is getting much harder as volumes disappear. Secondly they can be written off against the general profits for Boeing. This is looking much likelier and is much more visible.
 
JayinKitsap
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Re: Boeing Considers Closing 787 Production in WA

Thu Aug 27, 2020 7:59 pm

The real problem with being an Engineer in Aerospace watching the industry basically collapse, it would be time to leave except I cannot think of another industry that is hiring to any big extent, in particular if one lives around Seattle.
Automotive - cratered with COVID, coming back some but well below last years production.
Heavy Trucks - Two years ago record sales, now record lack of sales - in trouble
Aerospace - the industry appears to be in a coma, Boeing's volume even when the Max returns will be half of previous, contraction in the cards.
High Rise Construction - COVID has hurt hard, projects are not getting capped, but that may happen. Saw it in the '80's where the company I worked at closed down several buildings that were just getting going. I can't imagine anyone starting design on a new major high rise.
Commercial Construction - Slowing considerably, the construction cost index dropped recently, it had been decades since the last drop. REI just finished its new headquarters in Bellevue, WA, now not moving in and planning to sell.
Amazon Construction - One bright area but building distribution warehouses are quite simple, relatively few engineering hours in these projects.
Retail and Malls - In a coma, dying, and getting clobbered by Amazon.
Residential - High rise projects slowing like mad. Miami right now has a 3 year supply of condos on the market, luxury condos have an 8 year supply. Where will the funding for new projects come from in that. Single family looks good as the market is shifting, but again low engineering required to design.
High Tech - Not sure where this industry is going, drones and autonomous driving take loads of engineering. My sense is it is just OK right now, not growing. Working as a team on something like autonomous driving seems difficult to do working from home, need the collaboration around the table.
Government Contracting - the hit to taxes doesn't seem to have registered with many cities and states. Not a good situation to get new projects going.
Petrochemical and LNG - permitting of projects has been quite slow, or being stopped. Pipelines everywhere are getting cancelled or denied permits. Certainly not growing.
Marine - not growing.

Is there an industry that is hiring engineers like mad at this time. I am unaware of any.

So engineers that are working at Boeing, GE, Pratt, Airbus, RR that haven't gotten a pink slip will hunker down, certainly won't quit. It will be a great time to get needed design work done where there is need, but 'make work' doesn't gain anything.

I see some hopeful things at Boeing, the Australian Loyal Wingman has gone from inception to actual prototype has been super fast, the MQ-25 and the T-7 have moved forward on schedule with what looks like great product. Those doing the T-7 digital design quick with super ease of assembly could be the future.

---
I see the 787 is going to CHS, the Everett line will be mothballed for now. At Everett, there are other production lines running so transfers of key people to other lines preserves some of the talent. At CHS any RIF's basically lose that person. So restarting a mothballed line in Everett is less onerous than increasing production at CHS. Somehow I doubt the 787 will ever be back to rate 8, certainly 10/month is not happening anytime soon.
 
flipdewaf
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Re: Boeing Considers Closing 787 Production in WA

Thu Aug 27, 2020 8:16 pm

JayinKitsap wrote:

Is there an industry that is hiring engineers like mad at this time. I am unaware of any.
at the risk of going completely off topic, Yep, the industry I work in is doing pretty well to be honest, it’s the often overlooked but actually by value maybe the largest manufacturing sector in the world...food manufacture. It has ups and downs like other industries but let’s be honest we stop paying the mortgage before we stop getting food so it’s pretty robust in general.

Fred


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Opus99
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Re: Boeing Considers Closing 787 Production in WA

Fri Aug 28, 2020 4:36 am

https://theaircurrent.com/aviation-safe ... ral-issue/

It’s behind a paywall. But anyway will summarise:

Eight 787s have been pulled out of service by Boeing as they have discovered that those 787s do not meet the requirements for service levels as their fuselage joints were assembled incorrectly and therefore compromised the fuselages ability to withstand in service stress (cracks were found).

Airlines were United, Singapore and Air Canada.

Singapore’s said yes they are working with Boeing on the issue with one of their 787-10s

And we all know where those -10s are built....

And I want to bet those other 787s were built in the same place
 
USAirKid
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Re: Boeing Considers Closing 787 Production in WA

Fri Aug 28, 2020 4:49 am

Opus99 wrote:
https://theaircurrent.com/aviation-safety/boeing-pulls-eight-787s-from-service-over-structural-issue/

It’s behind a paywall. But anyway will summarise:

Eight 787s have been pulled out of service by Boeing as they have discovered that those 787s do not meet the requirements for service levels as their fuselage joints were assembled incorrectly and therefore compromised the fuselages ability to withstand in service stress (cracks were found).

Airlines were United, Singapore and Air Canada.

Singapore’s said yes they are working with Boeing on the issue with one of their 787-10s

And we all know where those -10s are built....

And I want to bet those other 787s were built in the same place


The article wasn’t behind a paywall for me. From what I read it looks like that joint is always put together at Charleston.

And the issue, according to several Boeing manufacturing engineers and aircraft assemblers familiar with the situation say the structural shimming has been a longstanding challenge for the company’s South Carolina manufacturing operation.
 
Sokes
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Re: Boeing Considers Closing 787 Production in WA

Fri Aug 28, 2020 5:09 am

Should Comac build a research and development center in Seattle?
Why can't the world be a little bit more autistic?
 
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Antaras
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Re: Boeing Considers Closing 787 Production in WA

Fri Aug 28, 2020 5:36 am

What is the maximum production rate of CHS? Around 5-8?
Would Boeing upgrade/expand CHS to catch the demand in the next 20 years?
If you disagree with my statement, assume that it was just a joke :duck:
 
Northeast748
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Re: Boeing Considers Closing 787 Production in WA

Fri Aug 28, 2020 6:05 am

[quote="Revelation"]A far simpler question: what is the relevance of accounting methodology to the decision to only keep one 787 FAL?

We have plenty of statements in Leeham and elsewhere saying 787 will never pay back all the deferred costs even before the COVID crisis.

So, 787 may have to take a write down early (it has already said 787 is close to loss forward position due to COVID) or it may take it when the program finally produces its last aircraft, but I'm not seeing how it influences the decision to be made in the near future.

If we feel Boeing runs the company on cash flow, it'll chose to keep KCHS open because it has the best cash generation potential.

Program accounting and/or deferred cost is at best a second order consideration, no?[/quote

What would happen if everything was consolidated to CHS, and then a hurricane wiped it out? :stirthepot: :duck:
 
2175301
Posts: 1909
Joined: Wed May 16, 2007 11:19 am

Re: Boeing Considers Closing 787 Production in WA

Fri Aug 28, 2020 7:23 am

Northeast748 wrote:
What would happen if everything was consolidated to CHS, and then a hurricane wiped it out? :stirthepot: :duck:


A hurricane at CHS is likely a better scenario than a massive earthquake in the Seattle area.

The hurricane will not destroy everything. The building may be messed up. Equipment may be damaged. Aircraft will be damaged, etc. But, the Building can be repaired, equipment can be cleaned up and repaired, etc.

I'm sure that Boeing has an insurance policy for just this type of scenario. I estimate production would be able to restart within 6 months.

This is based on my knowledge of a major Power Plant that was hit by a massive tornado (it bounced off of the main building, came back, and pealed around one corner, and headed away from the plant. On the way to the plant it distributed the regional warehouse for all system wide power plant parts over about 50 square miles, took down the coal handling system to get coal into the plant, took down miles of high voltage transmission lines, and stripped all the siding and roofing off of the power plant and destroyed almost all of the wiring and control cables.

Someone had a video camera and "filmed it" and it was on the 6pm national news. The insurance company in question sent a VP to the plant site with accounting and inspectors, and the VP had directions (and supplies) to write a $1 Billion dollar check if the inspectors felt the plant was un-repairable. There was an emergency battery room in a hardened room with inverters and a battery powered oil pump and an automatic system for putting the turbine/generator on turning gear when it slowed down, with wiring in very heavy ridged conduit (Schedule 80 pipe). The found that had worked as planned and the turbine/generator was on slow turning gear (and had not spun down and sat when very hot - which would have put a permanent bow in the turbine rotors). That feature saved the plant. The insurance company quickly spent about $1/3 Billion rebuilding the plant, coal handling system, transmission system, etc in about 5 months; and felt very very lucky (they were paying Iron Workers Triple Time as the "base rate" to erect steel outdoors in winter - and 6X for Sundays) The parts warehouse was under a different insurance policy - which just paid the full value of the policy.

Every one was happy. At the time I worked for a utility that was one of the co-owners of the power plant in question. After it came back on line we all got to watch about a 2 hour documentary of the damage, and rebuilding the plant and support systems, and of course coming back on line. The Utility felt that they lost a bit on the parts warehouse... but, not enough to materially affect anything (and they increased the next insurance policy value for the replacement parts warehouse).

That's what would happen at Charleston if a hurricane hit it. I'm not sure which company (or companies) insure major aircraft assembly buildings and equipment. I know that someone does.

I do know who insures major Power Plants (and Nuclear Power Plants for non- nuclear event damage: Nuclear event damage in the USA is insured by a specific insurance company created just for nuclear events sitting on I believe about a trillion $, and all users of nuclear generated electricity pays the premiums as part of the electric rate per kWHr).

Have a great day,
 
Northeast748
Posts: 23
Joined: Sun Sep 15, 2013 12:04 am

Re: Boeing Considers Closing 787 Production in WA

Fri Aug 28, 2020 7:26 am

Interesting. Thanks for the info. I guess it wouldn't be as big of an interruption as with what happened with the MAX.
 
User avatar
SEPilot
Posts: 5649
Joined: Sat Dec 30, 2006 10:21 pm

Re: Boeing Considers Closing 787 Production in WA

Fri Aug 28, 2020 7:49 am

The COVID situation is going to have a much longer lasting impact for Boeing and Airbus than it will for the airlines. They have ordered far too many planes than they can now use, and as a consequence are not going to order any more until long after they recover from the current drastic drop in traffic. That being the case, I see it being several years, perhaps as many as 10, before the production rate of the 787 will need more than one assembly line. And it might not happen at all. But with the situation as it is, it seems to me to be foolish for Boeing to maintain two assembly lines now. And since Everett cannot build the -10 that means their line is the one to close. And Charlestown, if quality issues remain, will have to deal with them. There just is no other option.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
FluidFlow
Posts: 741
Joined: Wed Apr 10, 2019 6:39 am

Re: Boeing Considers Closing 787 Production in WA

Fri Aug 28, 2020 9:28 am

2175301 wrote:
Northeast748 wrote:
What would happen if everything was consolidated to CHS, and then a hurricane wiped it out? :stirthepot: :duck:


A hurricane at CHS is likely a better scenario than a massive earthquake in the Seattle area.

The hurricane will not destroy everything. The building may be messed up. Equipment may be damaged. Aircraft will be damaged, etc. But, the Building can be repaired, equipment can be cleaned up and repaired, etc.

I'm sure that Boeing has an insurance policy for just this type of scenario. I estimate production would be able to restart within 6 months.

This is based on my knowledge of a major Power Plant that was hit by a massive tornado (it bounced off of the main building, came back, and pealed around one corner, and headed away from the plant. On the way to the plant it distributed the regional warehouse for all system wide power plant parts over about 50 square miles, took down the coal handling system to get coal into the plant, took down miles of high voltage transmission lines, and stripped all the siding and roofing off of the power plant and destroyed almost all of the wiring and control cables.

Someone had a video camera and "filmed it" and it was on the 6pm national news. The insurance company in question sent a VP to the plant site with accounting and inspectors, and the VP had directions (and supplies) to write a $1 Billion dollar check if the inspectors felt the plant was un-repairable. There was an emergency battery room in a hardened room with inverters and a battery powered oil pump and an automatic system for putting the turbine/generator on turning gear when it slowed down, with wiring in very heavy ridged conduit (Schedule 80 pipe). The found that had worked as planned and the turbine/generator was on slow turning gear (and had not spun down and sat when very hot - which would have put a permanent bow in the turbine rotors). That feature saved the plant. The insurance company quickly spent about $1/3 Billion rebuilding the plant, coal handling system, transmission system, etc in about 5 months; and felt very very lucky (they were paying Iron Workers Triple Time as the "base rate" to erect steel outdoors in winter - and 6X for Sundays) The parts warehouse was under a different insurance policy - which just paid the full value of the policy.

Every one was happy. At the time I worked for a utility that was one of the co-owners of the power plant in question. After it came back on line we all got to watch about a 2 hour documentary of the damage, and rebuilding the plant and support systems, and of course coming back on line. The Utility felt that they lost a bit on the parts warehouse... but, not enough to materially affect anything (and they increased the next insurance policy value for the replacement parts warehouse).

That's what would happen at Charleston if a hurricane hit it. I'm not sure which company (or companies) insure major aircraft assembly buildings and equipment. I know that someone does.

I do know who insures major Power Plants (and Nuclear Power Plants for non- nuclear event damage: Nuclear event damage in the USA is insured by a specific insurance company created just for nuclear events sitting on I believe about a trillion $, and all users of nuclear generated electricity pays the premiums as part of the electric rate per kWHr).

Have a great day,


The structural damage will not be a problem to insure at all, that is a rather standard insurance even for massive assembly plants. There will be a group of insurers, one in the lead and the others providing excess coverage.

The interesting question will be from who and how much coverage Boeing can get for the business interruption cover, which will cover the lost revenue over the time no manufacturing can be done.
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