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Stitch
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 12:11 pm

Quoting NYC777 (Reply 26):
Well if they're planning to build a large 777/747 successor then those parts (assuming they're going to use the barrell method a la the 787) would be too large to transport along large distances and it would make sense to set up an industrial park where the facilities are in very close proximity to each other to facilitate logistics of the large fuselage sections.

And Washington State's incentives do apply to any aerospace company, so that could help support building facilities in the area.

Quoting Abba (Reply 45):
However, the learning curve for Boeing is much steeper by far as it would have been for Airbus if they were to do the 787.

 Yeah sure
 
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USAF336TFS
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 1:05 pm

This is good news for American manufacturers, albeit for any future programs. I must admit, I was a bit uneasy about the reliance on so much foreign manufacturing and the shuttling around of major assemblies.

I think Mike is probably signalling that there is a chance that any future 787 production increases will be "closer to home".
If my guess is correct, then North American facilities could provide that capacity demand. Might be a jumping board for the future narrowbody replacement program as well.

Interesting which of the risk sharing partners he's not happy with. My guess is that he's probably talking about Alenia.
It's no secret that Boeing was quite unhappy with the condition of the first few production barrels.
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Revelation
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 2:30 pm

Quoting Rheinbote (Reply 32):
The positive aspect for Airbus is that Boeing is demonstrating the pitfalls of their global outsourcing approach before Airbus could manage to copy it!

It's not clear to me. Both B and A have done outsourcing of component manufacturing pretty much since their first days. Boeing has taken it a step further by outsourcing more design work, and more assembly of subsections. He's stating that some 2nd tier vendors won't be used again, and some design work will be kept in-house, but he isn't saying that global outsourcing will stop.

Quoting USAF336TFS (Reply 51):
I think Mike is probably signalling that there is a chance that any future 787 production increases will be "closer to home".

It's not all that clear to me, again. He says he would like a site where Boeing and all the subcontractors would be co-located. On one hand, it makes sense with the current economic model (planes priced in weak US$ sold primarily to non-US customers) to keep that site in the US, but on the other hand much of the capital intense manufacturing is happening in Japan, and he uses the example of Toyota manufacturing product away from their home country.

It'll be interesting to hear more details about the 787 issues as they leak out.

As for the future, it would not shock me to see all manufacturing of Y3 be outsourced to Japan. They are already doing the wings and wing box for 787, which is the real heart of the aircraft. It would solve the problem of having to ship huge barrel sections all around the world, and perhaps Japan is one of the few places one could gather the talent and the capital needed to launch such a huge project.
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 2:54 pm

There's a follow on article from Seattle PI.

Seems Boeing is willing to "dis" an even wider set of players:

Quote:
"Some of these guys we won't use again," Bair said Wednesday in a speech to the Snohomish County Economic Development Council.

He did not name names.

Did Bair mean to include Boeing's top-tier partners in the U.S., Italy and Japan that are responsible for manufacturing the composite wings and fuselage sections of the new jet?

"The suppliers you name and some of their subtiers," a Boeing spokesman said Thursday when asked to clarify Bair's comments.

An interesting quote at the end:

Quote:
Hamilton said Bair's speech confirms what many in the industry had already suspected: Boeing has serious production problems.

"They have issues with front-line partners, and not just with second- and third-tier suppliers," Hamilton said.

"If things are in this much disarray, what's next?"
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USAF336TFS
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 3:03 pm

Quoting Revelation (Reply 52):
As for the future, it would not shock me to see all manufacturing of Y3 be outsourced to Japan. They are already doing the wings and wing box for 787, which is the real heart of the aircraft. It would solve the problem of having to ship huge barrel sections all around the world, and perhaps Japan is one of the few places one could gather the talent and the capital needed to launch such a huge project.


All very good points, but I think Japan has also become an expensive country for capital-intensive manufacturing. I'm just not sure that level of outsourcing - almost the entire program, would be in Boeing's long term interests. Why create another competitor and give them the tools to put you out-of-business in the next few decades?
Of course that doesn't even take into consideration the political blow-back that Boeing would have here in the States.

And how do we know that one or both of the Japanese partners aren't on Mr. Bair's list of "guys that we won't use again"?

[Edited 2007-11-02 08:05:08]
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sphealey
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 3:17 pm

Quoting Stitch (Reply 39):
They have certainly been surprised by what has happened. They've known they have had issues for over a year and have spent much time and money to try and mitigate it, yet they still couldn't get it done.

It burns like dry ice to say this given how the classification was most recently misused, but the question is were those known unknowns (see this reference under Contingency Reserve) or unknown unknowns? Any experienced technology manager or executive would know to expect some serious unanticipated problems and that those problems could impact schedule. So I am still unclear (and we won't know for 20 years - until the autobiographies are written - if ever) on whether the problems to date are just the absorption of the contingency reserves (whether those reserves were explicit or just held in the minds of the fiduciary parties) or whether the reserves have been blown and they are in totally uncharted territory. That is why I said first flight is a key milestone; industrial ramp-up is of course also critical but if the unit won't fly then, well...

sPh
 
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Stitch
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 3:20 pm

Quoting Sphealey (Reply 55):
It burns like dry ice to say this given how the classification was most recently misused, but the question is were those known unknowns (see this reference under Contingency Reserve) or unknown unknowns?

I would classify them as "known unknowns" since Boeing was pro-actively trying to correct them prior to final assembly of LN0001 commenced.
 
sphealey
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 3:26 pm

Quoting Stitch (Reply 56):
I would classify them as "known unknowns" since Boeing was pro-actively trying to correct them prior to final assembly of LN0001 commenced.

If that is the case per the strict PM definition of the terms then there is no substantial worry. Which I think is the conclusion Wall Street has reached at this point.

sPh
 
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 3:38 pm

Quoting USAF336TFS (Reply 54):
All very good points, but I think Japan has also become an expensive country for capital-intensive manufacturing. I'm just not sure that level of outsourcing - almost the entire program, would be in Boeing's long term interests.

Thanks for the compliment.

I'm sure Japan is expensive, but that isn't the only factor at play. Access to capital is a huge one, and access to talent is another, and willingness to invest in industry in the US is another. Boeing has hinted that they want to become an "intellectual property" company as opposed to a heavy manufacturer.

As for the level of outsourcing, after reading the various books on the history of Boeing, I never thought I'd see the wings outsourced. Again, according to these sources, the wings are what make or break an airplane, and even if they kept the design in-house and just outsourced the manufacturing, I can only imagine a partner could learn almost all they need to know from the amount of information they have as a manufacturer. So, in essence, I feel Boeing has already sold the family jewels.

Quoting USAF336TFS (Reply 54):
Of course that doesn't even take into consideration the political blow-back that Boeing would have here in the States.

I admit I am cynical, but I think corporations can get away with almost anything in the US. They'll find a way to spin it ("Isn't it great for our environment to not have all those nasty manufacturing plants here in the US?", or some other such nonsense) and the rest will be taken care of by the appropriate campaign contributions.

Quoting USAF336TFS (Reply 54):
And how do we know that one or both of the Japanese partners aren't on Mr. Bair's list of "guys that we won't use again"?

Could be, but they have used the same partners on 777 and if their work was found wanting, I don't think they'd be on the 787. On the other hand, Boeing pressured Vought to fire the VP in charge of their operation in Charleston months ago, and reading some of the comments after James Wallace's blog at Seattle PI makes one really wonder what the heck is going on with Vought.
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Stitch
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 3:49 pm

To be fair, the Japanese are taking on a good deal more work in terms of the "level of finishing" on the 787 then on the 777. So while producing fuselage panels that are then assembled in PAE might be fine, producing complete fuselage sections might not be.

Mind you, this is pure "Devil's Advocate" speculation.
 
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 5:44 pm

Quoting Revelation (Reply 58):
admit I am cynical

I share your cynicism, my friend. I hope we're both proved wrong.
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planemaker
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 6:33 pm

Quoting Stitch (Reply 17):
the cold, hard facts are that no private company can reasonably be expected to be able to fund a new aircraft program with a price tag between $10-20 billion USD out of their own bank accounts and cash flow and deliver it within a handful of years.

It seems that too many people on this site have forgotten just how close the 7E7 was to not getting launched!

Quoting Revelation (Reply 58):
As for the level of outsourcing, after reading the various books on the history of Boeing, I never thought I'd see the wings outsourced. Again, according to these sources, the wings are what make or break an airplane, and even if they kept the design in-house and just outsourced the manufacturing, I can only imagine a partner could learn almost all they need to know from the amount of information they have as a manufacturer. So, in essence, I feel Boeing has already sold the family jewels.

Wing manufacturing are no longer considered "family jewels." It is the configuration of the wings, which Boeing still designed on the 787, that are the jewels.
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TomB
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 7:29 pm

The U. S. Dollar Index has declined from 120 in 2001 to 76.25 today. The 36% devlauation in the U. S. Dollar has made it increasingly likely the Boeing could set up a 737 replacement production line in the United States and that it would offer economic advantages compared to outsourcing major components from foreign manufacturers.

That is the whole purpose of the U. S. Dollar devaluation - to make the USA more competitive and to bring manufacturing back into the USA.

I wonder if Boeing could set up a NON UNION production line in the Southeastern USA? A lot of those southern boys would love to have a job assembling airplances at $20 per hour plus a nice benefits package on top of their wages. A NON UNION workforce would largely remove the threat of strikes and the stoppage of a multi-billion production line. Boeing has been trying to find a way to counter their unionized workforce in the State of Washington with the threat of strikes and high wage demands.

Tom B
 
grantcv
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RE: Former 787 Chief Disses Supply Chain

Fri Nov 02, 2007 10:09 pm

Quoting Aircellist (Reply 24):
Could the successor to the 737 be built in Japan?

Or could the successor to the 737 be built in China and labeled as a Boeing. And the successor to that be built in China and labeled with a Chinese brand?
 
tdscanuck
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RE: Former 787 Chief Disses Supply Chain

Sat Nov 03, 2007 1:31 am

Quoting Revelation (Reply 49):
Quoting Tdscanuck (Reply 38):
Nope. US Government would never allow it, among other things.

I'm wondering if you'd clarify this. If, for instance, Boeing decided they couldn't make money building the 737 replacement in-house and it was built by a Japanese firm instead, and marketed and supported by Boeing, why and how would this be disallowed?

I really doubt the US Government has much if any willpower to block the plans of any large US corporation. Decades ago we had the breakup of Standard Oil, and then AT&T, and now we see the same entities recombining themselves. without a peep from Uncle Sam.

There are a couple of reasons the U.S. Government would try to block it. First and foremost, Boeing is by far the largest exporter in the US (by $'s). Singlehandedly, they have a big effect on the US trade balance. It would be politically very difficult for any US government to allow the trade imbalance to go farther negative than it already is, which it would if Boeing moved assembly out-of-country.

There is also the security issue...although Boeing Commercial and Defense operate independently, there are several cross-over products. Also, by being in the US, Boeing can use a variety of EAR and ITAR controlled technologies for commercial production (e.g. FADEC engine controls, large capacity multi-axis milling, etc.). If they try to move any of that outside the US they instantly lose almost any chance of converting those commercial products to military use and there are a bunch of technologies they'd have to leave at home.

There's also the fact that final assembly is an enourmous number of jobs and the political fallout of letting a very American company send that many jobs overseas would be huge.

That's all about the why.

The how is fairly simple...given the nature of the product, Boeing has to play very carefully with the Department of State, Commerce, and Defense. Any one of those can block many types of request that a company makes to do business outside the US.

Obviously, Boeing always has the option to go completely extra-US but that would shoot access to one of their largest markets in the foot and there may never be a business case to do that.

Quoting Revelation (Reply 58):
As for the level of outsourcing, after reading the various books on the history of Boeing, I never thought I'd see the wings outsourced. Again, according to these sources, the wings are what make or break an airplane, and even if they kept the design in-house and just outsourced the manufacturing, I can only imagine a partner could learn almost all they need to know from the amount of information they have as a manufacturer.

Actually, they can't learn as much as you might think. Given a design, a partner can learn very well about the aerodynamics and construction techniques of that design. However, by itself this doesn't allow you to do much other than copy that design. A wing is aerodynamically and structurally complex enough that it would be extremely difficult, if not impossible, to reverse engineer the design techniques from the final product. It wouldn't tell them that much about designing a different wing (which is where the value would be).

Once upon a time, building a wing was something that only the OEM's could do. That has obviously degraded with time as more manufacturers develop the required manufacturing expertise and tooling. That's a trend you see in all industries and Boeing can't stop it or ignore it. The sensible thing to do is let go of the things that other people can do better and hold on to the things that have huge value-added or only they can do. Wing design is still something that only the OEM's can do really well. The 787 may have tipped over the line a little to far, but I don't think any of the partners learned enough from their experience to run off and build an airplane of their own just using what they learned from Boeing.

Tom.
 
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RE: Former 787 Chief Disses Supply Chain

Sat Nov 03, 2007 3:39 am

Quoting TomB (Reply 62):
That is the whole purpose of the U. S. Dollar devaluation - to make the USA more competitive and to bring manufacturing back into the USA.

It's not purposeful, believe me... if the continuing drop ever sets off a stampede out of dollar denominated debt (i.e. a run on the Fed) we will be in a world of hurt. There are already precursory signs that support this possibility. Move some of your assets out from under the falling dollar, while you still can  Wink

Quoting TomB (Reply 62):
A NON UNION workforce would largely remove the threat of strikes and the stoppage of a multi-billion production line.

But a non-union workforce can still organize, if they think they can get a better deal that way.

Quoting Tdscanuck (Reply 64):
Also, by being in the US, Boeing can use a variety of EAR and ITAR controlled technologies for commercial production (e.g. FADEC engine controls, large capacity multi-axis milling, etc.)

Most of the stuff on the state department munitions list will gladly be provided by the UK, France, Germany, Japan, etc., who get to charge a premium because US companies are forbidden from competing. That's the main problem with ITAR: most of the stuff that's restricted can be obtained on the open market without ever doing business with the US. (not everything, of course, and that's where ITAR actually works...)
 
brons2
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RE: Former 787 Chief Disses Supply Chain

Sat Nov 03, 2007 6:02 am

Quoting 2175301 (Reply 15):
it was Boeing Managements responsibility to put into place adequate contingencies

Not just adequate contingencies, but adequate business controls on the outsourced portions of production. This whole fiasco smacks of inadequate controls and audit.

I too am working on a large outsourcing project (not the 787) and if I have learned one thing, you really have to stay on top of the outsourced work and effectively manage it. My dates are slipping as well, due to their problems.
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slz396
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RE: Former 787 Chief Disses Supply Chain

Sat Nov 03, 2007 7:30 am

Quoting Slz396 (Reply 13):
Quite a worrying outlook for the 787 actually, as god knows what the long term quality and reliability of the 787 will be. That of a traditional Boeing plane is well known, but that of a hybrid Boeing/poorer standard manufacturers plane so far doesn't look too promising...



Quoting Stitch (Reply 23):
To think that Boeing or Airbus would even take a chance on fielding a plane that was unsafe is...well, I can't find the words. Especially in a society as litigious as this one.

Read again: unreliable and of low quality are NOT the same as unsafe.

I am sure the 787 will be a perfectly safe plane;the certifying authorities will make sure Boeing and all partners take care of that. However, the reliability and quality of the product is far less regulated and depends heavily on the skills and know how of all those involved.

Remember it only takes one weak link, one design flaw, one tedious problem with a mechanical, electrical or structural component to make the 787 into a real 'hangar queen'. It sounds like Boeing itself silently admits that at least the potential for any such weak link has greatly increased as some partners and their subcontractors are not living up to the quality expectations.




 
planemaker
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RE: Former 787 Chief Disses Supply Chain

Sat Nov 03, 2007 8:23 am

Quoting Tdscanuck (Reply 64):
Wing design is still something that only the OEM's can do really well.

While Boeing and Airbus will have their particular insights, wing design in the narrow body range is not where they have any significant advantage. You just have to look at the fact that MHI designed the wing of the GX in 1992.
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