Boeing Scrambles to Repair Problems With New Plane
Layers of Outsourcing Slow 787 Production; 'Hostage to Suppliers' By J. LYNN LUNSFORD December 7, 2007
EVERETT, Wash. -- On Tuesday, Boeing Co. will give Wall Street a progress report on its 787 Dreamliner, as it scrambles to overcome a six-month delay in producing the new jet. A look inside the project reveals that the mess stems from one of its main selling points to investors -- global outsourcing. When the Chicago aerospace giant set out four years ago to build the fuel-sipping jet, it figured the chief risk lay in perfecting a process to build much of the plane from carbonfiber plastic instead of aluminum. Boeing focused so hard on getting the science right that it didn't grasp the significance of another big change: The 787 is the first jet in Boeing's 91-year history designed largely by other companies. To lower the $10 billion or so it would cost to develop the plane solo, Boeing authorized a team of parts suppliers to design and build major sections of the craft, which it planned to snap together at its Seattle-area factory. But outsourcing so much responsibility has turned out to be far more difficult than anticipated. The supplier problems ranged from language barriers to snafus that erupted when some contractors themselves outsourced chunks of work. An Italian company struggled for months to gain approval to build a fuselage factory on the site of an ancient olive grove. The first Dreamliner to show up at Boeing's factory was missing tens of thousands of parts, Boeing said. Today, the Dreamliner is at least six months late, and the goal of delivering 109 planes by the end of 2009 is threatened. Rather than being well into flight tests, Boeing is rushing to get the first planes airborne while it helps suppliers around the world bring their factories up to speed. Boeing has said the delays have affected 19 of the 52 airlines that have ordered the 787, some of which were counting on using their planes during the 2008 Summer Olympics. If delays mount, the company could face millions of dollars in penalty payments to customers, as well as pressure from suppliers, many of which have agreed not to be paid until planes get delivered. The missteps underscore the hazards and limits of outsourcing -- especially with a brandnew airplane, the most complex machine in mass production. Lessons that Boeing is learning the hard way could end up helping rival Airbus, a unit of European Aeronautic Defence & Space Co. Airbus has said it plans to use a similar model of global suppliers to build a competing plane that should be ready in about five years. Boeing overestimated the ability of suppliers to handle tasks that its own designers and engineers know how to do almost intuitively after decades of building jets. Program 1
managers thought they had adequate oversight of suppliers but learned later that the company was in the dark when it came to many under-the-radar details. "In addition to oversight, you need insight into what's actually going on in those factories," says Scott Carson, the president of Boeing's Commercial Airplanes unit. "Had we had adequate insight, we could have helped our suppliers understand the challenges." The 787 is a hit with airlines. Boeing has 762 orders from 52 carriers for the plane, which will carry between 225 and 300 passengers. The combination of lightweight materials and fuel-efficient engines is expected to make it 20% cheaper to fly and a third less costly to maintain than older jets. Boeing says it has sold out of delivery slots until almost 2014, making it critical to get the jet into production without further setbacks. Boeing set out to bring the plane to market in just over four years, two years less time than such projects have taken in the past. It has responded to bottlenecks by throwing both money and people at them, parachuting in dozens or hundreds of its own employees to attack problems at plants in Italy, Japan and South...
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