[UPDATE: It just occurred to me that those who haven't wasted their youth watching reruns of Fantasy Island may be unfamiliar with the "di plane" reference. If so, please see this video clip about 0:20 in when the diminutive Tattoo yelps, "di plane! di plane!"] It's time to eat some humble pie now, although IPE Zone readers can probably forgive me for being wrong this time. (I still think I get things right more than often enough to warrant some consideration ;-) Anyway, many in the business press were successful in convincing yours truly that outsourcing substantial parts of the upcoming Boeing 787 was a marvy idea. I thought it was a classic make-or-buy, transaction cost economics problem that would be favorably be resolved in favor of farming out a lot of R&D and production to both American and international suppliers. Well, it's probably the right time to reconsider things. Here is a passage from an earlier post:
I was really sold (duped? braiwashed?) on the concept of "lean" manufacturing--lower inventory costs and associated overhead should result from having different suppliers deliver the necessary parts just-in-time. Well, the problem here is that Boeing's flotilla of subcontractors seems to be rather slow in working up to speed on the design of the subcontracted parts. Consequently, the rollout of the 787 will likely be delayed for a third time. It's likely that delays have been caused by the less-than-stellar quality of the work contracted out as before. Is there a lesson here? Maybe it's trust the subcontractor, but verify the realism of designated time frames. From the Financial Times:
Boeing says it can't supply a full list of subcontractors that are working on the project, but industry analysts estimate that their numbers are greater than the 900-plus that contributed to the 777, which began construction in 1990. Boeing spokesperson Loretta Gunter confirms that the processes used to construct the two planes are markedly different. "We have fewer first-tier subcontractors on the 787 than we did on the 777 because each is providing bigger components," she says. "Likewise, many of them are contracting out bigger jobs to their subs."
Boeing's new manufacturing template has captured the imagination of the aerospace industry. Recently officials from Airbus told analysts that the company will up its outsourcing to become more competitive. "For any company that wants to be successful in aerospace manufacturing, Boeing's new strategy is the way forward," says Aboulafia. "Which is ultimately good news for small business."
Boeing could announce a third delay for its 787 Dreamliner when it issues an update on the project at the end of March...
“We are working towards a schedule that we had outlined in January,” said Boeing. However, it left open the possibility that the company might report further delays when it gives the update. “The assessment could change that schedule,” it said.
Goldman Sachs, meanwhile, said it expected the first deliveries of the 250-300 seat jet to be pushed back to the third quarter of 2009, from Boeing’s current target of “early 2009”.
“[Boeing] continues to underestimate the amount of work required on the 787,” said analyst Richard Safran. “We think Boeing will notify suppliers of new production targets shortly, motivated by the need to keep delivery commitments to airlines.”
The 787 is Boeing’s most successful new aircraft, with 857 orders in place, worth about $140bn. New orders have continued to flow in spite of the programme being delayed, first in October and again in January.
A further delay would be both embarrassing for the company and irksome to Boeing’s customers, who are starting to grumble about pressing for compensation from the aircraft maker.
After Boeing announced the airliner’s second delay in January, Qantas, the Australian flag-carrier, said it would seek damages. International Lease Finance, the world’s leading aircraft leasing group, said last month it was also looking for compensation from Boeing.