By John Dodge
Posting in Finance
The Boeing 787 is as rich with stories and lessons as any complex and development effort by a private enterprise ever undertaken. I can't wait for the book or the movie. by John Dodge
Many books will be written about the development of the Boeing 787, now considered the most the delayed and expensive airplane in Boeing's storied history. The numerous lessons and businesses cases will apply to countless similarly complex engineering and logistical projects.
When I started covering the 787 in March, 2007, first flight was supposed to be the following September and had already been slightly delayed once. The PR roll out was in July, 2007 with a plane held together by the wrong fasteners because the right ones were in short supply. Now that plane and the two that succeeded it have been so heavily modified, Boeing has decided not to market them and will record an additional R&D expense of $2.5 billion.
By comparison, the Boeing 757 was trundled out on Jan. 13, 1982 and took its maiden flight just over a month later on Feb. 19.
My fear is the insiders from top executives to the engineering managers won't talk at least until they retire and possibly never. But the network of insiders is potentially huge considering the 40 top tier suppliers are also in the loop and not getting paid because no transactions are taking place for the moment. Maybe, they are getting paid. We don't know, but last week Boeing execs denied it's "shifting the [financial] burden" of the delays to its supply chain.
Key to a revealing and accurate book will access to the insiders like Boeing Commercial Airplanes President and CEO Scott Carson and Commercial Airplanes vice president and GM of Airplane Programs Pat Shanahan, who took over the struggling program in Fall, 2007 from Mike Bair, who I bumped into at a Apollo 11 conference a couple of months ago. Bair, reportedly miffed about his reassignment at the time, was polite but not in a chatty mood when I introduced myself.
And of course, no one is going to talk until the plane regularly flies and production smooths out.
Here's a list of topics (or chapter titles) I would like to see:
The blame game: Who's at fault for the miscues? Could problems like the fastener shortage have been forseen? Who knew what and when? Were the suppliers in the loop? How did information travel back and forth between suppliers and Boeing? What were the "holy s--t" moments? A handful of seemingly small things have the delayed 787, but with a new airplane, a fastener shortage, unfinished avionics software, logistical issues with the farflung and untested supply chain and a tiny but overly stressed area of the wing are show stoppers, thankfully.
Engineering a complex airplane: Again, little things so far have delayed delivery of the 787. All the wonderful technological advances I wrote about such as more fuel efficient engines, better turbulence damping, greater cabin comfort, innovative electrical systems and more composite structures than ever before have proven solid in pre-flight testing. Once in flight, it could be another story, but to Boeing's credit, the company has taken it's lumps and not rushed up the plane.
[Update: There is already a partial book manuscript online that is highly critical of using composites in the 787 and in certain Airbus models. It's called "An Impossible Dream" and author and materials engineer Hans Van der Zanden says it will be finished and published later this year. The third chapter looks specifically at the 787 although the book talk about it throughout. ]
How far can you flung the supply chain? Boeing ceded control of manufacturing once it decided to rely on partners to make most of the components. Problems with several suppliers and unfinished components resulted in what Boeing calls traveled or out-of-sequence work which is expensive. That raised questions about the logistical path Boeing chose.
How is an airline to cope? Airlines love the 787, but have become exasperated by the delays. They ordered nearly 900 at its peak, but 2009 with 73 cancellations and a mere 13 new orders has been tough. Still, Boeing has more than 800 remaining orders. But the airlines have not been happy and last week, Boeing confirmed some customers have switched to 777s and 767s instead (and Airbus's I would guess).
The economics of the 787: When it's all tallied, how much did it cost to develop the 787? How much did Boeing have to give back to customers as the result of the delays? How much does a customer pay for a 787 versus the list price of $138-188 million? How are they financed? How does maintenance factor in (Boeing has guaranteed maintenance will be 30% less costly compared to a Boeing 767)?
Most of this highly classified information will never officially be disclosed. Boeing had $151 billion in orders in April of 2008 when orders hit 892 which nets out to $168.2 million a copy, but we all know no one pays list prices.
Boeing 787, the real story. I can't wait.
More coverage of Boeing's 787 Dreamliner on SmartPlanet:
- Boeing eats first three 787s, stretches flight test schedule
- Boeing 787 maiden flight reset for Q4
- Is 787 Dreamliner novel manufacturing strategy on the rocks?
- Boeing's Candor on 787 Delay
- Boeing 787 Delay Call Live
- Boeing 787 First Flight Delayed Again
- Boeing 787 "Gauntlet" videos worth a look
- Boeing 787 Dreamliner mitigates turbulence
Aug 31, 2009