Business Essentials for Professionals


On 787 And 777 Cost Reductions, Boeing Barrels Ahead

On 787 And 777 Cost Reductions, Boeing Barrels Ahead
In order to chip away at the near-$30 billion deficit created by its 787 Dreamliner and to cut costs to compete with rival Airbus, Boeing Co is streamlining its aircraft production systems at its largest factory.
Boeing is reordering some of its assembly steps to speed up the process even as dozens of complex robots are replacing humans for such mundane tasks as drilling and riveting.
In recent times, Boeing has spent heavily to develop new aircraft models and the savings are part of a long-term cost-cutting drive, including substantial staff reductions, at the world's biggest plane maker.
To make carbon composite wings for its forthcoming 777X widebody jet, it poured $1 billion into erecting a 27-acre factory. In order to produce 100 planes a year, it also scaled the factory. But the production rate is falling with only 306 firm orders for the 777X on its books. In order that it can avoid purchasing some of the planned machinery, Boeing is challenging workers to find more efficient ways to do the work.
"Frankly, we would like to not to have to buy all of the equipment that we are currently sized for," said Eric Lindblad, vice president of the 777X program, during a recent factory tour. "It's just saving money on capital."
In order that it can test processes before hitting the acceleration pedal, Boeing also has set up a temporary low-rate assembly line for initial production (LRIP) of the 777X.
On the 787 line, where early aircraft that came out of the factory needed heavy reworking, and hence the "LRIP" strategy comes in part from those painful lessons.
This time, "we are actually testing the primary elements of that new production capability" on the 777, a plane Boeing already knows how to make, said Jason Clark, vice president of 777 and 777X operations.
With testing in 2019 and first delivery in 2020, final assembly of the 777X begins next year. It might be delivered a quarter early, if customers want, but not in 2019, Lindblad said.
The savings options are fewer on the 787 line because the company simply assembles supplier shipped parts that includes wings, fuselage and other major pieces.
But costs are still being taken out by teams. Bob Manelski, director of 787 business operations said that through such changes as putting interiors into planes earlier on the assembly line, and organizing kits so mechanics have all parts on hand, they have slashed production time by more than two-thirds in four years.
Everett, Washington, and North Charleston, South Carolina are the places where Boeing builds the 787. New techniques on one line at a time are therefore allowed to be tried out by the company.
About $27 billion have accumulated in deferred 787 production costs that were racked up by the first few hundred 787s and the savings are crucial to paying back that amount.
Building wants to build the largest 787 version, the 787-10 at the same cost as the 787-9 and in the same amount of time as the two smaller versions.
Manelski said, there are no choices but to continue getting lean. "We have to price the airplane more and more aggressively every time we got to the market."

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc