Business Week: On a Wing and a Prayer at Boeing

Boeing is in action, according to Business Week Online, and still has a few issues to deal with on the 787 program. I'm sure they will get it figured out soon.

On a Wing and a Prayer at Boeing
The stakes have never been higher for the company and its Dreamliner, its revolutionary lightweight jetliner
BusinessWeek Online 06/07/2006
Author: Stanley Holmes
For Boeing (BA ) the 787 Dreamliner, with its radical new lightweight design, represents far more than a potentially juicy profit stream. The carbon-fiber-reinforced plastic aircraft is supposed to be the symbol of a new Boeing -- a visionary company that has transcended its recent ethical scandals, designed the most innovative commercial plane ever, and devised the most sophisticated manufacturing process in history to produce the aircraft. But as crucial deadlines loom, BusinessWeek has learned that Boeing's engineers are wrestling with several significant technical and production problems that could threaten the scheduled 2008 delivery of the jetliner.

At a time when Boeing has left itself with little margin for error, the wide-ranging series of glitches could create a domino effect if not resolved quickly. The most important piece of bad news -- the fuselage section, the big multi-part cylindrical barrel that encompasses the passenger seating area, has failed in company testing. That's forcing Boeing to make more sections than planned, and to reexamine quality and safety concerns.

Elsewhere in the aircraft, suppliers are struggling to meet Boeing's exacting technological standards and ambitious production deadlines. The first two nose sections, for instance, were deemed unacceptable by Boeing. Software programs designed by a variety of manufacturers are having trouble talking to one another. And the overall weight of the airplane is still too high-- especially the single biggest part of the 787, the carbon-fiber wing.

BIG PAYOFF. A light, strong plane is the big payoff for the huge technical risk Boeing is taking in crafting parts out of composites. Small wonder that as the entire Boeing team prepares to build the first airplane, tensions among engineers have erupted into shouting matches, say people familiar with the matter.

Technical glitches, missed deadlines, and stretched nerves are par for the course with new planes. But far more than a new plane is at stake. Boeing has undertaken a grand business experiment with the Dreamliner. In a bid to tap the best talent and hold down costs, the aerospace icon has engaged in extreme outsourcing, leaving it highly dependent on a far-flung supply chain that includes 43 "top-tier" suppliers in 12 countries. It is the first time Boeing has ever outsourced the most critical areas of the plane, the wing and the fuselage. About 80% of the Dreamliner is being fabricated by outside suppliers, vs. 51% for existing Boeing planes.

The Dreamliner's mounting challenges call into question whether such a radical business model can succeed, and whether the advantages of collaboration on such a scale are outweighed by the loss of logistical control. For Boeing in particular, it raises the question of whether the company is entering a danger zone that could result in a serious blow to its credibility. In the years since Boeing's epic production disaster in the late 1990s, the company has regained much of its reputation and the ground it had lost to European rival Airbus. The Dreamliner has been central to that remarkable revival, racking up a record 350 firm orders in two years. That has forced Airbus to go on the defensive and rethink its midsize plane strategy.

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