This day deserves a round up of all the Boeing news that is currently making me cross-eyed.
Boeing and the IAM are cited as one of four causes for economic slowdown in the US by the White House:
READ THE FULL PODCAST TRANSCRIPT
Shot:
QANTAS' low cost arm is expecting Ship 21 in November 2009, but that, according to the airline, appears unlikely. An additional six month slip for early customers could put the first delivery to ANA as far out as February 2010, assuming August 15, 2009 as the current delivery date.
If we stretch the speculative imagination a bit, these same funds could be used to buy out Alenia on the 2nd half of Global Aeronautica in Charleston. There are loud rumblings that an acquisition could provide Boeing additional stability for the 787 production ramp up. The first 50% from Vought cost about $47 million. $5B would easily cover the remaining 50%. What about expansion of San Antonio? After all there was this item from yesterday's Seattle Times:
Boeing and the IAM are cited as one of four causes for economic slowdown in the US by the White House:
"Today's G.D.P. report is weak, but it is not unexpected," a White House spokeswoman Dana M. Perino. "A number of things contributed to the slowing economy in the third quarter -- record high energy prices, housing and credit concerns, two major hurricanes and a prolonged Boeing strike."Boeing released a podcast this afternoon (props to TBC on the new media!) and made some significant news with its content. MIke Denton, VP of Engineering says that Boeing is insourcing significant detailed design work for 787-9.
One of the really important things that our teams need to know is that we have learned as a management team from the lessons of the 787-8. so the way we do the -9 in terms of how the design work is shared between partners and the Boeing company will be revised.The podcast itself is a significant mea culpa on the issues with the 787 program in acknowledging what went wrong and where. Though the biggest play is to throw a significant carrot to SPEEA whose biggest grievance has been the continued outsouring of engineering work to risk sharing partners and engineering centers outside the US.
So the end result of that is that we had a fair bit of incomplete build and incomplete design and a lot of traveled work that came to our factories here in Everett Washington. And our engineers and production workers are basically correcting the problems that should have never come to us in the first place. Problems that are the result of the partners really not being done. That's really unfortunate.
We will do more of the detailed design work on the 787-9 than we did on the -8. We are working out those details with some of our affected partners now. For the next new airplane and the bright future is there will be a next new airplane we will look at how the partner model went on the 787.
READ THE FULL PODCAST TRANSCRIPT
Shot:
Denton: The challenges for SPEEA and our working with them is that -- just as we have new leaders in the Boeing side in Doug Kight and Tom Easley -- the SPEAA team is represented by a new executive director. So part of successful negotiation is establishing a good working relationship. So right now we are in the process of developing that relationship and defining the new norms for how we'll do our negotiating.Chaser:
From @SPEEA at 6:46 PM ET 10/30: SPEEA ends today's meeting early citing Boeing intransigenceATW reports today that Jetstar is expecting an additional six-month delay on getting its first 787.
QANTAS' low cost arm is expecting Ship 21 in November 2009, but that, according to the airline, appears unlikely. An additional six month slip for early customers could put the first delivery to ANA as far out as February 2010, assuming August 15, 2009 as the current delivery date.
Jetstar Airways executives told ATWOnline this week that the LCC's first 787 is not expected until May 2010, 21 months later than the original schedule. A spokesperson added, "Based on what we have been told, we are working on contingencies and planning for a further three-to-six-month delay in our delivery, although Boeing is yet to formally confirm that." The lag is far longer than the 54-day IAM strike and confirms ATWOnline's report last month that there has been further slippage in the program, possibly due to brake control issues.Also, Ethiopian news site Nazret.com cites a Reuters report from Addis Ababa that Ethiopian Airlines is expecting its first 787 by the end of next year:
It already has 10 Boeing Co 787 aircraft on order, the first of which is now due to be delivered in December 2009, after supply chain problems delayed the programme by at least 16 months. The airline is looking to order more Boeing 787 aircrafts or order Airbus A350 XWB.A picture begins to emerge of the (existing) 2009 delivery schedule for the first 25 units based on published reports. These targets are all likely to slip in to 2010.
ANA - ZA007 - August 2009And finally this from Flight:
JAL - ZA020 - October 2009
Jetstar - ZA021 - November 2009
Air India - ZA025 - November 2009
Ethiopian - ZA026 - December 2009
Boeing's finance unit may raise a $5 billion warchest that could be used to buy aircraft for leasing, to make loans to customers or to fund acquisitions of other businesses.The most likely use of these funds would be for financing aircraft purchases in the year to come.
If we stretch the speculative imagination a bit, these same funds could be used to buy out Alenia on the 2nd half of Global Aeronautica in Charleston. There are loud rumblings that an acquisition could provide Boeing additional stability for the 787 production ramp up. The first 50% from Vought cost about $47 million. $5B would easily cover the remaining 50%. What about expansion of San Antonio? After all there was this item from yesterday's Seattle Times:
[The new IAM contract] gives the union a new right to bid for work being considered for transfer to a nonunion Boeing facility.Thoughts?This could become important if, say, Boeing decided it wanted to move more 787 work to San Antonio, Texas -- a nonunion location already assigned to do any necessary changes on some of the early production airplanes.
TRANSCRIPT
NARRATOR: This week's conversation is with Mike Denton. He's BCA vice president of engineering. Thanks Mike for taking the time to talk with us today.
I'd like to ask you a couple of questions that we've heard from our engineering employees.
First one, one of the new features of the 787 program has been its partner model. Can you briefly explain that model and the benefits it has brought to both the 787 program and to Boeing?
DENTON: Sure [unknown], it's nice to here. Back when we launched the 787 we were really concerned about a couple of things. One of which was being able to have a business case that we could close. So we had gone through a couple of iterations of attempts of doing a new large airplane or a major 747 derivative and when we approached the business case around doing those new or major derivatives in the traditional way that we've always done it the upfront costs that we were so faced with were very prohibitive. They were so high that we couldn't afford to do the airplane. So what we were looking for was a way to reduce our total spending and our upfront spending in the development part of the program.
The partner model brought us a huge benefit in that we were able to secure the investment of R&D monies by our partners instead of just by the Boeing company. So rather than the partner doing a lot of the development work for which we would compensate them and we could code that money as R & D funds , the partners stepped up with their own R&D funds, reducing our level of R&D investment and made our business case much more attractive .
An additional benefit of the partner model was that we were asking the partners to do some of the design of the parts that they were building for us. by doing that it was reducing the total staffing requirements that we would have to do here at Boeing. And from a stability perspective that was very attractive. One of the phenomena of development programs for engineering has always been that to execute the upfront part of the program all of that development work we end up staffing up a lot we hire a lot of people. And when the developmental program ends quite often we don't have other work stacked up right behind to put those other employees to work on. so we are forced to go into a layoff situation. Not a good way to have your business operate. So business stability perspective and from a better business case perspective partner model was really attractive to us
We've hit some rough spots in implementing the partner model. What challenges has the company encountered and what is being done to overcome those
DENTON: Yeah, it's true Partner model hasn't gone as originally planned. I made the comment that one of the attributes of the partner model was that the partners would do the design of the parts they would build. This is a lot of major structure design that's traditionally been Boeing work, and the partners in the past would do basically a build to print is the way we would describe the work.
I guess let's say it this way our assessment of the partners capability in all cases to do that design work - our assessment was higher than their capability. Some of the partners did fine. Some of the partners have really struggled to do a really good job of the engineering for those parts. Further the oversight that we did on the program in the early stages to assess how the partners were performing was not as thorough as we would have liked in retrospect. So we were late in discerning that the partners were really struggling.
So the end result of that is that we had a fair bit of incomplete build and incomplete design and a lot of traveled work that came to our factories here in Everett Washington. And our engineers and production workers are basically correcting the problems that should have never come to us in the first place. Problems that are the result of the partners really not being done. That's really unfortunate.
So we still have a lot of work to do on the 787. We have work to do on other developmental programs. But that work on those other programs is somewhat encumbered by the fact that our engineers and production workers but our engineers especially are really busy making the designs right so a lot of recovery work so I'm really thankful our team is here and ready to do that work but I'm also really sorry that we put them in that situation where they had to do so many hours of overtime to get the program recovered .
So we created some problems, and a lot of the recovery around our partner model the way we implemented them is just a lot of hard work by our engineers.
One of the really important things that our teams need to know is that we have learned as a management team from the lessons of the 787-8. so the way we do the -9 in terms of how the design work is shared between partners and the Boeing company will be revised.
We will do more of the detailed design work on the 787-9 than we did on the -8. We are working out those details with some of our affected partners now. For the next new airplane and the bright future is there will be a next new airplane we will look at how the partner model went on the 787. There are attributes of it that we liked, like the fact that the partners chipped in their R&D. And the fact that they did some of the design.
However we will probably do more of the design and even some of the major production for the next new airplanes ourselves as opposed to having it all out with the partners. So we see that as an improvement. We see that as building on lessons of the 787, taking advantage of the parts that were really good, but doing some course corrections so that we can not relive some of the harder lessons that we have experienced recently
NARRATOR: Our last question today is about negotiation. Main table talks with SPEEA are coming soon and the union has described discussions as confrontational. What re you doing differently with SPPEE in an effort to reach a different outcome than with the IAM .
DENTON: Well the SPEEA negotiations are going to be different than they were with the IAM... just by the nature of we have a different institution and a different work force so there are somewhat different issues.
The challenges for SPEEA and our working with them is that -- just as we have new leaders in the Boeing side in Doug Kight and Tom Easley -- the SPEAA team is represented by a new executive director. So part of successful negotiation is establishing a good working relationship. So right now we are in the process of developing that relationship and defining the new norms for how we'll do our negotiating.
One example is that for the negotiations that I've been a part of in 2002 and 2005 we did a lot of work in the subcommittees and then brought the results of that work to the main table for a little bit of discussions and then just sign off on the what the subcommittees proposed. In this negotiation the SPEEA team has expressed a desire to do more of the detailed negotiations at the main table. That's new to us. We're willing certainly to work with them to make that happen obviously we have some concerns about whether there's enough time to get it all done at main table or not. We think the subcommittees will continue to have a role, but that's just a part of us working together to figure out a good process.
NARRATOR: This week's conversation is with Mike Denton. He's BCA vice president of engineering. Thanks Mike for taking the time to talk with us today.
I'd like to ask you a couple of questions that we've heard from our engineering employees.
First one, one of the new features of the 787 program has been its partner model. Can you briefly explain that model and the benefits it has brought to both the 787 program and to Boeing?
DENTON: Sure [unknown], it's nice to here. Back when we launched the 787 we were really concerned about a couple of things. One of which was being able to have a business case that we could close. So we had gone through a couple of iterations of attempts of doing a new large airplane or a major 747 derivative and when we approached the business case around doing those new or major derivatives in the traditional way that we've always done it the upfront costs that we were so faced with were very prohibitive. They were so high that we couldn't afford to do the airplane. So what we were looking for was a way to reduce our total spending and our upfront spending in the development part of the program.
The partner model brought us a huge benefit in that we were able to secure the investment of R&D monies by our partners instead of just by the Boeing company. So rather than the partner doing a lot of the development work for which we would compensate them and we could code that money as R & D funds , the partners stepped up with their own R&D funds, reducing our level of R&D investment and made our business case much more attractive .
An additional benefit of the partner model was that we were asking the partners to do some of the design of the parts that they were building for us. by doing that it was reducing the total staffing requirements that we would have to do here at Boeing. And from a stability perspective that was very attractive. One of the phenomena of development programs for engineering has always been that to execute the upfront part of the program all of that development work we end up staffing up a lot we hire a lot of people. And when the developmental program ends quite often we don't have other work stacked up right behind to put those other employees to work on. so we are forced to go into a layoff situation. Not a good way to have your business operate. So business stability perspective and from a better business case perspective partner model was really attractive to us
We've hit some rough spots in implementing the partner model. What challenges has the company encountered and what is being done to overcome those
DENTON: Yeah, it's true Partner model hasn't gone as originally planned. I made the comment that one of the attributes of the partner model was that the partners would do the design of the parts they would build. This is a lot of major structure design that's traditionally been Boeing work, and the partners in the past would do basically a build to print is the way we would describe the work.
I guess let's say it this way our assessment of the partners capability in all cases to do that design work - our assessment was higher than their capability. Some of the partners did fine. Some of the partners have really struggled to do a really good job of the engineering for those parts. Further the oversight that we did on the program in the early stages to assess how the partners were performing was not as thorough as we would have liked in retrospect. So we were late in discerning that the partners were really struggling.
So the end result of that is that we had a fair bit of incomplete build and incomplete design and a lot of traveled work that came to our factories here in Everett Washington. And our engineers and production workers are basically correcting the problems that should have never come to us in the first place. Problems that are the result of the partners really not being done. That's really unfortunate.
So we still have a lot of work to do on the 787. We have work to do on other developmental programs. But that work on those other programs is somewhat encumbered by the fact that our engineers and production workers but our engineers especially are really busy making the designs right so a lot of recovery work so I'm really thankful our team is here and ready to do that work but I'm also really sorry that we put them in that situation where they had to do so many hours of overtime to get the program recovered .
So we created some problems, and a lot of the recovery around our partner model the way we implemented them is just a lot of hard work by our engineers.
One of the really important things that our teams need to know is that we have learned as a management team from the lessons of the 787-8. so the way we do the -9 in terms of how the design work is shared between partners and the Boeing company will be revised.
We will do more of the detailed design work on the 787-9 than we did on the -8. We are working out those details with some of our affected partners now. For the next new airplane and the bright future is there will be a next new airplane we will look at how the partner model went on the 787. There are attributes of it that we liked, like the fact that the partners chipped in their R&D. And the fact that they did some of the design.
However we will probably do more of the design and even some of the major production for the next new airplanes ourselves as opposed to having it all out with the partners. So we see that as an improvement. We see that as building on lessons of the 787, taking advantage of the parts that were really good, but doing some course corrections so that we can not relive some of the harder lessons that we have experienced recently
NARRATOR: Our last question today is about negotiation. Main table talks with SPEEA are coming soon and the union has described discussions as confrontational. What re you doing differently with SPPEE in an effort to reach a different outcome than with the IAM .
DENTON: Well the SPEEA negotiations are going to be different than they were with the IAM... just by the nature of we have a different institution and a different work force so there are somewhat different issues.
The challenges for SPEEA and our working with them is that -- just as we have new leaders in the Boeing side in Doug Kight and Tom Easley -- the SPEAA team is represented by a new executive director. So part of successful negotiation is establishing a good working relationship. So right now we are in the process of developing that relationship and defining the new norms for how we'll do our negotiating.
One example is that for the negotiations that I've been a part of in 2002 and 2005 we did a lot of work in the subcommittees and then brought the results of that work to the main table for a little bit of discussions and then just sign off on the what the subcommittees proposed. In this negotiation the SPEEA team has expressed a desire to do more of the detailed negotiations at the main table. That's new to us. We're willing certainly to work with them to make that happen obviously we have some concerns about whether there's enough time to get it all done at main table or not. We think the subcommittees will continue to have a role, but that's just a part of us working together to figure out a good process.
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