Vought Aircraft has entered damage control mode after executives acknowledged the company's high-risk status as one of six key structural producers on the Boeing 787 programme.
The company has admitted errors and welcomed outside intervention, with both steps apparently intended to save face in the glare of public scrutiny over supply chain and production problems on the 787 that contributed to the programme's six-month delay for first delivery.
A Boeing executive, Scott Strode, has been appointed to take control of Vought's supply chain and production operations for all Boeing commercial programmes, with a special emphasis on the 787.
Strode's mandate is to focus on a planned production ramp-up for 787 suppliers scheduled in 2008, but also includes Vought's production activity on the nascent 747-8 development programme.
Vought's first 787 aft fuselage section on its production jig
"We have a rate increase that happens in the first half of next year that we have to make, and we asked for help and Boeing gave us Scott Strode and I can't think of anybody I'd rather have," says chief executive Elmer Doty, who presented Vought's third- quarter earnings to analysts on 9 November.
The move comes less than three weeks after critical comments about Boeing's suppliers by Mike Bair, who lost his job in October as Boeing's vice-president and general manager for the 787. Bair vowed some 787 suppliers will never again be selected on future aircraft programs.
Vought's troubles on the 787 programme have been known for some time. In June, Vought ousted its former vice-president for the 787 programme, Ted Purdue, signalling that the company was struggling to meet Boeing's demands.
But Doty makes it clear that Vought's problems within the 787 programme stretch back about 18 months, when the company was in the middle of a "near-death" liquidity crisis at the same time as 787 development was rapidly moving forward. At that time, Vought was still attempting to recover from a "bathtub" of business activity, as work for its main roles on Boeing's 747, 757 and 767 programmes dwindled, says Richard Aboulafia, an aerospace analyst for the Teal Group.
Doty also notes that Vought is the smallest in size of the six major structural producers on the 787 programme, which includes Alenia, Fuji, Kawasaki, Mitsubishi and Spirit Aerosystems. Moreover, Vought also faced the challenge of needing to reconstitute an engineering department, while simultaneously standing up a new production facility for the 787 at a remote location, Doty says.
"So, given those facts, I don't think you need rumours to assume we are among the riskiest, if not the riskiest, of the structure producers," he says. But Doty also credits Vought's engineers for doing a "good job". He says: "Until recently we haven't required a whole lot of help."
Vought's troubles on the 787 are strictly caused by supply chain breakdowns. "Let's just say it primarily has to do with supply base activity and the logistics of that," Doty says.
In November 2003, Boeing selected Vought to build aft fuselage sections 47 and 48. Vought formed a joint venture with Alenia North America a year later to integrate fuselage sections. The Global Aeronautica partnership established an integration facility in Charleston, South Carolina.
Vought's net cash expenditures on the 787, minus advances and settlements, was $180 million during the first nine months of the year.
Overall, the company reported a $2.1 million loss in the third quarter, which was improved from a $13.4 million loss reported the year earlier.