787 delivery is a big event for suppliers, too

Like Boeing Co. employees, workers at AMT in Arlington have looked forward to the first delivery of a 787 aircraft for a while.

The Dreamliner “seems like it’s going to be successful,” said Mark Riffle, AMT’s chief executive. “It just had more than its fair share of startup issues.”

On the 787, AMT workers complete some mid-cage assembly work for a contract the company won through Boeing’s Winnipeg division. AMT supplies machined parts on every Boeing aircraft program aside from the 787.

AMT, like other 787 suppliers, have weathered the program’s multiple setbacks, leading to a more than three-year slide in the schedule. Most suppliers expect to “hurry up and wait” in the early stages of a new airplane program. But with the 787, Riffle and AMT had to be patient.

“We got through,” he said.

The delays weren’t as tough on AMT as on some more 787-centric suppliers, given the amount of work AMT does on other Boeing programs. It also supplies to Airbus and regional jet makers.

The same is true for Korry Electronics in Everett, said Frank Houston, senior group vice president of Esterline, the parent company of Korry.

Korry supplies cockpit hardware for the 787. That required the company initially to tap its engineers. As the 787 rate increases, the company likely will add manufacturing workers.

“The Korry people have put a lot of work into it,” Houston said of the 787. “Our hardware is robust.”

Korry relocated to Snohomish County in 2009 from King County after its lease ran out there. The move wasn’t directly related to Korry’s work on the 787, Houston said. The company needed more space. Snohomish County not only had more land but also made the building process easy, he said.

In 2003, when Everett was named the final assembly site for the 787, the thought among community leaders was that some new Boeing suppliers would relocate to Snohomish County.

That was a misconception, said John Monroe, aerospace coordinator with Economic Alliance of Snohomish County.

“We thought there would be companies calling us up, wanting to come here,” said Monroe, a retired Boeing manager.

Few did.

The county’s biggest catch probably was Goodrich, which put a 140,000-square-foot facility near Boeing where it will install nacelles, or covers, on 787 engines. On a smaller scale, Dreamliner suppliers Messier-Dowty and Messier-Buggati, both based in France, opened a site at Everett’s Paine Field.

But Boeing’s larger partners — Vought Aircraft Industries and Global Aeronautica — picked South Carolina to set up facilities. Boeing later had to buy out both suppliers and take over their facilities there.

“Maybe we need to rethink our disappointment,” Monroe said.

If suppliers need to relocate at all, they won’t have to do it until Boeing is closer to reaching its peak production rate. Boeing expects to hit its target of producing 10 787s monthly in 2013.

“I think we’re going to see new recruitment or relocation and then begin to see expansion,” Monroe said.

Already two aerospace companies in the county have contacted the county’s economic development arm for assistance in expanding their facilities here.

Tooling manufacturer Electroimpact, which works not only with Boeing and Airbus but also Bombardier, has needed to expand its Mukilteo location, the company’s Ben Hempstead said at the governor’s aerospace conference this month. The company, which designed tools for Boeing and its suppliers on the 787 line, is supporting Boeing at its South Carolina facility, he said.

“It’s a global business … so we support Boeing in a number of different locations,” Hempstead said.

Boeing originally wanted major 787 partners to share in design responsibility and costs on the 787. The company planned to run final assembly and be responsible for building few major assemblies.

But the jet maker found out too late that some of its partners weren’t up to the task, which resulted in disastrous delays.

Analyst Richard Aboulafia, with the Teal Group, described Boeing’s initial supplier strategy as a “don’t try this at home” type of plan.

“One would hope that they’ve learned,” he said.

Boeing has brought back some of the engineering work, and initial production work, on the next version of the Dreamliner, the 787-9.

But Boeing still plans to implement a tenant of its 787 supplier philosophy: reduce the number of contractors it works with and make them responsible for managing lower level suppliers, said Gov. Chris Gregoire, at her recent aerospace summit in Kent. Gregoire spent time with Boeing executives at the Paris Air Show in June.

“That’s the model of the future,” she said.

Already the aerospace industry is moving in that direction. Earlier this year, Everett’s Giddens Industries was bought by Platt River Ventures, which also owns Precision Machine Works in Tacoma and PRV Aerospace in Everett. And United Technologies Inc., parent company of Pratt & Whitney and Hamilton Sunstrand, announced plans to buy out Goodrich.

For the moment, though, 787 suppliers like AMT and Korry have the same goal as Boeing: speeding up production on the 787.

“We’re starting to feel the increase in rate,” Riffle said. “We’re very busy.”

Global assembly

The Boeing Co. had planned to rely on three suppliers around the world for major pieces of the Dreamliner, doing about 35 percent of the work itself.

Japan was assigned to produce about 30 percent to 35 percent of the work, including the bulk of the wings. It fulfilled its part of the deal.

Italy and Vought Aircraft Industries of Texas were responsible for about 26 percent of the plane. Initially, both produced parts that either weren’t complete or required some rework. Boeing ended up buying Vought’s South Carolina plant, which produces a part of the fuselage, and taking over that part of the work.

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