Boeing’s Shanahan: ‘It makes my eyes water’ to see 787 sections ready for Everett line

Suppliers on the 787 program are making Boeing Co. executive Pat Shanahan tear up — in a good way.

“Personally, it makes my eyes water” to see suppliers sending 787 sections that are 100 percent complete, Shanahan said with a laugh.

Boeing’s senior vice president of airplane programs spoke Thursday at Barclays Capital conference in Miami. Shanahan’s remarks were webcast.

Shanahan was upbeat on the progress of Boeing’s 787 program. The 787 struggled through numerous setbacks with its global suppliers and in production, leading to a more than three year delay in delivery. But the Dreamliner’s launch customer, Japan’s All Nippon Airways, has received five 787s, which are performing well in service, Shanahan said.

“The 787 is performing as well or better than the 777 when it went into service,” he said, noting initial feedback on the 787 has been “very positive.”

Dreamliner assembly in Everett is going well. Boeing is building 787s at a rate of 2.5 jets monthly, Shanahan said.

However, the supply chain already has moved up to a rate of 3.5 jets per month.

“They’re already there,” Shanahan said. “We’re going to be there (in production) in a couple units.”

Boeing plans to be at a rate of 10 787s monthly by the end of 2013.

As Boeing moves up to that rate, Shanahan sees ample opportunity for cost savings. The company is working with its 787 suppliers to cut costs as well as fine-tuning production.

Shanahan believes the cost savings could be as much as $1 billion. The jet maker is under pressure to make the 787 more profitable quickly. It has estimated the delays in the program cost billions of dollars.

The 787s that are rolling off the production line in Everett have less work still to be finished than the early built Dreamliners.

Shanahan estimated recently produced 787s have between 500 to 1,000 jobs remaining before the aircraft are ready for delivery. The remaining tasks mostly included engine and seat installation as well as some required testing. Some of the 787s that were built early on had between 5,000 and 7,000 tasks remaining to be finished, he said.

Boeing has dozens of 787s parked around Paine Field in Everett, where they’re awaiting work. The company has thousands of workers assigned to do change incorporation work on those Dreamliners. If all goes as planned, Shanahan expects the company to be able to shift those workers back into the factory in Everett to support the increase in production.

“If we could build more, people would buy more,” Shanahan said of demand for the 787.

Boeing also has a second 787 assembly line in North Charleston, S.C. That site has performed better than anticipated, Shanahan said. Boeing plans to deliver the first 787 from North Charleston this summer.

The company also plans to activate its 787 “surge” line in Everett in June, Shanahan said. Boeing re-arranged its factory in Everett last year, shrinking production space for the 767, which created more room for 787.

“That second line will basically replicate what we’re doing on the first line,” he said.

Shanahan called Boeing’s surge line in Everett “temporary” though other company executives, including commercial airplanes’ president Jim Albaugh, have hinted the line could become permanent.

“We want to run (787)-8s down one line and -9s down another,” Shanahan said.

Boeing plans to deliver its first 787-9, the next version of the Dreamliner, next year. Besides the 787-9, Boeing also has several airplanes in development, including its re-engined 737 MAX and the 767-based tanker. The company has moved engineering resources from the 747-8 program to those other planes, Shanahan said.

On the development side, “we’ve got the band back together and we’re performing well,” he said.