Far-flung supply line hinders 787, ex-chief says

EVERETT — Where in the world will the Boeing Co. build its next jet?

The answer is still anybody’s guess. But the aerospace giant likely won’t ferry major components in from locations around the world to a final assembly site — the method Boeing uses with its 787 Dreamliner.

A far-flung assembly line isn’t the best idea, the former head of the program said on Wednesday.

“We made a bunch of mistakes, and we learned a lot,” said Mike Bair, who oversaw the Dreamliner program through much of its critical stages.

Nearly a month after Boeing officially delayed deliveries of its 787 by six months, and just weeks after Bair was reassigned to a marketing position within Boeing, he addressed the Snohomish County Economic Development Council in Everett. He provided a much deeper level of detail on the problems that have caused 787 delays than previously offered by the company.

Here are some of the things Bair said the company has learned:

Lesson one: Not all suppliers are created equal.

Boeing had assumed each of its primary 787 structures partners — as far-flung as Italy, South Carolina, Kansas and Japan — could design and build major assemblies for the new jet.

“Some of them proved incapable of doing it,” Bair said.

Some of Boeing’s suppliers — Bair declined to name them — couldn’t handle the detailed design work associated with the mostly carbon-fiber composite aircraft, forcing Boeing to take back the task. Others contracted out the design effort on the assemblies for which they were responsible with less than stellar results.

“Some of these guys we won’t use again,” Bair said.

In an interview after his speech, Bair suggested that Boeing might use certain 787 suppliers for manufacturing work only rather than expecting the supplier to design and build a major assembly.

“We were probably too black and white” in demands of Dreamliner partners, Bair said.

For the most part, Bair said, Boeing has been pleased with how the global supply chain has performed. In fact, partners turned out the composite barrels that make up the 787’s fuselage with fewer problems than Boeing anticipated.

But “the devil’s in the details,” Bair added.

Among those devilish details lies a major shortage in fasteners. For the first Dreamliner, Boeing’s partners had to ship large assemblies with temporary parts in place. Locating and replacing those temporary parts has proved more difficult than Boeing expected, leading to the six-month delay announced in early October.

Aerospace analyst Richard Aboulafia of the Teal Group says Boeing is coping with the ramifications of outsourcing. “I think in a lot of ways, Boeing thought by outsourcing it made it someone else’s problem,” he said. “You’re only as strong as your weakest link.”

Lesson two: Global partnerships work, but having suppliers building key pieces at sites all over the world doesn’t.

While Boeing still firmly believes in working with global companies, Bair said, it may take a different approach the next time around.

Dreamliner suppliers ship major components to Boeing’s Everett facility via a fleet of modified 747 cargo jets, called Dreamlifters. Workers in Everett piece the fuel-efficient Dreamliner together using a new production process — one that Boeing still is ironing out.

“It’s an elegant solution to having suppliers in the wrong spot,” Bair said about using the Dreamlifter fleet.

When Boeing launches its next commercial jet — likely a replacement for either the single-aisle 737 or twin-aisle 777 — the company may put pressure on suppliers to locate in a more central location. That’s something Boeing didn’t do with the 787.

When forging partnerships with 787 suppliers, it would have been difficult to “tell the Japanese to bring their money and their factory here,” Bair said. (The three Japanese “heavies” — Mitsubishi, Kawasaki and Fuji heavy industries — build major chunks of the Dreamliner’s wings.) Likewise with the 787’s Italian partner and with major suppliers in the United States.

But Bair doesn’t think Boeing wants to worry about ferrying huge assemblies from around the world to one spot with its next jet. It’s more efficient to have major suppliers closer to the final assembly site.

With the success of the 787, it wouldn’t be “outside the realm of what has to be done” to offer a partner such as Mitsubishi a major chunk of business if the Japanese company can complete it where Boeing wants the work done, Bair said.

While Snohomish County could fit the bill once again as the final assembly location, Bair suggested Boeing would conduct a search, as it did for the 787, for the best spot to locate a new jet program.

Bair pointed to automaker Toyota’s factories in Japan and in the United States as an example of large-scale integrators and suppliers locating near one another, which suggests the aerospace company could look at both national and international sites for a final assembly plant.

Deborah Knutson, president of the Snohomish County Economic Development Council, called Bair’s comments encouraging. However, she noted that many 787 suppliers considered the county too costly in which to do business. Only a handful relocated to the area for the Dreamliner program.

“We need to really look at how we can be competitive,” Knutson said.

Meanwhile, Boeing continues to make progress on the first 787 and is working with suppliers to ensure remaining aircraft come together on time. The company intends to deliver its first 787 to Japan’s All Nippon Airways in late 2008.

As soon as Boeing smooths out assembly and supply chain issues, the company will look to ramp up production of the fast-selling jet. That’s something Bair will advocate in his new role. The 787, which is sold out until 2016, has collected 710 orders from 50 customers

“We’re sold out for a long, long time,” Bair said. “We’ll probably have to do something about it.”

Reporter Michelle Dunlop: 425-339-3454 or mdunlop@heraldnet.com.