
Bumpy Ride for Boeing's 787 Dreamliner - pg
http://www.portfolio.com/business-news/portfolio/2009/04/22/Boeing-and-Dreamliner-Troubles?print=true
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micks56
I designed and built a key electrical system to this plane during late-spring
of 2007. I don't know whether I can say which one. Anyway, the company I
worked for was at the end of the line as far as outsourcing goes. Boeing
outsourced the design, development, and manufacturing to one the world's
largest corporations (Company A), who outsourced it to another company of
similar size (Company B), who then outsourced it to the much much smaller
company that I worked for (Company C) some time in mid-Spring 07.

We knew in May 07 that there was a 0% chance that the 787 would actually fly
on 7/8/07; a critical component was still in development. For that certain
critical component, Company A dictated to Company B which one to use and who
to buy it from (Company D). The problem is that the part was still in
development by Company D. The electrical component specifications
significantly stretched what actually existed on the market at that time. I
didn't think Company D would be successful in designing the critical
component. It was certainly a big leap forward. We knew that Company D would
not have the part done by July 07. The hope was August of that year.

In June 07 my company successfully designed and built a few prototypes of the
system we were tasked to build. They passed all specifications dictated by
Boeing, Company A, and Company B. We dutifully delivered the prototypes to
Company B in June 07. The only problem was critical component from Company D
wasn't there, and therefore the 787 could not fly.

I don't know whether Company D ever delivered. But I do know that Company B
(the company that outsourced to us) ordered a few more of the product I
designed at the end of last year, and the critical component from Company D
was not supplied to my company. I don't know whether the part existed. But it
doesn't seem likely since Company B would have had us put it in. My guess is
that Company D, or a replacement outsourcer, was able to deliver some time at
the beginning of this year, maybe Spring. Hence the two year delay.

I no longer work at the company where I designed this system, so I no longer
have any first hand knowledge of the goings on. But from what I read in the
article, the root cause of the delays has not been fixed. I would put my money
on further delays.

~~~
quizbiz
How complicated can building a plane be? . . . Seriously, what a tale. Thanks
for sharing but I remember seeing commercials for the 787, marketed as the
response to the Airbus A380, as if Boeing was expecting me as a passenger to
ask if I could fly in one next month.

~~~
micks56
I honestly have no idea how complicated building a plane can be. What I
designed required zero plane building knowledge. But given how long it takes
and expensive it is, I think it is more difficult than it looks. There are
technical difficulties, and then there are difficulties in dealing with
massive, distributed teams. The second one increased problems managing the
first, which is why we read that article today.

Two of the main design constraints for planes are weight, and its close close
relative, fuel efficiency. Consider those as important as actually being able
to fly.

The whole reason my project existed was to reduce weight and increase fuel
efficiency. What made the critical component I talked about difficult to make
was that it needed to be much more efficient than any of its type ever made
before. Its efficiency would allow for less operating current, which would
reduce the wire gauge needed throughout the plane, reduce weight by 1000s of
pounds, and therefore save many gallons of fuel.

It also allowed for another fuel efficiency gain; It reduced the number of
systems operating via air or hydraulics. The air comes from the engine after
the compressor stage but before fuel is added. These systems are inefficient
because the air from the compressors is very hot and it must be cooled before
use. That cooling operation takes electricity, and therefore wastes energy
when compared to a system that just used electricity from the start.

I should add that the critical component is not a discrete one like a
transistor or resistor. Rather it is a system of its own, like a power supply
is a system of its own, but we can buy one and as an engineer consider it a
single component.

I don't know Boeing's rationale for TV commercials either. It could be
anything from putting the Boeing name in front of Americans for American pride
when competing against European Airbus. Or maybe they know that the decision
maker at a key potential customer loves NFL football, and Boeing blanketed his
hometown team with ads during the games. Maybe the marketing department wanted
to use up their yearly budget.

Whatever the reason is, when hundreds of billions of dollars in orders are at
stake like this, the ads aren't directed at people who purchase plane tickets.
I am guessing the ads are out there to make sure that every plane purchasing
decision maker absolutely knows that the 787 exists and that they should buy
it, and making sure that every member of Congress (and their constituents)
absolutely knows that the 787 exists and Americans should support it, as
opposed to Airbus.

~~~
quizbiz
The thought entered my mind to short $BA after reading this when you posted
it. Today, Boeing made the delay official and the stock dropped 7% right at
opening.

[http://money.aol.com/rtn/pr/boeing-postpones-787-first-
fligh...](http://money.aol.com/rtn/pr/boeing-postpones-787-first-
flight/rfid225559631?channel=pf)

~~~
micks56
I wish I checked the date on the Portfolio article. I didn't realize it was
for the May issue.

In Boeing's recent statement they said they need a few weeks to determine the
length of the delay. It is not a good sign when it takes weeks to find out how
far behind you are.

Prediction Number 2: For every week it takes Boeing to release an updated
schedule, the delay will be 1-2 months. I think it will take Boeing 2-3 weeks
to release a statement, so that means somewhere between 2-6 months delay. I'll
take 6 months.

Boeing lost about $3B in value yesterday and today. Boeing margin on planes is
a maximum of about 6%. To me, this means Wall Street thinks about 250 planes
(or more) are now delayed. I figured that out by solving $3B / 6%, which is
total revenue expected by Boeing when profits are $3B. I took that number and
divided by $200MM, which is the approximate sales price per plane. That comes
out to be 250 planes (which would result in $3B profit).

Boeing says they would be able to produce about 10 planes per month,
eventually ramping up to 16. That means it takes about 2 years for Boeing to
make 250 planes.

Checking my numbers, I said a 6 month delay, then there will be 1 year of
testing, and then Boeing can start manufacturing. So I predicted somewhere
over 18 months, assuming no further problems (yeah right), while Wall Street
predicts around 2 years, pending further statements.

Prediction #3: First non-test version 787 delivered to a customer Fall 2011.

I may regret that prediction later in life. :)

~~~
prpon
Thank you for your insight. "Much work needs to be done before we announce to
the world that much work needs to be done"

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designtofly
It seems that the reason that this type of strategy is so rampant and
insidious is because it makes it easy to substantiate cost cutting goals using
unrealistic bids from inexperienced subcontractors. The costs that often go
neglected in the whole process is the added managerial costs that go along
with any outsourced work. For most projects, especially complex ones (as is
aircraft design and manufacture), the overhead costs can easily outweigh
initial cost saving estimates from outsourcing.

More importantly, it is a very short sighted strategy that favors short term
cost savings against the long term institutional knowledge that will help
sustain it in the long term. With the incredibly long development and
production cycles, Boeing might not have the appropriate capabilities in the
long term. While Boeing did do the initial design on the 787, they have
outsourced much of the detailed manufacturing design to their vendors, leaving
an important knowledge gap.

Here is an interesting presentation titled "Is Outsourcing Profitable?"

<http://www.strassmann.com/pubs/gmu/OutsourcingV6.pdf>

It presents some case studies and findings that do not substantiate the cost
savings claims of outsourcing.

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joel_feather
This is the core problem with outsourcing that we will also face in the
software industry - when groups work isolated from one another - the things
they produce get difficult to integrate and arrive with very different
quality.

Outsourcing is really not going to take over manufacturing. It will have its
place, but it has to be carefully controlled and selected - not everything can
be outsourced.

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dhs
So compared to the 777, the 787 is claimed to reduce fuel consumption by 20
percent, but it only carries 250 passengers instead of 300 - about 17 percent
fewer. It seems to me that surprisingly little energy per passenger is going
to be saved by replacing aluminum with plastics as the base material here.
Does anybody here have an idea about the energy requirements of aluminum vs
plastics in plane production? Are there significant savings zu be expected?

~~~
timtrueman
"So compared to the 777, the 787 is claimed to reduce fuel consumption by 20
percent…"

It was perhaps worded poorly but that's not what the article said: "Dreamliner
will use 20 percent less fuel than jets of similar size…" I would wager a lot
that if a 777 was redesigned with composites it would likely have similar fuel
savings (~20%) over an aluminum 777.

If you take a look at the table in the link at the bottom you will see the 777
is primarily for long-range, high-capacity flights. The 787 was originally
intended as a replacement for the 767 and as a competitor to the A330-200. The
majority of flights are shorter and carry fewer passengers than the target of
the 777. So fuel efficiency is just fuel efficiency and fewer passengers is
just a different market segment. The 787 is simply aimed at a different and
higher volume market than the 777.

[http://en.wikipedia.org/wiki/Competition_between_Airbus_and_...](http://en.wikipedia.org/wiki/Competition_between_Airbus_and_Boeing#Passengers.2Frange_km_.28statute_miles.29_for_all_models)

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mattmaroon
Plasma TVs? Really? I can't even fathom why they chose those over LCDs, given
lifespan and burn-in issues.

~~~
joel_feather
I don't think the article is accurate - usually airplane seats are purchased
by the airline (from another company) and not by the manufacturer - and in
this size of planes, the TV is usually in the seats.

