Aerospace Assembly

The Dreamliner Becomes a Nightmare

How could a really great company get so many things wrong?

February 12, 2013

I’ve been following the development of the Boeing 787 Dreamliner for five or six years now, wondering how a really great company could get so many things wrong. The battery debacle that has grounded all 50 planes delivered to airlines thus far is the latest and most highly publicized setback, but the truth is the 787 launch has been one big headache, not just for Boeing but for its airline customers such as United, JAL and ANA.

Watching the Dreamliner turn into a nightmare, I’ve often wondered how a company with a history of doing things right has bungled this launch so badly. A New Yorker report sheds a lot of light on why things went wrong. As it turns out, Boeing has been tripped up in the same way so many American companies have run into serious problems in the last couple of decades—it let the bean counters overrule the engineers. You can think of it as “design by accountancy.”

Airplane development is a highly scale-dependent business that has always been dominated by a handful of companies. At the start of the second half of the 20th century, there were four American aircraft manufacturers: Lockheed Corp., McDonnell Aircraft, Douglas Aircraft and Boeing. McDonnell and Douglas merged in 1967, and Lockheed dropped out of the business in 1984, when its L1011 TriStar, a competitor to the 747 and McDonnell Douglas DC-10, failed to produce enough sales. Boeing bought McDonnell Douglas in 1997. And that’s where the story of Boeing’s decline began.

As James Surowiecki explains in The New Yorker, Boeing acquired McDonnell Douglas but McDonnell Douglas’s management culture actually took over Boeing. Harry Stonecipher, McDonnell Douglas’s chairman at the time of the takeover, even became Boeing’s chairman when a bribery scandal forced out the existing chairman soon after the merger.

Boeing set the pace in commercial aircraft development. On at least two occasions, Boeing bet the company to develop groundbreaking planes in which it strongly believed. The first of those gambles, the 707, brought commercial air travel into the jet age. The second, the jumbo 747, introduced mass long-haul travel that gave us intercontinental tourism.

McDonnell Douglas, on the other hand, was highly risk averse and focused on cost-cutting. Its typical strategy was to wait until Boeing had proven an aircraft concept. It would then try to slip in a competitive plane.

The 787 was conceived in a bit of a panic in 2003. Long the world’s largest commercial aircraft company, Boeing delivered only 281 new jets that year. Airbus delivered 305. And, Airbus announced that development had begun on a jumbo jumbo plane, the A380, which could carry almost 800 passengers. Boeing experienced an existential crisis.

Boeing didn’t accept that the world needed planes as big as the A380. It was convinced that airlines really wanted more efficient aircraft offering better mileage and greater passenger comfort. So, the company made two major design changes. First, the plane would be made from carbon fiber composites instead of aluminum. Second, its braking, pressurization, and air-conditioning systems would be run not by hydraulics, but by electricity from lithium-ion batteries. Both choices represented major risks—a third bet-the-company gamble like development of the 707 and 747.

Carbon fiber is lighter than aluminum, allowing for better mileage. Carbon fiber is also stronger than aluminum, permitting bigger windows. And carbon fiber doesn’t corrode like aluminum, so cabin humidity could be roughly doubled to reduce the dryness passengers experience during flight. However, there was no experience with carbon fiber bodies.

Lithium-ion battery power also involved significant risks. Traditional jets use some engine air power to run some functions. The 787 would be entirely electrical, all the power coming from the advanced technology batteries.

Airlines loved the concept. Eight-hundred 787’s were ordered long before design was completed. But Boeing’s new management team was worried; betting the company was not part of the McDonnell Douglas DNA. The new management didn’t have the stomach for a big gamble.

Alan Mulally, then head of Boeing’s commercial aircraft division (and now president and CEO of Ford), pushed back hard, and the board finally agreed to put up half the development cost, $10 billion. The other half would be laid off on an international collection of more than 50 suppliers. As Surowiecki writes, “Boeing didn’t outsource just the manufacturing of parts; it turned over the design, the engineering, and the manufacture of entire sections of the plane to some fifty ‘strategic partners.’ Boeing itself ended up building less than forty per cent of the plane.”

Boeing, which had traditionally fabricated and assembled most parts aside from engines and some electronics, became married to a supply chain. And, because the supply chain members were investors too, Boeing didn’t have the clout to which it was accustomed.

The experiment has been a failure. Fasteners were not installed correctly, and parts didn’t always mate. In one case, a 0.3-inch gap resulted when the nose-and-cockpit assembly was attached to the cabin. Deliveries were late. Technology proved more challenging than some of the suppliers could handle. Boeing engineers feared the suppliers were stealing Boeing’s intellectual crown jewels. The first plane was delivered three-and-a-half years late.

And then came the battery fire and smoke incidents that resulted in the grounding of the entire fleet and Boeing’s inability to deliver more. (Interestingly, the last time the FAA grounded a plane was in 1979 when a DC-10 cargo door fell off and the plane crashed. In other words, the last FAA grounding involved McDonnell Douglas, the company whose management set the ground rules for development of the 787.)

Late last year, the Seattle Times reported that Boeing is encouraging suppliers to move to Mexico:

“Boeing is actively encouraging its suppliers to outsource work to Mexico.

“Patrick McKenna, director of supply chain strategy and supplier management at Boeing Commercial Airplanes, has urged suppliers to attend a Nov. 15 workshop in Chicago to learn how to do business in Mexico.

“‘Several of our suppliers have successfully set up factories in Mexico because of the numerous advantages that Mexico offers to aerospace suppliers,’ McKenna wrote in a letter dated Oct. 17. ‘Boeing will be sending several people to this event, and we wanted to inform our supply base of this opportunity.’”

The part about this story that astounds me is that Boeing seems not to have learned that outsourcing is risky. And it becomes riskier when suppliers are not local. Mexico isn’t a world away, but it is a country into which many U.S. corporations will no longer send their own employees because of security risks. It also ticks me off that Boeing is in business in no small measure because of the U.S. taxpayer. Without Pentagon aircraft purchases, Boeing likely would not have survived the occasions on which it bet the company. In return, the company wants to export U.S. jobs.

Boeing’s focus on cost-cutting is far from unique. Much of my business involves saving electronics companies from the disastrous consequences of outsourcing production to Asian contractors. Manufacturing executives would do well to remember that the quoted piece price is only a portion of a product’s ultimate cost. Troubleshooting supplier problems on the other side of the world leads to:

  • very expensive expeditions by American engineers to the Asian facilities.
  • the inability to deliver orders on time.
  • costly air shipping rather than sea transport.
  • not infrequently, the development of the supplier into a competitor.

Boeing made a common mistake that has very high costs, given the nature of the company’s products. I can’t help wondering whether the delivery delays and groundings have voided the lower costs that Boeing hoped to get by outsourcing. And I am astonished that Boeing now thinks that moving its suppliers from the United States to Mexico is without serious risks.

What do you think? Does Boeing deserve its current pain? Do its purchasing executives need their heads examined? What would you have done differently?


Editor’s note: Before “Shipulski on Design,” “Leading Lean,” and “Uncommon Sense,” there was ASSEMBLY magazine’s longest running and most controversial back-of-the-book column, “Unconventional Wisdom” by Jim Smith. A nationally known expert on electronics assembly, Smith never hesitates to question the sacred cows of manufacturing and economics. You can read more from him at his “Science of Soldering” blog.

Did you enjoy this article? Click here to subscribe to Assembly Magazine.

Recent Articles by Jim Smith

You must login or register in order to post a comment.

Had to be done

Michael
February 14, 2013
Jim Smith seems to be a good writer with extensive electronics background and has certainly referenced the pertinent facts. But I'm not sure he has the correct or full perspective on why aerospace companies like Boeing do what they do. Moving Production Lines—to be competitive in the marketplace, Boeing and others must execute on moving production lines—no choice, has to be done. Moving production lines reduce costs—that is true—and we need to remember that this is a key factor with commercial and defense customers and without a strong cost reduction strategy, these OEMs cannot be competitive. Integrated Supply Chains—It may not be pretty, elegant or even smart, but to execute on moving production lines you must integrate a supply chain as the automotive manufacturers did it. The OEM must become the designer and high-speed assembler of the aircraft. Now perhaps the supply chain wasn't ready and perhaps the execution of this concept leaves a lot to be desired, but it must be done, no choice. Spreading the Risk—Spreading the risk of investment is not just a cost-cutting move, it's a reality of gaining commitment from an integrated supply chain. It's the reality for an OEM who needs to take on a very innovative project with new materials, new structures, new inventions, and a new supply chain concept. No matter how large the OEM, they would need to partner with supply chain and potential customers. New Tech—The 787 includes many new technologies, as noted by Jim. There are risks in these new technologies. The list is a mile long. There are always going to be risks when you take on a new ground-breaking aircraft—as Jim so aptly points out, Boeing has a history of doing this on aircraft like the 707 and 747. They do their best to calculate the risks on an aircraft, but they also have to weigh the cost of not coming up with a new ground-breaking aircraft. What do you think that cost is? Don't you think that cost and risk is much higher? And the A380 isn't really a drive of much. It is considered by most to be a "niche" market of perhaps 100 aircraft at most. Boeing would not even consider playing in that arena to begin with. We can't really say why the economics of designing an aircraft that has a world market of perhaps 100 makes sense. Perhaps the economics in a federally funded commercial project are different because of politics. Who knows? I realize that "Dreamliner Becomes a Nightmare" is a catchy title that grabs attention and gets your name in front of a lot of folks. I suppose by the same logic as above, you just have to do it, no choice. But you know that Boeing has suffered these kinds of things on all of its earlier aircraft, this is known territory to Boeing and they have the guts and the money to make it work. They have to. So there's a good chance this will all be rhetoric in a few months.

Don't blow out of proportion

Kenny
February 14, 2013
Please do not blow this out of proportion. It is an engineering triumph, and this is a small set back. Without the outsourcing strategy, the big companies would not be able to afford to push the boundaries of construction. That’s why they do risk management. It does go wrong sometimes. Look at the 747 program, which nearly killed Boeing. They will deal with it and move on.

no way to run a company

Frank
February 14, 2013
Engineers jumped ship in the 90s and later, they had labor problems. HQ moved to Chicago—you can't manage across the country. Not enough flight testing. It ain't Bill Boeing's company anymore. There are others that are going to have or have had the same problems. All the merger and acquisition nonsense in the 90s didn't help.

focus shifted

Michael
February 14, 2013
When I taught for City University, a lot of my students were Boeing engineers. Their basic feeling was that the acquisition of McDonnell Douglas and the resulting ascendency of Harry Stonecipher shifted the company. Several folks said they felt that they worked for MD because of culture change. The move to Chicago hurt the culture; the focus shifted from engineering to something else. Shared services and labor issues combined to make hiring a problem; retention became an issue that it had not been in the past. Several folks told me that they felt they were not in the aerospace business anymore so much as the "airplane assembly business."

It's not just Boeing

Chris
February 14, 2013
Outsourcing and cost-cutting could be blamed for much of our current corporate woes these days. U.S. manufacturers are reaping what they sowed.

should have tested the batteries in a lab

Alfred
February 15, 2013
What I would have done differently is to heed the advice of experts who strongly urged that the new lithium ion battery configuration that was developed specifically for the Boeing Dreamliner be subjected to a comprehensive test series. Boeing rejected this recommendation mainly because it was very costly, and settled for qualifying the batteries using in-flight tests instead. Even now, accelerated charge-discharge testing in a laboratory would likely bring out the underlying problems with these batteries, which are known to have life issues associated with lithium-coated internal electrodes and also with growth of lithium "dendrites" inside the cells during repeated use.

doomed from the start

Sean
February 15, 2013
Sounds like this project was damned form the beginning. Design by committee instead of engineers. Outsourcing to reduce labor and material costs without quality checks on site. This is the commercial equivalent of the Bradley fighting vehicle and the V-22 Osprey.

good point on batteries

Mark
February 16, 2013
that is an interesting revelation that they did not do the comprehensive testing on the Li battery system. We had heard that they were going to use Li batteries and assumed that if so then there would be significant research and development to ensure they were intrinsically safe in order to get TSO.

more on batteries

Alfred
February 16, 2013
This info was published in the WSJ on Jan. 27, 2013. The article begins with... "Air Safety Group Urged Tougher Battery Tests By ANDY PASZTOR "Shortly after the Federal Aviation Administration issued safety rules in 2007 for using lithium-ion batteries on Boeing Co.'s 787 Dreamliner jets, an industry standards-setting group called for stricter testing to prevent battery fires on aircraft.Boeing and FAA officials decided that since design and testing of the plane was so far along, mandating the tougher standards would disrupt years of joint safety work and unfairly delay production of the cutting-edge Dreamliners, said people familiar with the details."

Boeing is pushing the boundaries

Michael
February 18, 2013
Let's be clear, they haven't actually fallen out of the sky have they? So they make a few small errors along the way in using a new business, design and production model. There's nothing unique in any enterprise that tries to push the boundaries. Now they've learnt their lesson, and still have that huge order book to pull them along, I'm pretty sure the testing process is already a high priority for all concerned.

President

Jacquess Hoffmann
February 18, 2013
If a legendary company like Boeing goes into a tailspin from farming out work on the Dreamliner that would be telling indeed. But, even outsourcing may not be the entire story here. FMEA should have warned Boeing that the consequences of battery failure would be unacceptable and that alternatives should be readily available. Could another source of Boeing’s pain be too much reliance on computer modeling? I see a few skeptics have already commented here on whether Boeing gave sufficient lab time to battery testing. As good as it is, simulation can fall short if a new system is so complex the computers have no way to see what is beyond state-of-the-art. And, let’s face it, this is no case of zinc whiskers. (Zinc whiskers, which short out electronics, grow over time and cause damage and financial hardship every year in server rooms and on workbenches even though the issue has been known since the 1940s.) Sadly, it may have been a hair of bad luck and a dash of faulty technical judgment that led to the battery problems at Boeing. Do they have battery alternatives, now? Different batteries impact weight, fuel efficiency – and of course safety – so this is no trivial concern. Worse yet, it could take the FAA months to certify such major design changes. Dr. Smith’s article prods us to consider if Boeing deserves its current pain and asks what could have been done differently. Yes, mistakes were made, but as a stoic, gun slinging Clint Eastwood said while standing over a prone and incredulous sheriff (Gene Hackman) in the movie Unforgiven, "It ain't about deserving." He then commenced to pulling the trigger. Somewhere in this entire Boeing mess, testing did not catch the fatal flaw in the batteries. Collaboration between testing engineers and the rest of the team was lacking in some way. As they pushed the envelope for battery and electrical systems, maybe simulation was not ready to put it to the test. In testing, it always comes down to a nuanced understanding of technology and the physics / engineering behind a test scenario to ensure quality. Of course have good collaboration between test engineers and those in production, and as we say at InterTech, never underestimate the importance of fundamental testing by engineers who focus on such things. Really.

not the same company

Frank
February 19, 2013
I remember working on SRAM II. When it blew up on the test stand, its contract was cancelled. They're not the Boeing of old....

every plane has problems...

Mike
February 19, 2013
Has everyone forgotten the tribulations of the 747, the DC-10 (cargo doors blowing out in flight), the 737 rudder kick, the A300 rudder break, the A320 FBW issues, and the A380 wing skins? Every aircraft out there has engineering "challenges," and every company is guilty of failing to cover some piece of the design adequately. The 787 is making news now for what amounts to a similar problem as all the others. A new aircraft will have issues. They are complex vehicles and even well-planned test programs are likely to miss some area that was believed to be insignificant. This is just another program like every other program. Boeing will address it, and solve the problem. And then, we will find another problem elsewhere to beat to death.

Yeah, but

John
February 19, 2013
Mike is right, to an extent. Every new large, massively complex assembly is going to have problems, initially. It's the nature of the beast. The issue to be debated is whether Boeing's plan to produce the plane's major subassemblies around the world contributed to those issues, and whether some of those problems could have been mitigated or avoided if more of those components had been built in-house.

Austin Weber
February 20, 2013
There’s an interesting museum in Washington, DC, called the Newseum (if you get a chance, I highly recommend a visit) that has a provocative display entitled “What if the Civil War Were Tweeted?” It imagines how the Battle of Gettysburg would have been covered if Twitter had existed 150 years ago. Thinking about that got me wondering what kind of dialogue would have taken place in the engineering community if blogs were around 90 years ago. That’s when the aerospace industry began shifting from wood to metal for wing and fuselage construction (I wrote about this topic 10 years ago—see “The Dawn of Aeroplane Assembly" in the December 2003 issue of ASSEMBLY). I suppose a lot of the comments back then would be very similar to all the bantering that’s going back and forth today about the Dreamliner.

overreaching technology levels?

Mert
February 20, 2013
I think what Boeing could achieve by initiating the System Integrator Business model and distributing the risks and costs of the new aircraft programs was something appreciable. In a compelling competitive environment, Being made an elegant and smart business maneuver to protect its place. However, today’s aerospace world is experiencing a hard transitional period at every aspect. Overreaching current technology levels is one of these aspects, and it’s quite a challenging one because our problem is not the technology we could develop, but the technology we could feasibly realize. It would be a fault to compare the Boeing of the current day with the one of 20 or 50 years ago. I liked the article because it points to a different aspect of the problem, which has not been mentioned so far. Besides, this battery issue is a very little problem compared with the ones that are faced with Joint Strike Fighter. We’re not talking about a battery problem here, but a problem of a single part of a subsystem of a system formed of hundreds of similar or more comlicated subsystems and millions of parts. This is like a single, tiny cancer cell that may ruin a whole human body. The aerospace sector needs a new and a comprehensive vision that could bring the technological, economical and even social aspects together in harmony and produce a new mentality that could really bring itself to the new frontiers.

keep design and assembly in-house

Alnoor
February 25, 2013
We are coming to the same idea again and again: That the aerospace supply chain should follow the model of the automotive industry. There are a lot of improvements and ideas that the aerospace industry can take from the automotive industry, but these two industries are different! A game-changing aircraft needs a game-changing supply chain. The idea of cost-cutting by outsourcing is not the right answer. Aerospace OEMs should reconsider what to keep as their responsibility. The easy answer is—designing and assembling.

MD-Boeing merger was a bad idea

Steven
February 25, 2013
Boeing started down the road to failure when they bought a failing McDonnel Douglas and, allowed MD's top management to run Boeing, and adopted MD's failed system's integration business model as it's own. I don't know of any Boeing engineers who agreed with what Boeing did. Everyone I've talked to knew Boeing was on a road to failure that it still hasn't fully recovered from. It's too bad that the board of directors and top Boeing management hasn't had a larger "voluntary" turn over. If rank and file engineers and technicians had made bad decisions of a similar scope, the repercussions would have been swift and sure.

reminds me of Northrop

David
February 25, 2013
This story regarding Boeing/MD sounds all too real. Northrop selling out its management to the remnants of Litton and Westinghouse was a terrific insult to all the older Northrop employees. Thank you—not—to Kent Kresa for picking bad management instead of recruiting from the well of talent that was already at Northrop.

Boeing makes great helicopters...

Robert
February 25, 2013
I'm just an old soldier with West Point roots. I worked as the primary engineer for "embedded simulation" on the Comanche helicopter. I am not a pilot nor am I an airframe guy. I'm just a guy who was tagged to find out how we could kill bad guys better with a helicopter. I would note that Boeing, having acquired McD helicopters, now provides the most effective rotary-aircraft killing machine in the world: the Apache Guardian. I am personally thankful that its predecessor, the AH-64D, was hovering over my shoulder in Iraq. Just one grunt's opinion.

interesting counterpoint

John Sprovieri
February 26, 2013
manufacturing-executive.com has an interesting counterpoint to Smith's post. The author argues that having numerous international manufacturing allies insulates Boeing from the fallout of the 787's growing pains. Despite long delivery delays, no one will cancel orders, because everyone has an economic stake in the airplane's success. http://www.manufacturing-executive.com/message/3724#3724

learn from mistakes

Paul
February 27, 2013
Boeing is a great company. It is not a perfect company. What makes Boeing a great company is that it is able to learn from its mistakes and to bounce back from them. In this case, Boeing failed to manage the supply chain risks. Yes, the risk was huge, but the rewards are huge as well. The company introduced a major design change, and a new product introduction process based on global outsourcing footprint, whilst not changing its supply chain management process to reflect its new strategy. As a result as Boeing chief Jim McNerney is quoted to have said “we just booted it.” Or as we in Britain would say, the company used a ‘suck it and see’ approach. However, let us not throw the baby out with the bath water. The strategy is correct. It was the execution that was poor and Boeing knows this. Aviation progresses by constantly learning, and here the lesson is about managing supply chain risk

execs didn't listen

Steven
March 4, 2013
Boeing's strategy: Horrible. Boeing's execution: Nice try patching up a horrible strategy. First off, Boeing's level of outsourcing design and manufacturing meant Boeing assumed all the risks in a highly risky undertaking. What did Boeing expect when people and companies of different languages, cultures and time zones attempt to come together and push the envelope further than any of them had done before? Exactly what they got. A disaster. While Boeing executives were trying to reinvent the assembly line and the company’s finances, Boeing engineers were raising red flags the entire time. The people whose job it was to design and build things understood how difficult it was given the best of conditions. The people whose job it was to set policy, direction and come up with new ways of making money refused to listen when the people who turn ideas into reality spoke inconvenient truths. This is a classic case of business executives who did not listen. Everything that went wrong with the design, manufacture, financing and execution of the business model of the 787 program were predicted by many engineers within Boeing. They provided an abundance of written warnings and reasoned explanations. The executives refused to listen to anyone but themselves.

not unique to Boeing

Chris
March 4, 2013
Quote—The executives refused to listen to anyone but themselves. ...While Boeing executives were trying to reinvent the assembly line and the compan’s finances, Boeing engineers were raising red flags the entire time. ...The people whose job it was to design and build things understood how difficult it is given the best of conditions.—End Quote Unfortunately, this is not unique to Boeing.

beancounters

Robert
March 4, 2013
I worked at Boeing Helicopters in Ridley Park on the Comanche program. Someone commented here that beancounters run Boeing. During my time in Ridley Park, I was sent to Reston, VA for a few days. It was a short drive and back. While my expense voucher was being processed, the reimbusement rate for mileage changed one half-cent per mile. My claim had to be adjusted. It took three cover letters from Boeing Helicopters, routing from Philadelphia to Seattle, more executive cover letters there, and more. I figred there was about $300 of administrative expense involved with adjusting my claim by little more than a dollar. I would have been happy to sacrifice the buck to avoid the weeks of delay. But the beancounters would have none of that. Boeing was very committed to accurate time billing. They were serious in their commitment to being accurate. They viewed work performed without being charged with the same disdain as billing for work that was not performed. I remember many days when I wanted to stay and complete some work, even if I wasn't paid, but EVERYONE had to get up from their desks at 4:42 p.m.—EXACTLY 4:42. I took it upon myself to find out why 4:42 p.m. It turns out that back in the ‘40s, there had been a train stop nearby and everyone could make it if they stopped work at exactly 4:42 p.m. The tracks had long been torn up, and there was no longer any train. But 4:42 remained. Beancounters unite! You have nothing to lose but your minds! But, I also found out that Boeing had a heart. My supervisor left Boeing for what he perceived as more opportunity with a small company. When a family member experienced severe medical problems that the small company's healthcare plan could not cover, Boeing found out and invited him back to his old job and his old medical plan. I always respected Boeing for that.

Multimedia

Videos

Image Galleries

Behind the Scenes at Ford's Michigan Assembly Plant

People are the heart and soul of the 2012 Assembly Plant of the Year. This slideshow shows some of the men and women who build three different types of electrified vehicles alongside traditional gas-powered cars on the auto industry’s most flexible assembly line—Ford’s Michigan Assembly Plant in Wayne, MI. Photos courtesy Ford Motor Co.

Podcasts

Live from The Assembly Show, the hosts of Manufacturing Revival Radio sit down with Adam Malofsky, Ph.D., president and CEO of Bioformix to discuss his company’s innovative, energy-saving adhesives and polymers, which cure without the need for heat or light. 

More Podcasts

THE MAGAZINE

Assembly Magazine

april assembly cover

2014 April

The 2014 April Assembly includes a cover story about robots and small manufacturers plus much more. Check it out today!
Table Of Contents Subscribe

Immigration Reform

Could immigration reform benefit U.S. manufacturers?
View Results Poll Archive

THE ASSEMBLY MAGAZINE STORE

welding.gif
Welding: Principles & Practices

This text introduces students to a solid background in the basic principles and practices of welding.

More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

Assembly Showrooms

ASSEMBLY Showrooms

STAY CONNECTED

facebook_40px twitter_40px  youtube_40pxlinkedin_40px