Bravo, Boening! (UPDATED – 6/24/2009)

Below is what I wrote almost two years ago now….(posted July 9, 2007) and the Dreamliner has yet to fly. Boeing has had its share of setbacks over the last two years, with virtually all of them related to fundamental changes in how Boeing builds this aircraft. What I mean by this is rather than utilize subcontractors for production of parts that are assembled by Boening directly, significant subassemblies are also subcontracted with final only piecing together taking place at Boeing.

Couple this with a machinists strike and other issues related to subcontractor’s and you have a recipe for delays. This says nothing about the fundamental design and idea of the Dreamliner, rather what it highlights is that when you decentralize your production you run the risks associated with control and timing. Of course, there are, in theory, production and cost efficiencies to be had by decentralizing assembly functions, but that concept is premised upon a competitive marketplace for those very subcontracted operations and economic incentives in place to ensure practice marries up with theory. At this point, it appears that this, taken as a whole, is what is delaying the 787. Moreover, one could make a case (and if these delays continue I for one will) that the extent to which Boeing is not relying on a competitive marketplace model for the sourcing and assembly functions of production is directly related to the delays and problems in bringing the idea to its customers for final delivery…

I for one would have certainly expected the Dreamliner to have had its maiden flight by now… It is still a great concept, but the customers who have ordered upwards of over 600 of the planes are going to be frustrated further by delays in production, the most recent being a design/production issue characterized as “a need to reinforce an area within the side-of-body section of the aircraft.” This issue is sensitive enough that it needs to be corrected before the 787 Dreamliner can hit the sky.

Original entry:

Kudos, way to go, job well done, keep up the good work!

dreamliner787.jpgBoeing unveiled the Dreamliner 787 very recently and it appears, by all accounts, to be a knockout. The strategy is not, as Airbus has pursued, bigger but rather lighter, faster and more fuel efficient AND able to access smaller runways. It’s all about capturing market share and to do that one needs to address both the underlying market for air travel as well as the infrastructure upon which the plane will function. Boeing has sized up all the angles and the result is the Dreamliner.

The Dreamliner will come out in three versions with the first iteration carrying between 210 and 250 passengers up to about 9,400 miles. The second will carry between 250 and 290 passengers up to about 9,800 miles, and the third will fly between 290 and 330 passengers on shorter routes, up to about 6,500 miles.

This market response by Boeing touches on a variety of themes, from use of higher tech materials to more refined and efficient engine designs. At the end of the day, airlines need aircraft which have low enough maintenance, high enough fuel efficiency, enough capacity, and the ability to access airports where passengers want and need to fly from and to… Seems to make sense, basic marketing and product development.

What is interesting though, is that the governmental consortium over in France, which makes Airbus, was more concerned about other things and failed to see this in a timely manner. When you follow, you lose – be it a bike race or in getting product to market. Clearly, the Dreamliner reflects a lesson learned.

Bravo, Boeing!

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Posted in Capitalism Advocacy, General. Comments Off on Bravo, Boening! (UPDATED – 6/24/2009)
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