Puget Sound conference looks at Boeing, aviation

We just attended a two-day conference organized by the Pacific Northwest Aerospace Alliance, a major event in Seattle’s Puget Sound region.

Michele Dunlop of The Everett Herald wrote several stories; here are our impressions.

  • Surprisingly, given the downturn in the economy, there were about 50 more attendees to the conference than last year. This speaks to the growing importance of this event and the desire on the part of suppliers to prepare for what all expect to be production cuts by Boeing.
  • Although Boeing is now openly talking about a 10% production cut in 2010, two major suppliers at the conference we talked to believes this could happen in the second half of this year.
  • Boeing on Tuesday at two separate investors’ conferences reaffirmed its schedule for first delivery of the 787 in 1Q10. One supplier we talked to at the PNAA conference believes first delivery will be later in the year than that.
  • Airbus touted its US supply base at the conference. Washington State ranks #4 in terms of dollars spent in the US.
  • Washington State and Snohomish County (Everett, where the wide-bodies are built) officials at the conference are considering strategies to keep Boeing’s next new airplane programs in Washington and Everett. Proceeding on the assumption that Boeing may try to relocate these to other states, the county economic development group in particular is concerned that Legislators don’t believe Boeing might pick up and move–that all discordant notes espoused by Boeing are just talk. (Our comment: the Legislators seem to have short memories; Washington barely retained the 787 assembly; Boeing officials have about had it with the unions.)
  • Richard Branson’s tongue-lashing of Boeing and the unions was a topic of networking discussion. One Seattle newspaper reporter who covered the Branson threat to cease buying Boeing because of labor strife at the company believes the entire tirade was choreographed by Boeing and Branson to send a harsh message to the IAM, which struck the company for 57 days–delaying delivery of a Boeing 777 to Branson’s VAustralia airline.

  • Teal Group aerospace analyst Richard Aboulafia sticks to his prediction the Airbus A350 will enter service in 2015, two years later than Airbus plans. Airbus’ Simon Pickup sticks to Airbus’ guns about a 2013 EIS. He notes that this is seven years after launch of the program compared with the four or five years (depending on the starting date used) for the 787 program. Pickup notes that Airbus has a much more conservative (his word) production and flight test schedule than had been planned and is planned for the 787. We note that a full seven years would put the A350 EIS to December 2013, about six months later than the Airbus timeline graphic suggests. A major difference at this stage between Airbus and Boeing: Airbus plans a 15-month flight testing program; Boeing plans just eight months.

The PNAA event attracted participants from Spain and Japan and is no longer merely a regional conference. The organization’s web site is www.pnaa.net.

7 Comments on “Puget Sound conference looks at Boeing, aviation

  1. Blaming the unions only, is a very short sighted view of the Union/Boeing relationship.

    “Management get the unions they deserve”.

    The strikers don’t earn huge sums of money. Staying out as long as they did must have really hurt them financially and staying out so long shows just how bad the Boeing management allowed relations to get.
    Bad management begets nasty unions.
    Denis Dempster

  2. Most seem to ignore what Branson really said, and put it in the context in which he said it.

    He seems to put equal blame on the union and the company, rather than merely attacking the union, as is the typical knee jerk reaction.

    But at the end of the day, Branson is no fool. He’s going to buy price and performance, a 2 month strike delayed delivery notwithstanding.

    As to a rate cut in the second half, possible but unlikely. Like poorly managed rate increases, poorly managed rate decreases cause just as much chaos, and the attendant cost increases that the chaos promotes.

    Throw in the issue of deferrals and the subsequent rate increases (Boeing manages these VERY poorly) to support delivery scheduals and you have a double whammy. Boeing would be well advised to find different ways to deal with the problem, from early retirements and buyouts to fire sale prices to it’s best customers on limited numbers of aircraft.

    Given the current dire state of Boeing’s balance sheet additional costs for no useful gain are NOT in order. Simply slashing production and headcount looks good on paper, but ultimatly may result in not much.

    It would appear that whatever demands the unions were making, it may well have been better for the company to have given some ground to avoid a strike. I remember quite well the union making it very clear the damaga to Boeing’s balance sheet that would occure, and the company downplaying it to the point of almost total dismissal.

    It would appear that the unions threat was not a hollow one, and Boeing’s hard line grandstanding delt it’s balance sheet a serious blow.

    As to state lawmakers, Boeing will have it’s way with them. It always does. It just needs to ring it’s bell, and the sheep will come home.

  3. Scott, could you shed any light on what evidence did Richard Aboulafia put forward to come up with EIS for the A350 of 2015?

    As far as the ‘full’ 7 years goes, I think what Mr. Pickup might be referring to is that the XWB was unveiled in June 2006 at Farnborough. However the formal industrial launch (what you are referring to) did not come until 1st of December 2006. The work on the XWB had started well before the actual industrial launch…
    This is my attempt at explaining the difference! 🙂

  4. Richard Aboulafia, with whom we have a dandy relationship and good-naturedly pick at each other’s predictions and prognostications, didn’t present any detail or facts to support his conclusion of a 2015 EIS for the A350. This is his analysis and best judgment largely based on the experiences of the A380, the A400M and the 787 programs, all of which have been late, and concluding that new airplane programs are more likely than not to be late.

    We think it’s a little soon to be drawing these kinds of conclusions; we think one has to get much closer to the timeline projections before getting a sense of what will be late or not.

    As for Simon Pickup’s presentation, the only date he mentioned at the PNAA conference was December 2006 and this was in reference to our specific reference to a seven year launch-to-EIS timeframe in our presentation that immediately preceded his. The inference, then, is logically that December 2006 is the starting point.

  5. What is quickly overlooked with the much publicized A380 problems is that it flew less than 3 months late and I believe completed its flight test programme on schedule, so it is possible for new aircraft programmes to be on time.

  6. Nobody really worries about when the test flight program ends outside of the effects on the delivery schedule. Airbus is still dealing with production issues on the A380, so that’s why you see hesitation by analysts in accepting the schedules of manufacturers. All-new airplanes are tough to build, but the stock market and customers wants them to arrive as soon as possible. Always a conflict there.

  7. Did Boeing really think that they could these large parts and sections of the 787 in from all over the world- especially made by unskilled people, some even farmers! And expect the planes to magically snap together and all go right? TV sets and toasters maybe…..not jet airplanes! Doesn’t take a rocket scientist to predict what was going to happen and has! A mess that may be the begining and the end for Boeing. It is time to bring ALL work back to the employees who take pride in their jobs and the great product that they were once building. Boeing needs to own up to this big mess of outsourcing and stop blaming the machinists! Machinists just wanted to stop outsourcing and build the best planes like the old days! Our fathers ran a great company and we need to get back to this era and boeing would soar high once again!!

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