KC-767 to benefit from 787 “surge” line

Key points:

  • The ability to increase production rates to sell more 767s in the coming years;
  • Lower production costs, which will be built into the KC-X bid in the hot competition with the expected Northrop Grumman KC-30 submission.

Boeing’s proposed KC-767 refueling tanker will benefit from plans to establish a surge production line for the 787 program.

The connection is not obvious, for Boeing didn’t suggest as much when it announced that Charleston (SC) will be the location for the second 787 production line. As Line 2 is being established, Boeing will put a “surge” 787 line in Everett (WA), where Line 1 is located. The surge line will be in the forward bay where the 767 line is, requiring relocating the 767 line to the aft part of the bay.

Boeing plans to implement Lean production practices in the relocated 767 line, which has its origins for the airplane’s 1982 entry-into-service date. Lean practices will result in about “a 20% improvement in unit time as we increase [the production] rate and incorporate efficiencies,” a 767 program spokesperson tells us.

Boeing will begin to relocate the 767 line in 1Q2010; it will be operational in 1Q2011.

The efficiencies include:

  • New tool designs with new technology and automation that will reduce flow, rebalance the line and improve assembly efficiencies;
  • Improving employee ergonomics;
  • New tooling to reduce the flow required to assemble the wings, which improves inventory holding costs and quality and overall costs;
  • Laser alignment in place of manual tools; and, among other things,
  • Incorporating auto-riveting and drilling to improve unit time and quality.

The smaller footprint also will allow Boeing to streamline processes and consolidate support.

Boeing declined to quantify the before-and-after employee head count for the 767 line.  But the spokesperson said that a planned production rate increase in 2011 from one to two 767s a month will require the addition of “several hundred people in various skills.

“The increased efficiency means we will increase by less than we would have and build a better product. The increase in efficiency will allow us to sell even more 767s in the next few years.”

These benefits have clear implications for the prospect of building the KC-767 tanker should Boeing win the contract, which the USAF hopes to award in August next year (a goal we believe may be optimistic, given the political meddling that is going on). Most observers already believe a protest by the loser is likely, further delaying the contract.

Assuming Boeing selects the KC-767 as its choice to bid for the Air Force’s KC-X (which we think will be the case), the lower cost of building the airplane will be reflected in Boeing’s bid price, the 767 spokesperson confirms. With the competition so far emphasizing cost rather than value in the Draft RFP (Air Force rhetoric to the contrary notwithstanding), this should Boeing an additional advantage over the larger Northrop Grumman KC-30, based on the Airbus A330-200, which has a higher list price than Boeing’s 767-200ER on which the KC-767 is based.

The Air Force currently plans to procure its KC-X at the rate of 12-18 a year, or 1 to 1 ½ a month. The KC-X must also be what is called ITAR-compliant, which means access to military-unique equipment must be controlled during production. The new, Lean line will be prepared for ITAR requirements, says the  Boeing spokesperson.

Boeing faces the challenge of relocating the line while the 767 is in production.

“We will continue to build airplanes sections in our current tools and location during the product line relocation,” the spokesperson tells us. “This process will require a synchronized, highly sequenced series of activities to minimize disruption. Concurrently, we will be reactivating rate tools, upgrading and incorporating improvements, adding new technology and moving and building new tools as part of this relocation activity. As a standard practice, we maintain and use our existing tools until tool tryouts are complete for all-new, upgraded, reactivated and moved tools. This is how we will mitigate disruption to our active production line.”

Although our emphasis in this column is how Lean will aid Boeing in a KC-767 bid cost basis, the hints that Boeing may gain more 767 sales in connection with  the 787 surge should not be overlooked, either.

10 Comments on “KC-767 to benefit from 787 “surge” line

  1. The 767 FAL could have been converted to a lean operation at any time. Why construe a connection to any decision on the 787?
    I’d wager that Boeing is *forced* to invest into 767 production efficiency enhancements to stay competitive in pricing as NG/Airbus has the benefit of economies of scale by producing the baseline A330 airframe at a rate of 7+ a month.

  2. Scott – Why should 767 sales rise in connection with the 787 surge production line? Perhaps the take away is that even with the 787 surge line, Boeing’s 787 deliveries will still be months/years late, so Boeing must give their customers compensation. Instead of gving them money, Boeing will offer them 767s they would not otherwise want, while at the same time setting up a new 767 line which will enhance their tanker bid.

    • That’s Boeing’s statement, not our conclusion. Your assessment may be correct, but we are exploring this further and may have additional information after the holiday.

  3. Quote ‘Boeing plans to implement Lean production practices in the relocated 767 line…’

    Well, I find this amusing. I remember Boeing official touting lean manufacturing practices for the the 787 to be back in 2005/2006.

    Since then they have made all of the possible mistakes and all anti-lean practice.
    These include bad inventory practice (fastners!) the shipment of uncompleted parts (with lost of tracking in their travelled work), the building of unnecessary stock (how many generation of 787 are lying around?), modification of airframes before validation of said modification (the side-of-body failure) and so on…

    Unless they have really learned from these errors (failure is more appropriate), I find the quoted statement another public relation farce of very bad taste.

  4. “Lean practices on the 737 and 777 lines
    have worked quite well.”

    My guess is that “lean” was not the initial
    manufacturing setup, right?

    Leaning out an inventory rich environment
    is a lot easier than starting lean processes
    from scratch. Nothing to fall back on.

    This is aggravated when you have no idea
    what you have missed out on / overlooked
    due to no experience.

  5. I find it funny that the 767 line is still going at all.
    Stonecipher, when he was in charge, kept warning the Pentagon that it needed to make a decision on buying tankers from Boeing soon as the line was soon to be shut down (within the next year, I believe). Implicit in this advice was the fact that it would be more expensive for the Pentagon if the 767 line had to be restarted. Here we are 5 or 6 years later: the line is still running, Stonecipher is gone, no tanker has been ordered and Boeing believes they are about to sell more 767s.

    Calling Dr. Strangelove!

  6. Read a commentary about the WTO ruling and the tanker competition. It has a couple of interesting points. The authour is an independent consultant to Northrop Grumann, amongst others but some might find it still to be worth a read.
    http://www.defensenews.com/story.php?i=4388235

    In other news, the MRTT for Australia did multiple, simultaneous wet contacts to 2 Spanish Air Force F/A-18A+ fighters. From an Airbus press release, “During a two-hour sortie the two fighters received 11,400kg of fuel in a sequence of 13 contacts of which 11 were simultaneous. The operation was conducted at an altitude of around 15,000ft and a speed of 250kt and used only the hose-and-drogue pods.”
    Things seem to be starting to move there.

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