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:
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.