Airbus seeks to increase Washington State supply business; aims for 13 A350s/mo

It was the first time that Airbus specifically participated in an event in Washington State exclusively designed to mate the fierce rival to Boeing with suppliers in a meeting intended to increase business opportunities in Boeing’s back yard.

More than three years in the making, Airbus sent top supply chain officials to a suppliers fair organized by the Pacific Northwest Aerospace Alliance and the State Department of Commerce.

Before the event even started, one of the main arterials leading to the meeting was closed during the peak rush hour due to police activity. Wags suggested Boeing arranged the traffic disruption.

In fact, Boeing officials previously have said they support the idea that Washington’s supply chain sell to Airbus and other original equipment manufacturers–though they also admit they like the common suppliers to favor Boeing first. The cross-selling makes from stronger suppliers, Boeing says.

Boeing also had two people at the event listening in.

Here is an article from the Puget Sound Business Journal. We sat down with Airbus’ head of Americas procurement for Airbus and parent EADS for an exclusive interview, and we’ll have this report next week.

But one key piece of information to come out of the meeting that is critical to rival Boeing (as well as the supply chain) is that Airbus plans to produce the A350 at a rate of at least 13 per month. This confirms a long-reported rumor we’ve heard but which Airbus would never acknowledge. The confirmation came from presenter ElectroImpact, which is headquartered in Everett and has a major facility in Broughton, Wales, where it makes wings for the A380 and A350. The A350 facility was built with a capacity for 13 A350s per month.

Airbus has only acknowledged its production plans call for 10 per month within four years of entry-into-service (2H2014). Consideration to creating a second A350-1000 production line is underway and has been publicly promoted by John Leahy, COO Customers. No timeline for the decision has been specifically set, though it may come by year end.

54 Comments on “Airbus seeks to increase Washington State supply business; aims for 13 A350s/mo

  1. Isn’t it always prudent for suppliers to build in some extra capacity to cover possible future rate increases? Just because the ElectroImpact facility can go to 13 per month does not mean that is their marching orders from Airbus. Did a rep from ElectroImpact come out and say it directly?

      • For a long time Airbus’ plan was for 10/month. Apparently they told ElectroImpact to build for 13/month max. My point was that just because there is capacity to go at 13/month does not necessarily imply that is what the rate will be.

    • Prudent? maybe; Expensive? certainly.
      An aerospace production line is quite expensive compared to most others. Building it bigger than required usually doesn’t pass the business-plan phase.
      Then there’s the fact that depending on the program and the supplier, the tooling could well be owned by Airbus – leaving no option to the supplier to go bigger than required.

      • The 737 production system has operated below its max rate for years. Apparently having surplus capacity really did pass the business plan phase.

  2. Airbus will build the second A350 FAL in Everett, as soon as it is vacated by most of Boeing’s widebody programs. 🙂

    • As I was writing my comment I had not seen your post yet. It looks like we had the same thought at the same time. And from what I can see on this blog we are not the only ones to realize what’s going on right now.

    • Realistically, Airbus would be smart to source from the supplies in WA, but building FAL might not be that smart because of high cost and unions.

  3. As Boeing slowly moves to the Southeast maybe Airbus is preparing to fill the void that will be left by Boeing in the Northwest… 😉

    It looks like the A350XWB will be a very successful programme. Much more so that the A350 Mk 1 might have been. So an increase in production, with two lines going full tilt at a rate of 13 per month, should generate mountains of cash for Airbus, and provide a quick return on its investment. Unlike the Dreamliner programme, which is nowhere near break-even, let alone a quick return on its investment. And if more problems keep developing it may very well become a permanent drain on Boeing’s finances.

    • Boeing shares opened at $107.63 today. There seem to be a disconnect between Wall Street and Reality Street. I don’t understand why the shares keep going up while the Dreamliner problems are accumulating.

      Please move on, there is nothing to see here.

      • Maybe “The Street” is confident in Boeing? How come Airbus(EADS) stock went up even in lieu of the A380 problems?

    • You mean the “mountains of cash for Airbus” like the A380 (A3XX) program was supposed to bring? LOL.

      The A350 program IIRC is >$15 billion, many of the carriers (especially I know of EK) got great deals (sorry,can’t give the numbers). Also, many carriers had the opportunity to switch from the A350MK-whatever to the A350XWB at no to minimal cost.

      Even with all of the troubles for the Dreamliners and granted it will take a while for Boeing to break even, IIRC the projected breakeven for the program stands about 1,000 frames. If (and big if) Boeing can deliver future planes w/out too many problems (the -9 is looking to be on spec and on time) then the B787 program will do quite well also.

      Boeing has >900 orders already. Future 787-10 orders (as well as future -8/-9 orders) will certainly make the program profitable.

      Again, can Boeing deliver the goods IMHO is the most important aspect.

      • Back in October 2011, Boeing set the initial 787 program accounting block at 1100. I vaguely recall a prediction a couple months ago by McNerney that the 787 program would make a very small “single digit” profit, whatever that means. So, program break-even will probably be closer to 1100 units, only about 8.5 months later than what you are saying, assuming Boeing increases the rate to 12/month.

        I’m not exactly sure how people are getting the impression that the A350 is a particularly well run program. I mean, it is running smoother right now than the 787 program was around the time of first flight, but it has not even been close to trouble free.

      • “I’m not exactly sure how people are getting the impression that the A350 is a particularly well run program.

        Well, I for one believe that A350 program execution has been exemplary as it has chosen to prioritize product development maturity over that of schedule; by not committing to send half baked assemblies to the FAL in order to avoid traveled work etc.; and finally, that Airbus has adhered to two out of three industrial best-practice recommendations, which suggests that new products should use existing processes and tools, the existing organization and demonstrated technologies.

        Thanks to all this, the A350 program should come in a whole lot cheaper than what was/is the case with the 787.

        In fact, it’s much cheaper for an OEM to accept development delays up front during the period of development and testing than before the final assembly line is active. In fact, that’s part of the syllabus of Manufacturing 101.

      • Using the word “exemplary” is overstating it in my humble opinion. It may be cheaper than the 787, but it will still be a whole lot more expensive than Airbus first estimated.

      • I was talking about the XWB program, not the original A330 fuselage-based concepts. 🙂

        I’m not sure that the A350 program will be “a whole lot more expensive” than what Airbus originally estimated. As I previously indicated, it’s a whole lot cheaper to extend the development period and delay the EIS date early on, than to prematurely start serial production.

        For the sake of argument, let’s say one additional year of development increase costs by around $2 billion dollars. That is, keeping 20000 people busy for one additional year while paying them $100000 dollars each. 🙂

        Estimated A350 R&D costs in 2006: $13.5 billion along with $2 billion in capital expenditure (Carol Matlack, Business News.)

        But Condit wildly overshot his initial budget. The plane was budgeted for $6 billion in development costs but ultimately cost $12 billion, say close observers. “We were milking money from the 767 and the 737, and that money was going right into the 777,” said one former high-ranking Boeing exec. “Even though it’s a wonderful machine, on a stand-alone basis, the 777 is not a commercial success.” Boeing declined to discuss development costs, saying they are proprietary.

      • OV #16,

        That’s $100,000.00 in costs per person working on it. Salary is just a (small?) part of it. Software Licenses, hardware costs, re-pacing and re-planning by suppliers – it’s all part of the cost of any delay.

      • “As I previously indicated, it’s a whole lot cheaper to extend the development period and delay the EIS date early on, than to prematurely start serial production.”

        I agree, but before you give Airbus too much credit for this, read the following:

        I’m not trying to say that the A350 program is being run as badly as the 787 program was before flight test. There is no excuse for what Boeing did with the fastener situation and the roll-out abomination. There is also no excuse for promising schedules and costs that were just plain unsupportable. The Boeing leadership should have been purged for what happened. So, compared to the 787 program, Airbus is doing much better with the A350, but that is setting the bar pretty low.

        Airbus is, to a certain extent, putting schedule before maturity and starting serial production prematurely according to the Aviation Week article. MSN-1 through MSN-4 are the flight test aircraft, with MSN-5 through MSN-16 having “relatively minor” design changes. However, starting with MSN-17, 40% of the cabin parts will be changed including bracketing and the air-conditioning system. Other structural and wing changes will also be made. This is starting to look disturbingly similar to the 787 program, in my humble opinion.

        These late changes are really going to stress the production system especially when that system is in the early stages of maturation. This is also going to cost a lot of money. Will it be as bad as the 787? No, probably not, at least I hope not. It is good that these changes are in the the plan. I’ll give Airbus credit for that, but, it remains to be seen how the execution will go. We will also have to wait and see what the real cost turns out to be.

        • Mike, the primary difference to previous projects seems to be
          the “batching” of changes here.
          What previously was incorporated into the production on a
          “now available basis” will be applied for the A350 at a few
          waypoints planned long before FAL Start for the individual frames.
          For the product and the customers an improvement.

          Compare to the rework nightmare seen on the Dreamliner not
          ony caused by design changes as such but also by the expanded
          scope of adding the same change to significantly differing frames
          ( from “wild” changes already applied during section stuffing and FAL.).

      • Uwe,
        The 787 changes were incorporated in “batches” as well. The tables on All Things 787 make it apparent that 7 batches were used.

        Boeing had a plan for this as well, at least for the changes that came up before flight test, like the wing/fuselage join. Changes that came out of the flight test could not be planned out before then.

        The A350 FAL has started a while ago, and who really knows how long Airbus had those plans in place. The article makes it sound like at least some suppliers were caught off guard.

        Finally, even if it was perfectly planned, it is still going to take money and valuable schedule time to execute.

        While good compared to the 787 program execution, in my humble opinion the A350 program is not the shining example that some here would like to believe.

  4. I’m of the opinion that eventually, monthly A350 production output will be closer to 20 units than to 13 units. It’s a no brainer, really. 🙂

  5. “many of the carriers (especially I know of EK) got great deals (sorry,can’t give the numbers)”

    Agree the 787-9 looks great, I assume carriers will try to upgrade from the 787-8. It seems WallStreet has become immune for 787 issues, fires, diversions. You can that after being alarmed 10-20 times.. over a relatively short period. Everyone wants to be exited about the Dreamliner so the public gets what they want. Everybody happy.

      • I apologize keesje. About 2 minutes after I posted this response, I realized it was not fair to you. You have just as much right to voice your opinion as I do mine. Again, I apologize.

  6. Mike Bohnet :
    I’m not exactly sure how people are getting the impression that the A350 is a particularly well run program. I mean, it is running smoother right now than the 787 program was around the time of first flight, but it has not even been close to trouble free.

    If people have the impression that the A350 is a well run programme maybe it is because the 787 is, or was, such a badly run programme.

    – Airbus did not shut down its electrical engineering department just before launching the most daring all-electric vehicle ever conceived by the human mind.

    – Airbus did not build the A350 out of composite barrels but used a more conventional approach, with CFRP panels on a metallic frame.

    – Airbus did not give away the first 800 frames, but sold most of the first 700 with a fat margin.

    – Airbus has designed, or redesigned, the A350 to offer Ni-Cad batteries as an option.

    – Airbus was overly conservative with the A350 Mk 1, but shifted gear with the XWB and made the bold decision of enlarging the fuselage in order to compete with both the 787 and 777 at the same time; while offering an advanced design package in a relatively conservative configuration.

    – Airbus has a good handle on its outsourced contracts and has been developing the business model for decades. While the Boeing management has bee demonstrating its incompetence for the last decade.

    – Airbus has been hiring engineers and technicians for forty years while Boeing was getting rid of the best brains in the industry.

    Conclusion: I expect the A350 to have a few kinks and some bugs of the teething-problems variety. While I expect the Dreamliner to continue to demolish Boeing’s phenomenal reputation.

    I love Boeing but I think it needs an overhaul.

  7. There have been delays to the A350 programme, but nowhere near as long as those for the 787 and when they have been necessary Airbus has been open and honest about them as far as I can tell. That’s one big difference.

  8. The thing is not whether there is only a one year delay of the a350 official EIS but when will “normal” operations in airline service start? I think the a380 was running normally about 18 months after official EIS, sorry, no source, only a feeling that reports of troubles increased slightly as airbus “intensive care” slowed, and seem to have dropped again as the aircraft matures, while the 787 has not entered “normal” service yet, despite 2 years from official EIS.

    After the experience of getting the a380 and the a400 up and running I think airbus has learnt by now to avoid immature aircraft entering service, they can see the a380 EIS went a lot better than the 787, probably because production problems gave them time to get it right.

  9. Pretty complete report on Flight Global at the time:
    Interesting to note that Airbus was quite open about giving initial close support resulting in problem decimation early on. The 787 appears to make less progress in that respect.
    Difficult to establish but utilisation per day seems to be significantly below what the A380 achieved after 18 month ( 12..13h.

      • If they can rewing a 777, it is not outlandish to rewing the A330. Just get the empty weight and the MTOW below the 787-8 with a new wing, new main gear, new latest tech engines, why not?

    • A330 regional, I’m thinking a 54m 4000nm model, and a 60m 33300 nm model.

  10. So it did start with a metallic frame before they switched to composite. But titanium is a better interface for composite panels whereas aluminium will corrode when in direct contact with CFRP. So why did they not choose titanium? Is it because it is more expensive than aluminium? Like GLARE seems to have fallen out of favour because of its cost, from what I understand.

    • This was intended as a reply to OV-099, post #23 above.

    • Both the 787 and the A350 are using thin-film interface materials at the
      aluminium-carbon composite junctions in the fuselage and the wing to prevent galvanic corrosion. For example, the wings are constructed using machined aluminum ribs in combination with CFRP spars, stringers and wing covers.

      Vince Trampus, vice president, Heller Machine Tools LP (Troy, MI), says: “I can see aluminum to be more competitive in the future when it comes to fuselages, but there is an offset compared to composite material in cost and availability. Aircraft builders will have to factor in the specific characteristics of all three – composite-aluminum-titanium. “Aluminum is typically machined with high cutting speeds. The overall machining process is very mature. The quality level of the machined parts is typically a function of the volumetric accuracy of the machine tool. Robust machining of composites, on the other hand, is a matter of optimizing the process with regard to feed rate selections, cutting tool geometries, and the choice of dry and /or lube-assisted machining. Titanium-machining creates higher chip volume, and utilizes higher cutting forces and elevated cutting temperatures. To be effective machining titanium, metalcutting machine tools must exhibit dynamic stiffness paired with thermal stability and high volumetric accuracy,” Trampus explains.

  11. keesje :
    I’m sure GE would be willing to provide a suitable light GENX engine and Filton a suitable wing & wingbox.
    It could fill the market that will be left open by the A300, A310, 767, 757. E.g. intra Asia, EMEA, heavy city pairs and transcon markets. Launch customers Delta, Air China and Lufthansa & we have a go.. And now back to reality

    First, the magical word NEO is not said … but a launch, end of this year may have a taste of a A320 NEO remake …

    Not sure GE will pay much attention, and may be they want to protect their B787 investments (They are the leader motorist today)

    I think more about a T1000 with “Ten” features, RR needs tu defend it’s leadership, on the A330 !
    Or a new GTF, but the lead time may be very long, unless P&W have secretly advanced a bigger GTF prototype !

    For the wings, Broughton today has only the A351 wing to complete, and basically, this wing is nearly the same structure as for the A359… so they may have some free R&D times ahead !

  12. Who thinks launching an aircraft for EIS around 2018 with 25-30 year old engines by then, is a good idea when better engines are available that are in production for 10 years by then. With fuel prices at record heights. I’m not.

  13. keesje :
    Who thinks launching an aircraft for EIS around 2018 with 25-30 year old engines by then, is a good idea when better engines are available that are in production for 10 years by then. With fuel prices at record heights. I’m not.

    Very obvious Keesje …
    But Airbus has said, more than one time no to the NEO , for the 330 evolution !
    We may hope, it’s just a trick to mislead BA …
    Or Airbus don’t get for now, the answer they hope for, from the motorist’s !

    What I see from Airbus, is a very cautious and non binding approach of the 330 evolution !
    May be Airbus is keeping an eye on the B787, and the other on the performances and spec’s of the A350, to get a closer idea of what would be the A358, and eventually an A358 low MTOW, with a shorter range …. if & when they build her …

    The TXWB is very heavy … I don’t see it powering planes through the 70-75 000 lbs of thrust window, without a serious weight penalty !
    RR has to improve weight seriously to cover this range of power, for medium haul versions !

    Seems we shall get the answers from Airbus before year end !

    First leaks through the 1000th A330 delivery, just in TLS, with Cathay presence … and nothing in Le Bourget !

    Cathay may be the future launch candidate for a re-vamped A330 ??
    Why not ??

    • IMO RR woud use the 787 s Trent 1000 ,as a starting point for.a proposal. The Trent XWB seems way to big. GE would love to strenghten their position on Airbus widebodies, Gecas would like so anyway. They even developped and proposed the Genx at Farnborough for the A 330, I think 7 years ago.

    • If Airbus was simply to fit an A330 with new engines it would be a NEO. But if they stick on a new or heavily redesigned wing I think they can argue it isn’t a NEO any more 😉

  14. A question for Leeham;

    Did the supplier presentation indicate 13/mo for the whole program or just a subset of the models?

  15. To : Ikkeman !
    Electro impact said their machinery installed today in Broughton may produce up to 13 set of wings per month for the A350 ! That’s all !
    May be they think the Airbus Broughton, wing factory will need more ????

    To Keesje !
    I think, too, it may be very challenging for a new version of the A330 to cope with the modern airport noise restrictions, fitted with an old engine, and it’s worse for a shorter haul, and higher frequency Aircraft !
    Whatever they name it, NEO, or NG …
    Sure Mr John Leahy is fully aware of this part of the equation !

  16. Perhaps I’m missing something here, but wasn’t the A330 originally designed as a regional airliner? As time has gone by its MTOW has been steadily increased to give airlines the range they wanted – so, perhaps all that’s needed is to go back to the original airframe, take out as much A340-associated weight as possible, add the various aerodynamic improvements since then and re-engine. It oughtn’t cost the earth to do that.

  17. Pingback: Twin-aisle aircraft deliveries 20-year forecast | The Blog by Javier

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