Stabilizing 737 production is Boeing’s priority, CFO says

By Dan Catchpole

June 5, 2019, © Leeham News: Boeing is focused on smoothing out 737 production at 42 aircraft a month for now. Any decision to returning production to 52/month is well down the road, Boeing CFO Greg Smith said Wednesday at the UBS Global Industrials and Transportation Conference in New York.

“It’s going to be all about stability,” Smith said. “And stability is not just about on schedule but ensuring that we’ve got predictability and accuracy that’s more finite than what it’s been in the past.”

The company had planned to step up production from 52/month to 57/month in June or July. Boeing slowed down production of the workhorse single-aisle in April after a second 737 MAX crashed shortly after takeoff. At the time, it cited the accidents as the reason for slowing 737 production. However, the aerospace giant already had been struggling with production disruptions prior to the crashes. The biggest headache came from slow deliveries from engine-maker CFM, as LNA reported in April.

Industry insiders at the Aviation Week MRO Americas conference in April said Boeing already planned to hit 57/month in September. However, at Wednesday’s investor conference, Smith’s sidestepped any question about when 737 production could reach that pace.

737 production stability is the priority

Going to 57/month without resolving existing supply chain and production problems “is not the right answer,” he said.

“We’re hanging engines where engines need to be hung,” he said. When CFM deliveries of its LEAP-1A engines fell behind pace, Boeing had to park engineless 737 MAXes anywhere it could find room at its Renton plant and the adjacent Renton Municipal Airport.

“There’s still challenges on the shortage side,” Smith said. “We’ve got teams focused more on some of the smaller suppliers.”

The production slow down offers a chance for Boeing to review its procurement strategy with some low-cost parts, he said. “Is there a chance to minimize” production disruptions “as we go back up in rate?”

Returning to 52/month will be far easier than hitting that pace the first time. The company and 737 suppliers already made the necessary capital investments and did not cut workers when the pace slackened, Smith said. “We hung onto our resources. People will go back to the jobs they were on at 52/mo.”

Most suppliers remained at 52/month, he said.

That inventory should relieve some pressure on the production system when 737 output increases.

Smith said Boeing does not plan on making a decision about increasing production rate until after it has sorted out resuming 737 MAX deliveries and is confident that its supply chain is stable.

Restoring the 737 MAX brand

When talking about getting the 737 MAX back in service, Smith reiterated previous statements made by CEO Dennis Muilenburg and other company officials: Boeing is working hand-in-hand with regulators and customers. It is up to regulators when Boeing’s software fixes for the MAX’s MCAS program is certified. The company is reviewing its policies and procedures to identify improvements to avoid future tragedies. And so on.

Boeing has pulled people from across the company to work on safely returning the MAX to service. It has brought people in from outside the company, specifically for brand management and crisis management, Smith said.

“We’re very clear-eyed on the brand,” he said. “We’re putting any resources required inside and outside the company to help us restore the MAX brand, and then obviously, the company brand.”

That will be no mean feat in the wake of two fatal crashes and questions about Boeing’s candor following the first crash. Barclays Capital surveyed 1,756 fliers from North America and Europe after the second crash and found significant apprehension about the MAX’s safety among respondents. Forty-four percent said they would not fly on a MAX aircraft for at least a year, and 52% said they would choose another aircraft over a MAX on otherwise identical flights. European fliers expressed more reluctance to board a MAX then did respondents in America.

777X unaffected by 737 MAX re-certification

Boeing’s newest jetliner, the 777X, has not been affected by the need to re-certify the 737 MAX, Smith said.

The first two 777X flight test aircraft are on the ramp at Boeing’s Everett plant, and the next two are in final assembly there. GE’s massive GE9X engine has required retesting, which has slowed progress. However, it is not an issue with the 777X program’s production system, Smith assured the conference attendees.

“We still expect to fly this year with a 2020 entry into service,” he said.

36 Comments on “Stabilizing 737 production is Boeing’s priority, CFO says

  1. Talk about chutzpah, the arrogance of Boeing constantly diverting blame of the fatal crashes that left over 345+ people dead, and still touting that bird is A-OK?? I have bridge from Brooklyn to Manhattan to sell you. This all about nationalism, (USA), and Airbus, Europe). Sorry but it does get that simple. I’ll leave it at that.

    • People are still pretty stupid and easily led to believe anything Boeing tells them. This plane is not safe now and wont be safe later. The design is flawed beyond repair and should not be allowed to fly ever again! Boeing wont admit it because Boeing would have to admit guilt! Let the law suits begin!

  2. The CFO of the Boeing Company seems unusually a mountain of information for Boeing Commercial Airplane news, do we ever hear from the CEO of BCA?

    • I think its the newest try at a talking head.

      Same flop as the last one.

      Maybe a CEO in the form Ford had during the Tire issue?

      Bring it in, we will put on better tires and will deal with Bridge stone (actually pretty good as they determined what the load raring would be and how close to no margin it was!)

      Really is simple.

      We screwed up seriously.

      We will compensate the victims.

      We are fixing that screw up that killed 346 people.

      We are going to change process so it does not happen again.

      • You’re right, it really is that simple.
        How long for the outside help on crisis management and brand management to figure it out and present those four points to the public? They owe you.

      • except that the replacement tires had a worse safety record than the killer firestones. and the problem was never the tires, but rather that the company chose to specify running them at a lower pressure to improve ride comfort with no appropriate adjustment to the GVWR.

        by shuttling the blame to the tires, instead of the company that chose to deliberately underinflate them while still advertising the GVWR at what it would be if they were properly inflated and not informing the customers, they did almost exactly what Boeing is doing.

        point the finger at someone else, compensate as little as possible, lipstick the pig and move on.

      • Boeing needs to send Muilenberg off in order to restore public confidence. He’s “captain” of the ship and under his watch, the cash cow (737) is bleeding, yet they talk as if re-arranging the deck chairs SS Boeingtanic will make everything okay, or somehow make the iceberg disappear.

  3. Is that before or after building safe airplanes?

  4. Those engines. Those engines. If we can just get some more engines everything will be peachy.

  5. PR people brought in from outside to ” restore brand”,massive mistake,the public are not that stupid.Only the giving the impression of good solid engineering is going to do the job,and you need less PR to do that.

    • Trouble is , that method works. Lots of future stories, that ‘move on’ will be written and passed onto friendly journalists newspapers and magazines for background and future use. Listen for Boeing to start saying ‘they have listened to the flying public’ etc etc and how this is no longer an issue.
      I can see selected opinion makers getting advance background material about the 797 in return for putting Boeings version of the good news Max story out there. The hands behind the curtains will never be seen.
      Suddenly ‘influencers’ in social media will be getting free rides in 737 Maxs once its back in service.
      Sure ‘big media’ like say the NY Times and CNN will still be doing the ‘real story’, but thats only ready by a tiny number compared to the oceans of people are going to get the 737 Max news from Facebook, instagram etc.

      • I’m not so sure,ideally Boeing dosnt want to actually promote the MAX and make it trendy,more forget about it and just associate it with ordinary safe everyday travel.

  6. In amongst the bullshit bingo I really liked this bit:

    “We’re very clear-eyed on the brand,” he said. “We’re putting any resources required inside and outside the company to help us restore the MAX brand, and then obviously, the company brand.”

    Well that’s okay then, why build safe aircraft? All you need to do is put resources into brand building. May I respectfully suggest that said restoration is wholly dependent on all stakeholders having faith in BCA being willing and able to build safe aircraft and not to take risks with safety to save a few billion bucks. I don’t think they are near approaching restoring faith in the aircraft and far less the integrity of the company.

    Hey this is easy, design integrity and proper certification don’t matter providing you can spin.

    • Brand building is one thing, but where is the new executive appointment of an Executive VP for Airplane safety. Clearly they need this as it seems that the original MCAS was for a minor part of the flight envelope that pilots really didnt need to know about, had 2 sensors giving AoA and only small increment in elevator movement. Once flight testing started to reveal all was not well it all changed , but no one had authority to say we have to go back and start again with MCAS design and certification.

      • That is they key, how can a late change during flight test not trigger a new complete failure investigation and full simulator testing with all failure modes ran thru at all speeds, altitudes and c.g.’s? Instead a mail from an ex. FAA employee now at Boeing as the cheif FAA coordinator to the FAA and all of a sudden it required none of it. Boeing should have gotten another answer from the FAA and its own checklists should have stopped that e-mail at that time before all verification and testing was done.

        • I see the problem lying very deep. The entire company was briefed on “we have to catch up with the NEO, or else we are toast”. So everybody involved, from the decision makers to the engineers and the test pilots was heading for that one direction and under that once banner: TIME.

          Safety was NOT the primary concern. Why not? Because all existing planes were so safe (yeah, ok, that battery, but that wasn’t us, that was that supplier, right,…) that nobody had it on top of their work sheets any longer.

          But they had to close the time gap to Airbus.

          And now, when test flight had begun, there was this extremely unpleasant problem of instability rearing its ugly head! Which was probably why the idea of a MAX had originally been abandoned. But we have no time to change the stabilizer or elevator, pylon and gear, and it would not only cost time and money, but maybe even the type rating. That can not be, so it will not be. A fix was needed and pieced together. Would a CQO have made a difference? I really don’t know. It would probably have depended a lot on his/her powers, but I doubt it.

          • @ Gundolf
            I think your analysis is correct.
            Knowing some of the people who called the shots on the MAX program, I can almost hear them say “Unstable? I don’t believe your science, get lost” upon being told about the issue.

            I also agree that CQO probably would not have made a difference. If they blatantly ignored known risks, I have a hard time believing that proper CQO would have made any difference here whatsoever.

          • I agree and playing catch up with Airbus is really dumb. Do you think Rolls Royce tries to catch up with Ford or General Motors? No, because they are already the best and they remain the best because dont compete. The best is the best like Boeing use to be! Its up to others to use it as a model of perfection.

          • The strange result is that a late change does not automtically trigger the Boeing cheif engineer to restart the specific verification process with 100’s of tests and reports that the FAA should have asked for. The results probably would have been similar to todays suggested system but maybe with some added logic by using IRU and GPS logic added and maybe an elevator extension of 1-2″ keeping the same stabilizer.

  7. Says 777-9 won’t be affected? Then Boeing need to prioritize FAA’s reputation over MAX return to service. Tell me again, how many US customers does it have? There will be zero deliveries until EASA, CAA, CASA etc sign off on it. Not even EK will accept until it can fly over EU, and to Asia, Brazil or Australia.

  8. It is important to understand who he was talking with and so how he would be advised to frame answers and highlight or lowlight aspects. So I don’t find anything immediately bad in the quotes above.

    For example, “We’re putting any resources required inside and outside the company to help us restore the MAX brand” might on the surface be taken to mean adding a gloss varnish without actually addressing engineering shortcomings. But as the engineering shortcomings are the key issue this statement could equally mean all engineering and communication resouces required.

    The “it’s going to be all about stability” smoothing production bit seems to indicate that return to service will be later than BCA hoped/expected when they originally announced the temporary rate cut and so perhaps not entirely honest. But the ability to resolve production pressures is a positive and I don’t see anything wrong with highlighting positives.

    • I read it in conjunction with this comment rightly or wrongly,

      ‘It has brought people in from outside the company, specifically for brand management and crisis management, Smith said’

      I think it is a strange thing to say, firstly this can be taken as read as a standard course of action for such a large entity and second because I don’t think that ‘Brand Management and Crisis Management’ will solve the root cause of the problem. The root cause is loss of confidence in key stakeholders of Boeing’s integrity and the impact that has had on the design and development of the MAX.

      • “The root cause is loss of confidence in key stakeholders of Boeing’s integrity and the impact that has had on the design and development of the MAX.”

        There are prerequisites to that loss of confidence. so it is not the root cause 🙂
        IMHO the root cause is a culture that competes on “non primary” metrics. Like extended PR, lobbying, AstroTurfing, .. shareholder management. ..
        no longer is product excellence of high importance … until the accumulated good reputation has been used up 🙂

    • Boring forgot that first principle usually apply. NEWTON stated “To every action there is an equal and opposite reaction”. That and the first rule of design KISS, “keep it simple and stupid”
      The whole MAX concept appears to have overlooked these simple rules.
      Have always firmly believed that it required a hardware fix.
      Maybe a complete interior layout could help. If the fresh and waste water tanks offer sufficient weight to overcome the imbalance issues??? Who knows?

      • Andrew, the problem is not that the COG and COL are too close, but that the COL is moving too fast and too wide.

        Normally when you have a stable aircraft, the stick offers low resistance in level flight and the more you push or pull the force increases. That’s intuitive and easy to handle. When you approach stall and let go of the stick the plane recovers automatically and returns to level flight. But with the MAX this apparently doesn’t work and the plane instead goes into a stall. And maybe that behavior is so bad that even full elevator down does not suffice to save the plane, but the stabilizer is needed for support. But as the pilot can’t control the stabilizer and the automatic trim would be way too slow, here comes MCAS, kicking in hard and fast.

        I don’t think you can move ballast (water) around the plane fast enough to fix that problem.

        It will be difficult enough to fix the MCAS so that is will work fine in “regular” conditions, but it may be quite impossible to make the MAX safe for “difficult” conditions.

  9. As things around Boeing become clearer internal thinking gains definition in public:

    “This is a smear campaign against Boeing by foreign forces effected by some suicide pilots.
    All the PR men and horses are needed to recreate the shine expected on a perfect product.”

  10. Is it possible that the production level simply reflects the hideous logistical nightmare of trying to find space for 200/300/400 aircraft. when we saw the ‘terrible teen’ pictures I thought that would be a one off, this is of a order of magnitude larger.

    It has all gone quite on the MAX front, is this significant good or significant bad? There is rumour of whistleblowers from a number of sources including Boeing, does this mean that a smoking gun has been found?

    • I would say they are getting to the root cause of the whole drama. The NYT article explains where the investigations have arrived, and that’s not a pretty find.

      I have serious doubts that a software fix will solve the problem with the high AND slow speed stability. Now if you consider hardware changes (new stabilizer, elevator, pylon, gear, trim system,…) on all existing MAXs including new certification, we are looking at what, a 3 year time line?

      What would you do if you were Boeing’s CEO?

    • Storage isnt so much of a problem, as they are allowed to fly them elsewhere. The parts and main fuselage and wing sections still continues at the 52 p.m. rate before the groundings, only small numbers are the NG version still coming down the current line of 42 pm ,that are allowed to be delivered.
      I think there is a lot of wishing their way out of the production problem.

      The delivery slots for 57 pm that they were supposed to be going to at in a few months have been sold of course.
      When they move back to 57 rate they are only going to be building planes from the parts made that were not delvered.

      Its sort of a Soviet style central planning gone crazy but with the US twist that all the planes have been sold !

      • I work in day three of Systems Install, there’s only one NG left in the firing order and it has to be rebuilt because the wrong wing box was installed.

  11. Really don’t like the idea that you used a computer to compensate for center of gravity issues go back to the drawing board stop relying on computers programs to fix problem and if that’s all you have there should be three backup systems and they should be integrated without extra cost to the buyer should be mandatory

    • The 767 has a mcas type system. Ive seen references to it had been added to the B52 upgrades at some stage.
      Someone in Boeing really really likes mcas.

  12. A good Quality Assurance Program should be established
    Purchased hardware that are considered safety items
    should be monitored by qualified engineers not unqualified
    purchase agents Forged Bolts fore instance It can happen
    where by a purchasing agent to meet schedule is asked
    to make bolts machined not noticing they can not be
    replaced unless forged . Number one priority in the industry is safety profit is second.

  13. Just saw FAA representative mooted return of MAX for December 2019 soonest.

    At the 42 rate that means about 380 gliders parked, so production planning indeed IS needed…

  14. Production goes hand in hand with orders. I take order for Boeing Jets at a large Discount. We offer 737s, 747s, 767s, 777s, 787 and I hope some day 797s. From Commercial, BBJ, Freighter, Boeing Brazil, Boeing Business Jets we can help you save alot of money on Boeing Jets. Name your price? Free no obligation quotes… Place orders. Pick your discounts. Max 7, Max 8, Max 9, Max 10, 777-X, Dreamliner, Dreamlifter, Defense we can help. If you missed the Airshow its no problem. We will take your order and give you a great price. Lets compare apples to apples!

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