By Chris Sloan
October 11, 2024, ©. Leeham News – In a late Friday news dump just after U.S. financial markets closed, The Boeing Company Announced significant financial hits as the IAM strike lurches toward a full month with no end in sight, nor are further talks scheduled after pulling its latest off the table.
In an email to Boeing staff, Kelly Ortberg, Boeing President and Chief executive Officer, starkly admitted: “Our business is in a difficult position, and it is hard to overstate the challenges we face together. Beyond navigating our current environment, restoring our company requires tough decisions and we will have to make structural changes to ensure we can stay competitive and deliver for our customers over the long term.”
The company announced a multi-prong series of “clear-eyed, difficult decisions” and program updates. The headline is a roughly 10% permanent reduction in the size of the non-represented workforce, many of whom are already on furlough or partial furlough. These reductions will include executives, managers, and employees, who will begin learning their fate next week. The company did say, it will not proceed with the second wave of furloughs for now.
Significant program updates with wide-ranging ramifications were shared:
In a filing with the SEC ahead of the beleaguered aerospace giant’s third earnings call on Oct. 23, the company reported it expects third-quarter revenue of $17.8bn, GAAP loss per share of ($9.97), and a negative operating cash flow of $1.3bn. Cash and investments in marketable securities totaled $10.5bn at the end of the quarter. The company is reportedly searching for additional liquidity to prop it up, which has prompted fears of its debt being downgraded to junk status.
With his short honeymoon period far back in the rearview mirror, the new Boeing CEO struck an empathetic note to the worldwide workforce. “We know these decisions will cause difficulty for you, your families, and our team, and I sincerely wish we could avoid taking them. We will navigate through this moment. We will re-focus our company, and we will restore trust with all those who depend on us.”
I just do not see how prolonging this strike helps Boeing’s bottom line in the short or long run. They are increasing an already bad reputation for them among the airline industry. So what is their end goal, to shut down or be taken over by Airbus or Embraer ? It is sad to see what has happened to the world’s leading aerospace and commercial airplane manufacturer and leading exporter in the United States.
Boeing simply can’t afford to restore the pension plan for the IAM. That is the sticking point.
Other than public employees who have limitless access to taxpayers’ wallets, private companies can no longer afford the liability of their retirees living 10 or 20 years after retirement.
Generous pensions were written when people retired at 65 and died at 72.
Moreover, increasing numbers of women in the workforce who live longer, have quickly made actuarially assumptions irrelevant.
“… private companies can no longer afford the liability of their retirees living 10 or 20 years after retirement.”
I recall American life expectancy is getting shorter… may be it’s those without good jobs dying young.
(Source: https://x.com/jburnmurdoch/status/1641799698058035200
“Things have deteriorated so much that the average American now has the same healthy life expectancy (years lived in good health) as someone in Blackpool, the town with England’s lowest life expectancy (by far), synonymous with deep-rooted social decline”)
Read the thread if you don’t mind signing up X.
That’s because of too many people dying young. Those who are 65 will on average live well in to their eighties.
IAM retirees tend not to live that long, if they make it to retirement.
Stress, chemical exposures all take a toll.
OK, in a career before my 31 years with Boeing I was a CPA, and I totally disagree with this point of view. There are a multitude of problems here, but perhaps the most fundamental one is a serious lack of understanding of some of the most basic realities of accounting. In part, I blame the textbook companies.
About 20 years ago or so, a critical element was deleted from introductory accounting texts, which is the limitations of accounting. A quick online search will find several lists parsed in different ways, but they all contain the same ideas, in something between 9 and 12 bullet points. Accounting is limited in two critical ways. One is that any value that is shown in the financial statements must derive from either a transaction or an estimated amount for which there is at least one generally accepted method for generating that estimate. The other constraint is that two independent teams of accountants must be expected to come up with similar, not identical, but reasonably close, values for each item in the financials. This means that the boundaries of accounting and the boundaries of a firm are two radically different things. There are significant non-accounting elements in each area of the balance sheet, and this includes the equities, which is probably the area most overlooked in this fact.
In an M&A activity, the two negotiating sides work to come to some mutually acceptable estimates of a fair valuation of all of the assets and liabilities or risks, including many of the non-accounting items. But even then, items like institutional knowledge, and assets related to special relationships with customers, suppliers, and the communities in which a company operates are often taken for granted with no attempt to value them. As for the off-the-books equities, many are just plain blind to them.
For example, right now who owns The Boeing Company? That’s a simple enough question, but it is actually extremely complicated, and oh by the way, the current shareholders don’t own any of it. They are allowed to exercise control over it, but they own nothing. In fact, they are in a debtor relationship to the company. It is a fairly serious flaw in American business law and the way we both charter and oversee the governance of large corporations, that the non-accounting equities are virtually ignored.
Peter Drucker in his famous 1946 book “The Concept of the Corporation” was probably the first person to dig into some of these issues. But, it also helps to understand the transformations that occur in a society when it transitions from a non-monetary society to one that uses some form of money. Studying this transition helps make clear the off-the-books equities in any company. But to a certain extent, it has always been obvious, if ignored.
Ask any business owner or corporate CEO what their most important assets are, and they will quickly tell you that it is their people. Ok, who owns those assets? That question quickly gets at Drucker’s points.
We can also pull in John Maynard Keynes and his famous advice to the Roosevelt administration as it was struggling with the Great Depression and the certain knowledge that another big war was on its way. Keynes pointed out that “Anything we can do, we can afford to do.” Really, that’s just an observation about basic supply and demand balancing and the decisions relating to opportunity costs. Pick the mix of things that one is going to do, and that clears the table of everything else. So it is then just a matter of managing things consistent with the choices one makes. If you want to put people to work for war production, they can’t be buying appliances and cars. So sell them bonds to take away their spending power for the duration. They aren’t paying for the war with money. They are paying for it with consumer forbearance. Money is just a way of keeping track of the reciprocity values, just like Maus and Sahlins described in their books (Maus – “The Gift” and Sahlins “Stone Age Economics”).
OK, so how is American society going to structure itself to ensure we don’t end up with high percentages of impoverished retired people? We’ve tried two very different approaches to that problem. One worked and one was a miserable failure. What this argument about the so-called non-affordability of defined benefit plans really is, is an argument for the system that failed, and ditching the one that worked. That is close to being insane. At best, it is an argument for social instability.
Drucker should be required reading by every high school student, and anyone getting a business major should have to pass a test on its contents.
Oh, and by the way, the current owners of The Boeing Company are the public at large and the communities, customers, and suppliers which give it value. If you want, I can lay that out in T accounts using algebraic notation for the non-accounting elements.
“.. current owners of The Boeing Company are the public at large and the communities, customers, and suppliers which give it value ..”
my noob view:
only thing that matters is “Who has real effective control” !
Quite often that is not reflected in (theoretical) models.
Right now, the International Association of Machinists, District 751 has seized a very great deal of control. They have this board of unqualified frat boys and thieves by their private parts. The only question is whether they can hold out long enough for Congress to do what needs to be done, which is to seize the company, which clearly, this group of clowns is not willing to admit on their own as being the thing they need to facilitate and then act upon properly, like the board of GM did.
More like 20-30+ years. 10 to 20 might be ok.
Chapter 11 bankruptcy can sometimes get a company out of its pension commitments. Pension plans are usually only partially funded, and the slack gets picked up by federal insurance (PBGC) up to a statutory maximum.
It’s not automatic, but if there’s one thing Jack Welch’s disciples can do well, it’s bankruptcies.
Boeing Reports Preliminary Third Quarter Results
“Commercial Airplanes expects to recognize pre-tax earnings charges of $3.0 billion on the 777X and 767 programs. The company now anticipates first delivery of the 777-9 in 2026 and the 777-8 freighter in 2028, resulting in a pre-tax earnings charge of $2.6 billion”
“Beginning in 2027, the company will solely produce 767-2C aircraft in support of the KC-46A Tanker program”
https://boeing.mediaroom.com/2024-10-11-Boeing-Reports-Preliminary-Third-Quarter-Results
The 767 decision is interesting. They still have to continue making it for the KCC-46A. Or is there more to it and they just are not getting any more orders for the 767F?
Seems like they are using the strike as cover to do the other cuts. I don’t see too many people as the issue as its management failures to execute.
Ortberg focusing on BDS when all ops have issues?
Clearly I was wrong on a new era for Boeing. Still have no idea of why Ortberg came out of retirement. He may not be as bad as Calhoun etc but nothing I am seeing is righting the company.
Trans
Ortberg is viewing the challenges thru a new lens (his), he has no legacy attachments to personnel and programs. It might come down what will make money in the next few years. That said, Boeing commercial could come down to two trick pony for the rest of decade (e.g. 737 and 787)
European rules kicking in later in this decade forbid even the manufacture of planes with the emissions of the 767. The US has signed in to the agreement, but would allow US freight companies to buy new 767F’s and just not fly them to Europe.
But by then, the 777F should be online and it doesn’t make sense for Boeing to make a “global” 777F and a “domestic” 767F.
We also may see a 777F tanker by then. There are a stunning number of KC-135’s to be replaced, so there’s a Big Deal that’s coming sooner rather than later.
@goforride
There are also P2F conversions to be had on the B767. That airframe is getting retired at a quick clip
They arent ‘european rules’, they are global ‘rules’ from ICAO which the FAA has adopted as you mention
The rules relate to CO2 emissions per passenger , which is met by increasing fuel efficiency and were tighter for widebodys than single aisle and less again for RJ. As the only in production widebody without a modern engine the 767F was time limited
Boeing got a legislative waiver from congress for a 5 year extension after 2027 but of course could only fly domestically including to US territories.
Hahaha haha
Where does it mention number of passengers??
“Europe’s aviation regulatory authority EASA has for the first time certified an aircraft – the Airbus A330-900 – to ICAO’s new CO2 emissions standard, which was adopted by the ICAO Council in 2017 and implemented into the EASA Basic Regulation in July 2018. The certification process provides an assessment of an aircraft’s fuel efficiency and therefore of the CO2 it emits while in operation. Under a complex formula, the fuel efficiency in cruise flight is certified, which is *influenced by the engines as well as the aircraft’s aerodynamic characteristics and weight*.”
The size and weight of the plane is a metric for ‘per passenger’, other wise its far too complex formula for average people to understand.
ICAO even releases a method of calculation the CO2 per passenger
How many passengers to carry in an aircraft is a decision by the airline, not the airframer. An A321 can carry up to 244 passengers but most airline have opted for far less. How does the calculation work?
A lot of those laid off will never come back.
So good luck on any production ramp ups.
Seeing Ortberg dropping the dumb furlough strategy that was solely designed to intimidate the IAM is fascinating.
We now know all of the offers to the IAM were cynically predicated on this announcement.
What remains is just how much of it is bogus. There’s no particular reason to trust Ortberg.
@Steve
I wonder if the offer of making the next airplane in Washington is still being offered
Boeing’s offer was withdrawn IAM starting a zero….IAM has nothing to show after a month of “negotiations”. Except IAM members, no paycheck, no unemployment payments, no healthcare, no Boeing offer on the table and no contract
I can have a sarcastic sense of humor. The premise that any offer of a new airplane launching in the near term is even more ridiculous now.
and Airbus keeps gaining market share
It never was offered. The contract was 4 year. Boeing stated publicly several times no new airplane until after 2030.
It was all gaslighting.
Time to right size for profitable product lines
Need to wonder what will happen to Starliner?
“What remains is just how much of it is bogus. There’s no particular reason to trust Ortberg.”
or
What remains is just how much of it is bogus. There’s no particular reason to trust Jon Holden. NLRB ruling will be the telltale on what is really bogus
The contract will be long settled before the NLRB ever gets to it.
These ULP complaints happen from both sides every strike, and they are always dropped when the strike ends.
1. From Reuters
‘ “We reset our workforce levels to align with our financial reality and to a more focused set of priorities. Over the coming months, we are planning to reduce the size of our total workforce by roughly 10 percent. These reductions will include executives, managers and employees,” Ortberg’s message said.’
‘The company said in light of the job cuts it would end a furlough program for salaried employees announced in September.’
2. Will Pope stay with BA for another twelve months?
3. With a preliminary result announcement, BA is cleared to raise fund from the market?
4. The strike is over in a week?
Time to move production to Wichita, Seattle is no longer the area it once was. By moving it to Wichita you have access to many Aerospace workers that will appreciate the offer already given.
“Many American workers”
And how many of those will have any aerospace experience down there in SC?
Will BA resort again to ex-KFC employees?
Has emotion overwhelmed reasoning?
Present how it works on a spreadsheet, show us the rate of return and how many years to cover the investments. Thanks.
Also risk factors and scenario analysis etc.
NLRB filing response
“The respondent must file an answer to the complaint within 14 days of its receipt, setting forth a statement of its defense.”
Regarding the 767:
– the 767F has a backlog of 29 orders, 12 from Fedex and 17 from UPS; Fedex has options for 43 more 767Fs, as it canceled 7 options earlier this year. If Fedex cancels more options, 767F production could actually terminate before the end of 2027.
– The 767F is not compliant with the current wire separation regulation. In 2012, the FAA granted Boeing a temporary 3-year exemption that was later extended to 2019 and then 2027. To continue producing the 767F after 2027 without having to make it compliant with wire separation rules, Boeing would have to convince the FAA to further extend this “temporary” exemption.
Since 2005, Boeing has delivered a total of 393 767s (including KC-46s), an average of 1.6 per month.
In its latest annual reports, Boeing began writing about the 767 program:
“The 767 assembly line includes the commercial program and a derivative to support the KC-46A Tanker program. The commercial program has near break-even gross margins.”
So, it would seem that having extended the production of the 767 so much at such low production rates has ended up eroding the profits that Boeing had certainly accumulated in the first decades of 767 production.
Also considering that Boeing wrote off over $7bn for the KC-46, one has to wonder how wise it was to insist so much on the 767. Perhaps the decision to end the 767 program should have come many years ago.
What does that mean for the future tanker purchase call?
why not have the US government pay for the upfront cost of designing the new wide body with a tanker order and use that platform for the new commercial wide body aircraft (e.g. back to the future 747 aircraft)
It won’t be considered a subsidy since its a “military” aircraft first
Is Sierra (or others) interested? Can BCA sell the tooling and assembly line to Sierra and BDS ‘partner” with Sierra in the future?
The contract will be long settled before the NLRB ever gets to it.
These ULP complaints happen from both sides every strike, and they are always dropped when the strike ends.
even when the IAM is found to have NLRB unlawful surfacing bargaining tactics?
Its a bit surprising IAM national lawyers didn’t have better guardrails for the President District 751 on “negotiating strategies” But something you “can’t fix stupid” when he said “not good enough” with no real counteroffer presented
When a new CEO arrives in difficult times, it is usual to clean the augian stables, and announce big write off all over the place.
Is it fully done by M.ORTBERG?
We shall see when detailed accounts will be available, in particular how the 12Bn deffered production costs is dealt with.
A several $bn write off has been obviously needed for a long time
Not easy decisions, as going too far means junk status for the (huge) debt, and possibly being booted out of the Dow jones (GE was booted out some time ago)
Issuing new shares at a decent price will be pretty difficult out of the Dow, and junk status will have a huge impact on future interest costs.
as mentioned in another posting
““You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.”
― Rahm Emanuel”
“…GAAP loss per share of ($9.97),…”
BA has 613 million shares outstanding, so a loss-per-share of $9.97 corresponds to a total loss is $6.11B.
On revenue of $17.8B, that represents a 34.3% loss!
Wall Street is really going to love this news when pre-market trading opens up on Sunday night.
Monday night. Bonus points for announcing this on a holiday weekend.
Indeed.
However, Boeing is also traded on the Xetra stock exchange in Frankfurt…and that will be opening on Monday morning, with pre-trading hours beforehand.
If I was an A330 bod I’d be rubbing my hands now.
I hope the 777X actually does manage ’26 EIS. Surely Ortberg’s job 1 for externals has to be to make only believable promises and then be seen to keep them all (bar genuine out of the blue stuff).
Dumb to dumber.
When will we learn the reaction of TC/Emirates? Before or after Oct 23? May depends on how much compensation is doled out.
“Boeing will take at least five years to overcome its current crisis and the troubled US plane maker should foot the bill for Emirates’ multibillion-dollar programme to retrofit its 777 wide-body jets amid delays in the development of the newer 777X version, Emirates president Tim Clark has said”
Found this interesting tidbit from a July report:
‘In a visit to Boeing’s Renton factory in Seattle last week, Mr Clark said he was “pleased to see that Boeing’s management had moved their offices into the factories, so they’re actually looking at their planes rather than sitting in Chicago”.’
https://www.thenationalnews.com/business/aviation/2024/07/22/emirates-boss-tim-clark-fears-boeing-777x-wont-hit-the-skies-until-2026/
Which member of BA’s mgmt team had moved from Chicago to Renton? Is Clark referring to Kelly? Who else?
Bloomberg:
‘Assuming an average annual salary of $100,000, the job cuts could provide savings of about $1.7 billion in earnings before interest and taxes, Jefferies analyst Sheila Kahyaoglu said in a Friday note to clients. They’re also a possible warning shot for other aerospace manufacturers.
“The workforce reductions are what we have seen across smaller suppliers earlier this week, signaling more to come across” the industry, she said. […]
In response to Boeing’s announcement, the International Association of Machinists and Aerospace Workers pledged to continue its industrial action. “The path to resolve this strike begins at the bargaining table. An unwillingness to stay at the table only prolongs the strike,” it said in a statement. “CEO Ortberg has an opportunity to do things differently instead of the same old tired labor relations threats.” […]
Ortberg said the company would not proceed with the next cycle of furloughs as part of its plan to cut jobs. The current round of unpaid leave is scheduled to end in late October.’
https://www.bnnbloomberg.ca/business/2024/10/11/boeing-to-cut-workforce-by-10-as-strike-eats-into-reserves/
“job cuts could provide savings of about $1.7 billion in earnings before interest and taxes”
This will be countered by the extra outlay that the hire of fresh workforce in the future will cause.
It’s possible to reach 10 % salary reducting must faster without losing productive workers: start firing right below Ortberg and continue down the ladder until 10 % are reached. It’ll hit most of the people accountable for Boeing’s current state.
Scott, thanks for pushing out late breaking news. A slight inaccuracy is that they can basically lay off union workers as well. Nobody is truly safe – except for the CEO, who must be fired by the board, I believe.
I just keep thinking of the huge payouts to the last 5 terrible CEOs that led BA to this point. Company is hemorrhaging money and their debt is heading for junk bond status.
From Reuters report of Boeing’s order and delivery in September:
By my calculation, there’s an ASC 606 adjustment of (151) in 2024.
Gross order thru Sept 30: 315
Cancellations & conversions: (43) [note: my calculation]
___________________
Net order 272
ASC 606 (151) [my calculation]
____________________
Net order after accounting adj: 121 (as reported by Reuters)
OK, so let’s talk about how to fix Boeing, which is a conversation Scott started back in August. First, in order to get out of a hole, one has to stop digging it deeper. Currently, Boeing has a cadre of managers, many of whom are nice and good people, who have been trained to perform incompetently. That is not their fault. Rather than replace them, the right thing to do is to retain them properly.
The first thing they need to understand that rework costs many times more than doing a job right the first time, albeit at at must slower pace. For at least the past two decades, not a single Boeing production line has produced a product that did not require months of rework. Step one is to admit that and stop pretending that any of the lines have a production rate. They don’t. The rate of the lines is zero. All finished product comes from rework activities post production. Even then, it is all suspect because of the awful working conditions. Aircraft and other sensitive flying equipment should be produce on well organized lines in the factories that were built for that purpose.
So even once Congress does the right thing and takes control, they need to put someone in charge who will authorize assembly mechanics to stop the line every time something is passed to them that is not in the condition that is specified for acceptance.
Next, they have to outlaw the game of telephone for quality feedback on the lines. If a quality problem is found downstream in an assembly process, the line should not only stop, but the individual or team that has spotted the problem should hike up the line to where the problem occurred. and explain it to the team there. Then the team receiving that input should give the team providing that feedback a reward. Feedback must not flow up into a management chain and then back down. That’s simply ineffective stupidity. Also, those providing feedback must be rewarded for doing so. A very good reward would be the presentation of a Boeing totem flag or icon of some sort that they can take back to their workstation and display. Such awards should be encouraged to be passed on to upstream teams that are doing an exceptionally good job. Make it fun. Have some noisemakers or something to announce the passing of an award.
The motto has to be the same as it was back before the merger and takeover by the GE thieves. “We make the very best flying equipment we possibly can, and then charge a fair price for it – period.” Quality must not be compromised at any point in any process. Good enough is never good enough.
Next, the engineers need some competent leadership, and red teams must be inserted at every step of the design processes. A single PDR is not enough. Up the number of those to at least three. And demand that anything that is advanced to CDR actually be ready for use in a finished product. This crap nonsense of boasting that things will work that haven’t been properly tested has to stop. And when something is a piece of crap that doesn’t work like that Remote Visioning system on the tanker, or to robotic rivet head alignment system that was on the 777 FAUB, that sort of thing needs to be stopped way up stream in an early PDR. The lying about what works and is mature has to stop.
OK, that’s the easy stuff. The hard part is recapitalizing the company. And here I am NOT talking about money, although an enormous amount of that will be required – way more than the capital markets can provide. The human capital needs to be rebuilt. That will require committed programs that excite the very best people in their fields and draw them to the company. They will need top salaries and benefits, but that’s the easy part. The most critical thing that will be needed to draw them in are worthy programs.
The WTO rules make this one a bit challenging, but the easy way around that is for Congress to buy something. There are two obvious projects. One is a repeat of the 707 program for a new airframe for the military that can be easily modified as a commercial airplane. That one is easy – redo the 787 program as a tanker/transport, but this time actually execute the 20xx program plan.
The other obvious opportunity is a defense project that deals with systems architecture. I don’t think I should describe that one here, since initially it should probably be a classified program, but it would have cascading benefits to every other Boeing product line.
The cost to do those two programs will probably be way more than $200 billion. In my book, that would be cheap given the products they would produce and the healthy company that would be created in the process.
Up front:
I don’t think that in the peaks of management any body is really tasked/interested in saving the company.
Established target is ( and will stay that way ) gutting the company further. There is no turning back. MiB: greed cloaked in a company suit ( as in giant cockroach in a Larry suit 🙂
Then:
” That will require committed programs that excite the very best people in their fields and draw them to the company. They will need top salaries and benefits, but that’s the easy part. The most critical thing that will be needed to draw them in are worthy programs.”
You need to find people that are intellectually satisfied with their job.
Money is a side issue.
( usually it starts with a low to reasonable payed activity that gets increased esteem, than payment rises, attracting people that just look on money, quality goes down … company belly up ( see NASA ).
I agree completely with your comment, which is why the only way to save the company is for Congress to both seize it, and tear up the existing Delaware charter.
Saving it will require a new charter that enforced governance that is legally required to serve the best interests of the country, the company, the company’s people, customers, and suppliers. The Delaware charter practically encourages what we have been seeing, which is why that approach to chartering corporations is so popular with international drug cartels and money launderers. It is also why Interpol lists it as one of their biggest obstacles in fighting international crime.
Simply put, the State of Delaware is in the business of selling protection to would be corporate thieves. Nevada has basically gone down the same path and is competing with Delaware for criminal cover-up business.
The task the IAM faces is actually quite similar to what the employees of Toyota were facing in 1949. On the surface, the 1949 Toyota strike was about the process for laying off roughly 25% of the company. But what they really were about was putting and end to a kind of corporate medieval feudalism. Viewed that way, the challenge the IAM faces is identical.
As Drucker pointed out in 1946, the whole concept of the American corporation had become something totally unanticipated by the constitution, and demands a reconsideration of the way we go about creating and governing these institutions. His message to Alfred P. Sloan, who sponsored his work, and to the board of GM, and the public at large was not something Sloan wanted to hear. And yet, he and Drucker remained friends, and Sloan personally endowed a program at MIT to research the topic and train modern enlightened business leaders.
The American corporation is a critically important core element of the way we organize our society. The structure and processes we have in place simply are not working the way we need them to, and this has been well understood for the past 78 years. It’s about time we do something about it. Boeing’s mess presents us with a great opportunity to do just that. Let’s take this lemon and make some lemonade.
RTF, that sounds too “socialist” to come truth. Apart from that, it might trigger the EC to also pump tens of billions into Aerospace..
just a note “robotic rivet head alignment system that was on the 777 FAUB”
All the bidders but Kuka (least experienced of the group) told Boeing Everett you can’t align the heads for drill and upset without a mechanical connection between the two heads/robots.
Boeing just makes up their mind and ignore the experts in the field….self inflicted wounds
Sorta. This is but one of many examples of the Jurassic Park Syndrome that have occurred since John Tracy and his successors took over as corporate heads of engineering. Lower level engineers, and even senior ones without a good deal of well tempered experience routinely fall into this trap. Someone will ask if something can be done, and without thinking it through, they start trying to see if they can. Pretty soon a vague idea becomes a committed project without adequate checks. The preliminary design review (PDR) and red team reviews are designed to catch these mistakes before too much time and effort are spend on them. But, the folks doing the reviewing have to be qualified critics, and the review has to be both thorough enough and early enough. Because so much senior talent was shoved out the door, staffing those reviews adequately became problematic. That’s why I think they need to triple the effort, and maybe even bring in some outside help.
I’ve heard quite a few retired senior technical people say they would go back for free to serve as consultants and mentors to try and put the place back together. They wouldn’t have to do much more than buy us lunch.
Oh, and they need to ban the use of the term “lean.” It was a horrible choice of terms by Womack, Roos, and Jones. Yes it describes the appearance of things when a well coordinated production system is flowing properly. Buffer stocks start to disappear and factories become less cluttered, but way too many people use the term as a verb and talk about leaning things out. That’s just wrongheaded. Choreograph would have been a much better choice of words. Neither Taiichi Ono nor Masaaki Imai used the word lean in their books. Also, neither of them breathed a word about the Toyota cultural advantage that began with the resolution of their 1949 strike when the employees demanded and got the entire top leadership of the company replaced. Not even Imai fully explained what was meant by the term Kaizen in the context of that strike and its resolution. It is telling that the Kaizen banners that went up in their factories after the strike were the two Kanji characters painted right on top of the rising sun flag. Their workers had simply had enough of the old Japanese top down dictatorial leadership style that had destroyed their country and their company. Good change meant a whole new way of doing things that was dramatically more collaborative.
what actually frustrated the FAUB (riveter?) project?
FAUB was discontinued whith never a realistic explanation as to the why and how ..
what I found:
https://www.spokesman.com/stories/2016/sep/04/boeings-struggle-with-777-assembly-robots-adds-to-/
usual Boeing wishi washi “in depth” explanation. Mr Gates can only work on tangibles.
According to a recent piece by D Gates:
Even after they gave up FAUB, workers at Everett continue the struggle of assembling the fuselage from pieces come from JP.
“Meanwhile, at the start of the 777 assembly process, relatively inexperienced new hires are working in a separate building putting together the 777 fuselages and running two or three days behind schedule on each aircraft. […]
This work of stitching together the fuselage has been problematic since 2016 when Boeing introduced a new way of holding the panels in place.
Engineers had designed that new assembly system to use riveting robots that ultimately proved incapable of the necessary precision.
Boeing finally gave up and abandoned the robots in 2019. Ever since, mechanics have built the fuselages by hand.
Without the fixtures that held the panels in place in the old way of building the 777, however, the panels are very difficult for mechanics to align properly.
So for every fuselage built, engineers use lasers to measure the misalignments between skin panels and the force needed to make them flush with one another, feeding the data to stress engineers.
This painstaking process has added two to three days to what is supposed to be a five-day build, the veteran mechanic said.”
https://www.seattletimes.com/business/as-strike-looms-boeing-pushes-777-jets-through-chaotic-production-in-everett/
So it is not the robotic riveter but the process/tools that present a NOT well aligned work object to the riveter.
Standard American cop out: KUKA riveter is shit. Case closed.
Is the 777F also effected by the new emission rules or just the 767?
Boeing might not be able to ship a 777-8F right after 31.12.2027.
Yes:
https://www.google.com/search?q=777F+production+emmisions+rule
elsewhere:
“Meanwhile, deliveries of the 777F have also been slow to get going this year. Boeing has declined to comment on the reasons for the slowdown in production of the model but reports have surfaced about possible shortages of the twinjet’s GE Aerospace GE90 turbofans.”
Why are GE90 engines in short supply?
Did GE “miscalculate” the swap over from GE90 to GE9X?
@Uwe: Supply chain issues going into GE are a factor in GE90 deliveries to Boeing.
color me shocked to learn that Ortberg is yet another Neutron Jack Disciple who’s answer to everything is “fire 10%” and “shareholder value”
not a surprise really considering who hired him and is pulling his strings.
this is a multigenerational McDonnell leadership failure. first they bought and strangled douglas, now they’ve bought and strangled Boeing.
If done right, five years from now a very different Boeing that is streamlined and profitable Thanks to the the IAM strike! Do you currently need 33k IAM workers for a couple dozen aircraft a month? (Two Airbus A320 FAL and One A220 FAL for about total of 16 a month rate and Airbus Mobile can do it with 3k workers)
Boeing Seattle is so bloated with production workers, a total reset on how the 737 is produced is needed Time to give up on the 737 moving line and go to stations What is the right number? Maybe half?
As for Everett, after the 777x cancelation, by 2028 do you really need 1 million sq. ft. for 3-4 aircraft a month production (couple 767 tankers and a couple 777 freighters)
“You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.”
― Rahm Emanuel
https://www.madeinalabama.com/2024/07/airbus-marks-milestones-in-project-to-build-new-a320-assembly-line-in-mobile/
https://www.assemblymag.com/articles/98090-airbus-ramps-up-production-and-adds-1-000-workers-at-mobile-facility#:~:text=Governor%20Ivey%20said%20adding%201%2C000,the%20in%2Ddemand%20passenger%20jet.