By Scott Hamilton
Feb 19, 2020, © Leeham News: Boeing says it is helping some suppliers with liquidity while the 737 MAX is grounded.
Other suppliers complain that Boeing is dunning them for alleged bad workmanship, squeezing cash. Still others say Boeing proposes not paying them for MAX parts until every regulator in the world recertifies the airplane. There are some 80 regulators who have to approve restoring the MAX to service.
And one Tier 1 supplier, Leonardo, sued Boeing Dec. 23 for withholding $20m in payments for 767 slats. Boeing alleges faulty workmanship. Leonardo says Boeing won’t provide documentation of this claim.
(US District Court for Western Washington, 2:19-cv-02082-JLR.)
Boeing’s tactic of withholding payments for claims against future invoicing was echoed by some of the suppliers attending the annual conference of Pacific Northwest Aerospace Alliance Feb. 4-6. Some complained Boeing is using them for its “bank.” It’s a complaint of long-standing even if for different reasons.
Feb. 17, 2020, © Leeham News: Boeing executives said that while the 737 MAX production is suspended, efficiencies are being implemented on the assembly lines.
At a Cowen & Co. conference last week, EVP and CFO Greg Smith outlined some of the efficiencies that are being put in place.
But another area that could be improved, not addressed by Smith, while the lines are shut down is supply chain tracking. This has huge ramifications for cost savings and streamlining. It’s part of the business plan for the next new airplane, whatever this is.
This process is called ERP, or Enterprise Resource Planning. Boeing is transitioning to a more advanced method, called SAP, or Systems Applications Projects.
Boeing Australia and Boeing Global Services have made the transition. But Boeing Commercial Airplanes’ transition is stalled due to middle management inertia, said several people who attended the Pacific Northwest Aerospace Alliance annual conference Feb. 4-6.
Boeing should use the production halt and slow ramp up to implement SAP, they said.
Feb. 10, 2020, © Leeham News: The was plenty of angst among suppliers last week at the annual Pacific Northwest Aerospace Alliance conference.
Worries about the production shutdown, its duration and lack of communication from Boeing prevailed.
But there were in fact rays of sunshine beginning to break through the dark clouds of the last year.
Some suppliers—not many—reported that they’ve been told to begin shipping parts and components as early as March 1.
This gives hope that production will resume in April.
To be sure, the good news is mixed with a lot of bad news for suppliers. Some laid off workers and more layoffs are yet to come.
By Scott Hamilton
Feb. 6, 2020, © Leeham News: Boeing will decide to proceed with the launch of the New Midmarket Aircraft (NMA).
These are the two popular options discussed yesterday at the annual conference of the Pacific Northwest Aerospace Alliance in Lynnwood (WA).
Aerospace analyst Ken Herbert of Canaccord Genuity believes Boeing will launch the NMA.
Analyst Rob Epstein of Bank of America Merrill Lynch believes Boeing will go with the Future Small Airplane (FSA), a fresh design that is similar in size to the 757-200 and 757-300.
Consultants Kevin Michaels of Aerodynamic Advisory and Michel Merluzeau of AIR voted for the NMA. Consultant Richard Aboulafia of The Teal Group voted for the FSA.
By Scott Hamilton
Feb. 5, 2020, © Leeham News: Boeing is headed for a 30% market share unless it invests in a new airplane, and soon.
Aboulafia, who has been following Boeing for 30 years, implored the new CEO, David Calhoun, to redirect billions of dollars in shareholder dividends toward research and development instead.
Calhoun recently suspended 2 ½ year focus on the New Midmarket Aircraft to conduct a clean-sheet review of the next new airplane.
This has been widely interpreted as a move to kill the NMA. In reality, LNA understands, this is more about reassessing the market and what the airplane should ultimately be.
By Scott Hamilton
Feb. 5, 2020, © Leeham News: “Who’s going to fail?”
The question, of course, related to the small- and medium-sized suppliers caught up in the grounding of the Boeing 737 MAX.
By Scott Hamilton
Feb. 5, 2020, © Leeham News, Lynnwood (WA): Suppliers attending the annual conference of the Pacific Northwest Aerospace Alliance say they gained some clarity from Boeing last week about future production plans for the 737 MAX.
But they still face a multi-year challenge that puts strain on everyone.
Boeing’s plans to return to the pre-grounding production rate of 52/mo will take until 2022. Plans to boost the rate won’t be fulfilled until 2023—four years later than planned.
Nov. 18, 2019, © Leeham News: Boeing suffered another setback last week, and this time it’s unrelated to the 737 MAX.
Boeing abandoned a robotic riveting/fastener system awkwardly called Fuselage Automatic Upright Build, or FAUB, intended to speed production.
Doing these processes manually is incredibly labor intensive. FAUB, when it works, dramatically cuts the time, improves the accuracy and reduces injuries.
FAUB is but one element of a production transformation Boeing has been doing for years under the code name Black Diamond.
Various automated and digital processes technologies have been in place on various 7-Series programs for years. FAUB, as The Seattle Times reported, was added to the 777 Classic line ab0ut six years ago. Part of the mission was to de-risk FAUB for application to the 777X.
Then, FAUB and the other processes were to converge for the first time on one Boeing Commercial Airplanes program with the New Midmarket Airplane, or NMA.
Boeing CEO Dennis Muilenburg said on several earnings calls that the NMA was as much about production as it was about a new airplane program (or words to this effect).
But Boeing couldn’t make FAUB work.
This is a good question and one for which there isn’t a clear answer.
FAUB, or a system very similar, is used by Airbus and other aerospace companies. It works for them, says Jessica Kinman, a senior manager for Dassault Systemes.
Kinman spoke Friday at a seminar sponsored by the Pacific Northwest Aerospace Alliance (PNAA) at North Seattle College about advanced manufacturing and other transformative production processes. This was just two days after the Boeing FAUB news broke.
Among the processes illustrated: robotics working on an upright fuselage. In other words, FAUB—although this was not identified as Boeing’s FAUB.
With the NMA business plan relying in part on Black Diamond processes, of which FAUB is an element, losing FAUB isn’t going to help an already-struggling business case.
But, then, NMA is on hold at Boeing until the MAX returns to service and cash flow resumes. So, from this perspective, losing FAUB at this time isn’t especially critical.
But longer term, Boeing needs to understand why it couldn’t make FAUB work whereas Airbus and others can.
It’s all part of the digital factory Dassault and its competitors consult on as aerospace (and other industries) transform in the future.
I’ll have more about this in a subsequent post.
By Bryan Corliss
June 11, 2019, © Leeham News: © — A deal by Mitsubishi Heavy Industries to acquire the CRJ program from Bombardier would make abundant sense for Mitsubishi Aircraft Corp – taking a struggling competitor off the board, acquiring hard-to-find human capital assets, and taking over an established North American American supplier network and a global product support system.
And recent unconfirmed reports that MITAC also is considering a North American final assembly site would make a lot of sense for a company that’s looking to cut production costs – and get closer to some likely key customers.
Yet while everyone in the industry is talking about the potential links between MITAC and the Montreal-based CRJ, nobody’s saying much about the company’s future in Moses Lake (WA). But overlooking Mitsubishi’s growth over the past two years there would be a mistake, because the company certainly is acting like it intends to plant roots there in the Eastern Washington farm country.
March 14, 2019, © Leeham News: Airbus’ effort to slash supply costs for A220 production is “an ongoing exercise at this point,” Joe Marcheschi, Airbus’ head of procurement in North America, told LNA in an interview last month.
“There are no specific, let’s say, achievements yet,” he said. “We are working closely with our supply chain.”
It takes time to squeeze cost out of the supply chain, he said. “We only took over July 1. That’s when we got full knowledge of the existing contracts.”
In January, Philippe Balducchi, head of the Airbus-led venture overseeing production, told journalists that the aerospace giant aims to realize “significant double-digit” percentage cost reduction. He indicated that most of the savings likely would come from the supply chain, according to news reports.
“Look, the airplane is absolutely fantastic—it just costs a lot of money,” Marcheschi said. “Now, we have to find a way to reduce the cost.”