Tag: Airbus

OM in the News: Debugging the New Airbus A350 Jet

The A350's curved wingtips reduce drag and increase fuel efficiency
The A350’s curved wingtips reduce drag and increase fuel efficiency

“A million parts, flying in tight formation,” is how BusinessWeek (Feb.17-23, 2014) describes the debugging of Airbus’ latest new plane, the A350. The European company desperately wants to avoid the kinds of problems that have plagued rival Boeing’s 787 Dreamliner. After several production fiascoes, the 787 endured further problems when its lithium-ion battery packs burst into flame. For the A350 to be economically viable, says Airbus, “the airlines need an operational reliability above 99 percent.” That means that no more than one flight out of every 100 is delayed by more than 15 minutes because of technical reasons.

To ferret out the flaws in an airplane, Airbus technicians have come to depend on sophisticated computer systems. These, too, can introduce problems. Like the A350, the A380 superjumbo was designed entirely on computers, but engineers working in the company’s German and French operations hadn’t used the same versions of the design software. When assembly line workers started installing bundles of wires, they discovered that the German software had miscalculated the amount of wiring needed for the fuselage, which had been designed on French software. Miles of wiring turned out to be too short and had to be torn out from half-completed airframes and replaced.  In 2011 and 2012, cracks were found within the A380’s wings, prompting authorities to order the entire fleet to undergo detailed inspection of the structural integrity of the plane. To minimize the chances of that occurring in the A350, Airbus is putting the airframe sections through more than 80,000 simulated takeoff and landing cycles.

But much of the work is done by suppliers, not by Airbus itself. While the company might look to the outside world like an aircraft manufacturer, it’s more of an integrator: It creates the overall plan, then outsources the design and manufacture of the parts, which are then fitted together. “We have 7,000 engineers working on the A350,” says Airbus, “and at least half of them are not Airbus employees.”

Classroom discussion questions:

1. Why was development of this new plane so difficult?

2. Why did Airbus decide to make a new plane, as opposed to migrating from an older model such as the A330 (see Chapter 5)?

OM in the News: Social Media on the Factory Floor

social mediaAccording to a recent survey by the Manufacturing Leadership Council, 13% of manufacturing executives plan to digitize their design/production processes, and social media tools represent an important component. By 2023, that percentage will rise to more than half. “What’s the goal of increased social media-based interactions, ” asks Cisco News Network? Manufacturers want to tap into valuable customer opinions, preferences and desires. They also want to encourage collaborations between employees, partners and suppliers in order to create better end products.

For example, Frito Lay offers one illustration of a manufacturer going directly to its core constituency for critical product feedback. The company collaborated with customers via social media to define and select the most appealing flavor ideas. Such combinations of crowdsourcing—a form of distributive problem-solving—and taste buds represents a novel, and completely different, approach to the use of social media in manufacturing.

At the other end of the spectrum, a range of more industrial companies are beginning to employ social media-driven, collaborative tools for their workforce.  Airbus offers partners and dealers a range of interactive procurement portals. These platform-based resources enable suppliers to describe their capabilities to Airbus buyers in addition to exchanging requirements and proposals online during the bid process.

Such social media trends extend even further. Industrial Mold and Machine in Twinsburg, Ohio makes custom molds for plastic bottle manufacturers. The company empowers its workers by providing an iPad-accessible Social Media platform for production-line quality control, design access and problem-solving.

It appears that more and more manufacturers will use collaborative Social Media technology to advance their operations through multiple, diverse collaborations.

Discussion questions:

1. Do you think social media can add value to the manufacturing process?

2. What is crowdsourcing?

OM in the News: Alabama Opens Its Wallet to Airbus

airbus alabamaFollowing a year of secret negotiations, Airbus broke ground this month in Mobile, Alabama, for its new plant that will produce the popular A320 jet.  Businessweek (April 22-28, 2013) provides the details of the final location decision and incentives: After looking at “just about every site in the US that had industrial capacity,” Airbus promised to bring an estimated $600 million in investment and 4,000 jobs to the state, no fewer than 1,000 permanent. Alabama, for its part, offered incentives totaling $158 million. They include $82 million in funds for capital investments in the plant and other expenses; and $51.9 million for a 40,000-sq.-ft. on-site training center where workers will be prepared, at state expense, for their new jobs. Faculty from the aerospace departments of colleges in the state will provide the training. The deal also includes tax breaks on manufacturing equipment and a state corporate income tax credit.

The State’s governor says Alabama taxpayers will recoup the investment more than 2-fold within 3 years.

Settling in Alabama, a right-to-work state, will mean lower labor costs for Airbus since plant employees won’t be unionized. Yet opening up shop in Alabama isn’t just about saving Airbus money. The facility won’t make entire airplanes—it will assemble pieces made overseas. Partially completed sections, from cockpit to tail, will be transported by barge from the company’s European factories to Alabama, where they’ll be put together. The cost of transporting the pieces means that even with lower labor costs, planes completed in the U.S. will cost more to manufacture than those made start to finish in Europe.

But having a presence in the U.S. is worth the cost and complications if it helps the company to sell more planes. “Being close to the customer always works—in any industry,” says one French industry analyst. “We believe, similar to other industries, including the auto industry, that if we create an industrial presence in the U.S. our market share will go up.”

Discussion questions:

1. Why did Airbus open a factory outside of Europe?

2. Were the incentives provided unusual or unreasonable?

OM in the News: Outsourcing Leads to Delays For The Airbus 350

Just as aggressive outsourcing  a decade ago on its 787 Dreamliner caused Boeing to stumble, Airbus now faces exactly the same issues as it prepares its direct competitor, the A350. The Wall Street Journal (July 11, 2012)  writes that both companies have lurched through a string of expensive and embarrassing crises while developing their new airplanes. To recover, the competitors are rethinking how they build jetliners. What is emerging is a middle path between outsourcing, which has reshaped the aeronautical industry over recent years, and the highly centralized production systems that preceded it.  In a major retreat, Boeing  has since bought up suppliers, brought work back in-house and integrated more closely with its remaining contractors. Manufacturing problems on the 787 have left Boeing with more than 40 almost-completed Dreamliners awaiting fixes. Customers are getting their planes 4 years late.  For a second, larger version of the Dreamliner, Boeing opted to design many outsourced components itself.

Airbus found internal coordination was equally daunting. The A350 team pressed  plants  to agree on common standards and buy identical equipment. Some  “partners”  balked at spending hundreds of thousands of dollars for the digital “tool set” of software to access A350 blueprints. By 2010, A350 blueprints were running late and the project was delayed 6 months. Last spring, bad news again surfaced. Lower-tier contractors were struggling to deliver parts on time.  Preparations to manufacture composite parts took longer than the setup for metal parts had. As parts arrived late, delays rippled upstream. Large sections of the first test airplanes weren’t ready for assembly. Airbus could rush the unfinished fuselage parts together and appear on schedule (as Boeing had done), even though it would be harder to complete tasks later, out of sequence. It chose to delay yet another 6 months.

Airbus now monitors 450 suppliers  world-wide. “We don’t know everything, but we know all about the risky ones,” says the A350 VP.

Discussion questions:

1. What are the advantages and disadvantages of outsourcing in this industry?

2. What is the impact of a plane delayed by 2-3 years?

OM in the News: Airbus Over Alabama

When you are teaching global location analysis in Chapter 8, what better way to start a discussion than Airbus’ decision this week to open a new $600 million facility in Mobile, Alabama. The Wall Street Journal (July 3, 2012) reports that the European jet maker’s US facility will  turn out 40- 50 A320 jetliners yearly by 2018, with about 1,000 full-time employees. (State officials say they expect each job to produce at least 4 more in the local economy). Airbus now assembles A320s at plants in Germany, France and China.

Even without the global politics of airline manufacturing, the economic incentives for Airbus to build more plants in France are difficult. With a headcount of 1,000, the new plant  surpasses France’s various thresholds for taking on a welter of worker “protections” and the burden of union bureaucracies. But it’s worth noting that Airbus didn’t just pick the U.S. over France, Germany, or China. It chose Alabama over the rest of the U.S.  Not least, it’s that Alabama is one of 23 right-to-work states, which means workers are free to decide if they want to join a union. That not only makes that labor market markedly freer than France, but also struggling states across the U.S.. Airbus, of course, isn’t the first foreign enterprise to notice Alabama. The state also hosts Mercedes, Toyota, and other auto production facilities.

Alabama is also offering Airbus over $100 million in tax breaks and other incentives such as job training and infrastructure improvements.  Jets are sold worldwide in dollars and since  Airbus’ planes are manufactured with most costs in Euros, US manufacturing will help hedge against currency gyrations. ( Here is a 3 minute WSJ video on the subject).

Discussion questions:

1. Why is Airbus starting production in the US?

2. How was Alabama able to lure the company?