airplane manufacturing – The OM Blog by Heizer, Render, & Munson

OM in the News: Life Cycle and the Last Boeing 747

Some legends really are true, writes The New York Times (Feb. 1, 2023), and indeed it is the case that two men on an Alaskan fishing trip in the mid-1960s struck a bargain that wound up starting the era of the jumbo jetliner, which democratized air travel.

The first 747 being rolled out of the factory in 1968

“If you build it, I’ll buy it,” said Juan Trippe, the head of Pan American World Airways.

“If you buy it, I’ll build it,” countered Bill Allen, the president of the Boeing.

Remarkably, barely three years after a handshake agreement, the Boeing 747 rolled out of a giant factory north of Seattle. It quickly made global air travel more affordable than it had ever been. This week, 53 years after the first Pan Am passenger flights between New York and London, the 1,574th — and last — Boeing 747 took to the skies.

The 747 was nearly three times the size and capacity of any jet airliner at the time, and with that distinctive double-decker bulge, it looked like none of its predecessors. All told, 747s have carried more than six billion passengers 60 billion nautical miles, the equivalent of 144,000 trips to the moon and back.

The last Boeing 747 leaves Everett, Wash.

The “Queen of the Skies” is passing out of fashion because nimbler, more energy efficient jetliners with just two engines have come along to do a better job of getting people from point to point internationally. In the mid-90s, Boeing introduced the two-engine 777, which was about as big as the 747, but more advanced and efficient. A decade later, Boeing’s main rival, Airbus, debuted the A380, which can carry more passengers than the 747. But Airbus struggled to sell the plane and ended production in 2019.

The 747 is composed of about 6 million parts produced all over the world. But the final work of assembling them into an airplane was completed at a factory in Everett, Washington. That plant, regarded as the world’s largest building by volume, was built for the 747 in the 1960s.

The final 747 went to Apex Logistics, a huge transport company, which still views it as an ideal choice because of its reliability and ability to fly huge amounts of goods.

Classroom discussion questions:

Figure 2.5 in your Heizer/Render/Munson text illustrates the life cycle of 10 products. Where do the current Boeing planes (737 Max, 747, 777, and 787) each fall?
Why was the 13 year life cycle of Airbus’ Superjumbo A380 so much briefer?

OM in the News: Boeing 737 Max Production Freeze Risks ‘Supply Chain Fallout’

With 13,500 workers, Spirit is the largest employer in Kansas’ biggest city. It gets half of its revenue from making fuselages for the 737.

Boeing just announced it would suspend production of its 737 MAX jetliner. This is an escalation of the crisis facing the giant plane maker that will ripple through the global aerospace industry. Boeing plans to halt production in January at its Seattle plant. The MAX was grounded globally in March following two fatal crashes of the aircraft within five months. Boeing employs around 12,000 workers at that 737 assembly plant. But production of the 737 MAX also supports thousands of jobs across a network of over 600 suppliers and hundreds of other smaller firms in the global MAX supply chain, reports Supply Management (Dec. 17, 2019).

Boeing had 4,545 MAX orders in backlog as of November and had been building the aircraft at a rate of 42 a month since April (down from 52/month). Many suppliers had said they favored Boeing maintaining some production, citing the risk of losing workers in a tight labor market during a halt. They said furloughing staff and stopping machinery would be harder than lowering production, and that restarting assembly lines would be costly.

One industry expert stated: “The decision to suspend production of the 737 Max is a largely unprecedented move and with the highest volume production of any large aircraft, the fallout across the global supply chain is going to be significant. The main problems for suppliers will be under-utilization of labor and machinery. Many suppliers have significant capital investment tied up in production capacity for the 737 Max program and they won’t be able to afford to keep this sitting idle for long.”

Classroom discussion questions:

Do a SWOT analysis on this decision.
Identify the top 5 suppliers that will be impacted.

OM in the News: Boeing Tries to Streamline its Supply Chain

“Boeing has begun a push to streamline its supply chain, reducing overlap between existing divisions and cutting layers of management and bureaucracy,” writes the Seattle Times (Nov. 10, 2017). The firm’s enormous global supply chain delivers more than a billion parts to its assembly plants every year, everything from buckets full of fasteners to entire wings for its 787 Dreamliner. The management of that global network is the focus of Boeing’s plan.

One tool it has turned to is increasing its use of modern information technology and digital analytics to track supplies and identify blockages in the pipeline. Boeing’s current supply chain has grown organically over many decades with multiple internal divisions all using separate tracking systems. The extended study, currently under way, will also help Boeing better determine which suppliers are working well and which are underperforming — so that it can allocate contracts accordingly, and in some cases take work in-house.

Boeing expects the first organizational pieces of the streamlining initiative — bringing together supplier management, raw-material management and elements of engine systems supply — to be in place by year end.

Classroom discussion questions:

Why is Boeing struggling to control its supply chain?
Why is a large percent of the supply chain outsourced, and why to many different countries (refer to the Global Profile that opens Chapter 2)?

OM in the News: Boeing and Airbus Change the “Make or Buy” Formula

A Boeing employee working on a vertical fin assembly for a 787 in Salt Lake City. Boeing will start to manufacture some parts for its planes to tap into the lucrative aircraft components market.

“The world’s largest plane makers are testing a seemingly simple formula to smooth production, cut costs and fatten profits: Make more of the parts that go into their jets themselves,” reports The Wall Street Journal (Sept. 8, 2017). Worried about getting squeezed by parts company consolidations (like United Technologies proposed $23 billion takeover of Rockwell), Boeing and Airbus have moved to protect themselves by building more of their parts in-house. This month, Boeing started construction of a new plant in England that will make the motors that help move a wing’s flaps. The wings for a revamped version of Boeing’s 777 jetliner also will be built at a new plant near Seattle rather bought from a supplier.

Airbus, meanwhile, is planning to build its own nacelles, the metal casings that house a plane’s engines. “We are constantly revisiting our ‘make or buy’ decisions,” said Airbus’ COO. “The opportunity ahead of us, in terms of transforming how we design and build, how we manufacture, is even greater than some of the product innovation that we’re going to bring to the table,” added Boeing’s CEO.

Boeing and Airbus are slated to deliver new planes worth more than $100 billion this year. Under pressure to deliver all those planes, they have pressed their suppliers for cost savings and deadline commitments. Parts represent more than half the value of each of those planes and are mostly made by dozens of suppliers such as United Technologies, Spirit AeroSystems, and GE. Profit margins for plane makers have averaged 9% over the past 2 years, compared with 14% for “tier one” suppliers such as United Technologies and Rockwell, which make finished parts directly. Margins come in at 17% for tier 2 suppliers, which provide smaller components for those parts.

Classroom discussion questions:

What are the plusses and minuses of changing from “buy” to “make?”
What other reasons are there for Boeing to make its own parts?

OM in the News: Global Sourcing Creates a Giant Backlog at Boeing and Airbus

“The aviation industry is bulging with orders for new planes,” writes The Wall Street Journal (Feb.24, 2017). If only it can get them made. There were so many almost-finished jetliners, missing their engines, piled up at an Airbus factory last May that executives joked they were in the glider business. It ceased to be funny when a frustrated Qatar Airways canceled orders for 4 planes that were months overdue.

Airbus and Boeing must build 30% more planes annually than they do now to meet existing orders, in one of the industry’s steepest production increases since World War II. The scale of the ramp-up is putting companies to the test.

Suppliers of seats, toilets and engine parts are stretched to the limit and sometimes falling short. In one of the worst holdups, Pratt & Whitney informed Airbus in September it would ship only 75% as many engines in 2016 as planned. P&W struggled with making the engine fan blades, which initially took twice as long as expected. French aviation-parts supplier Zodiac Aerospace was late delivering business-class seats, which cost about $100,000 each, for new Boeing 787s headed to American Airlines. Zodiac also was late delivering seats and lavatory doors to Airbus for its A350 long-range jet, at a time when Airbus was sharply raising production of that plane in 2015.

Both Boeing and Airbus are making adjustments to cope, retooling factories and tightening oversight of their globe-spanning supply lines. Airbus may dedicate more resources to “supporting and understanding proactively possible hiccups with suppliers in the future,” said its CEO.

Classroom discussion questions:

Why are the supply chains so hard to manage?
Can Airbus and Boeing bring more manufacturing in-house?

OM in the News: The Battle to Manufacture Planes More Efficiently

The interior of the A350. Airbus used a faster and more ergonomic way to build overhead bins, among other tweaks to ease production

Production mistakes at a giant Airbus factory a decade ago almost crippled the European plane maker, writes The Wall Street Journal (June 12, 2015). Today, the factory is a model of efficiency and a nexus for the company’s efforts to produce jetliners at an unprecedented clip. After years of racing to develop and market new models, both Airbus and Boeing have clear product lines and backlogs for the next decade. Now, each aims to grab market share by building its planes faster and more efficiently than the other—a gambit both have struggled with in the past.

For Airbus, the lessons being showered on its new A350 (its largest twin-engine jet, designed to compete with Boeing’s 787 and 777), come from the A380. That project caused havoc inside Airbus when wiring problems led to multibillion-dollar cost overruns, furious customers and years of management turmoil. On the new A350, lasers guide computerized clamps that push together giant fuselage sections in a process that is 30% faster and 40% cheaper than on the superjumbo. Thanks partly to such improvements, the A350 project has stayed on schedule and on budget.

Efforts to accelerate production have ranged from reducing vacation days to high-tech innovation. Airbus is introducing a giant inkjet printer to paint the tail fins of its planes. The new printer could slash by almost 90% the 170 hours that workers now need to prepare and paint an ornate airline logo. Airbus says that in a few years the printer could double painting capacity and cut related labor costs by half. Another step to hit the target rollout date was tapping veterans. Managers on the A350 line insisted that at least 70% of workers come from other Airbus programs. Efficiency gains like these are vital because building jetliners is so complex.

Classroom discussion questions:

1. How would you define efficiency (see Chapter 1)?

2. Why is efficiency so important to Boeing and Airbus?

OM in the News: The Pentagon’s F-35 Push

Lockheed's F-35 assembly line in Fort Worth, Texas — Lockheed’s F-35 assembly line in Fort Worth, Texas

When I worked as a design engineer at McDonnell Douglas in the late 1960s, the F-4 Phantom fighter jet assembly line was one floor above my basement office. We rolled out one Phantom a day, a very efficient line, with volume stable and constant. This has not been the case with our nation’s latest fighter jet, the F-35. Lockheed’s mile-long assembly plant in Fort Worth currently produces only four F-35s a month.

But now “the Pentagon plans to push Congress to approve a deal for more than 400 F-35 jets, worth $34 billion, in what would be the largest-ever weapons’ contract,” writes The Wall Street Journal (May 30-31, 2015). The Pentagon said that committing to buy that many jets over 3 years starting in 2018 could yield cost savings as suppliers would be able to plan with more certainty, buy materials in bulk and triple production from existing levels to about 150 planes a year.

Boosting production is crucial to cutting the cost of the F-35 from the $108 million average paid for the jet in a 43-plane deal agreed last November. Lockheed recently submitted proposals for the next 2 batches of aircraft, and alongside other suppliers have pledged to cut the average cost to $80-$85 million by 2019. Even a rise in output to 150 jets a year would fall short of the 200-plane capacity of the Lockheed plant. Analysts believe official projections of demand for more than 3,000 jets won’t be realized. (Italy and Japan also plan to assemble some jets). Lockheed’s earlier F-16 fighter jet had more than 4,500 orders, and experts expect the F-35 to secure at most 2,000.

Classroom discussion questions:

1. This cost savings plan requires knowledge of learning curves (see Module E). What is the typical learning rate in this industry and how does it impact the analysis?

2. Why will increasing production rates decrease unit costs?

Video Tip: Watching the Boeing 787 Being Built–in 3 Minutes

Jay and I have followed the Boeing 787 project closely for the past decade. The Global Company Profile that opens Chapter 2 details the plane’s design, supply chain, technology, and construction. The 787 has become one of Boeing’s most popular models due to its lightweight carbon composite airframe and the resulting lower fuel burn. Boeing continues to lose money on each Dreamliner it builds, but expects to reach the break-even point on the 787 program this year. The program’s deferred production cost, an accounting measure of how efficient an assembly program becomes over time, rose to $25.2 billion last year, topping the $25 billion cap Boeing had forecast for the 787.

Of course, the 787′s assembly costs will continue to drop over time as workers improve the efficiencies of the line and the rate at which they can build new planes. We discuss this issue on page 768, in Module E, noting the far-reaching consequences of learning curves. Boeing has a backlog of about 850 Dreamliner orders, on sales of 1,072 planes. It builds 10 each month at two plants and plans to boost output gradually to a dozen per month in 2016 and to 14 by 2020.

Your students will enjoy this 3-minute video showing the assembly line in Charleston S.C. The amazing thing about the building is there are no uprights supporting the roof. Six planes in various stages of completion are under the one roof. When completed, the plane is towed to the paint shop. Boeing has a runway that connects with the Charleston airport, and from here that the planes are delivered to customers.

You might show this video with Chapter 2, OM in a Global Environment (Boeing is one of the U.S.’s largest exporters), Chapter 9, Layout, or Module E.

OM in the News: The Boeing 787 Lithium Battery Explosions

The damaged battery case from a Japan Airlines 787

“Flaws in manufacturing, insufficient testing and a poor understanding of an innovative battery all contributed to the grounding of Boeing’s 787 fleet last year,” according to a new report by the National Transportation Safety Board (see The New York Times, Dec. 1, 2014). The report assigned in the starkest terms yet the blame for the 787’s battery problems.

The first battery episode occurred after a Japan Airlines flight landed at Boston’s Airport on Jan. 7, 2013 and was traced to one of its 2 lithium-ion batteries. The following week, a smoking battery forced an emergency landing in Japan, and prompted regulators to ban the jets’ flights until the problem could be resolved.

The NTSB found a wide range of failings among manufacturers and regulators. The battery’s maker, GS Yuasa of Japan, used manufacturing methods that could introduce potential defects but whose inspection methods failed to detect the problem. Boeing’s engineers failed to consider and test the worst-case assumptions linked to possible battery failures. The FAA failed to recognize the potential hazard and did not require proper tests as part of its certification process. The planes were allowed to fly again after Boeing instituted new safety features which added internal components to reduce the chance of overheating.

This was the first time large lithium-ion batteries were used aboard a commercial jet. But the NTSB investigation found that the manufacturing process allowed defects that could lead to internal short circuiting. GS Yuasa, the report said, “did not test the battery under the most severe conditions possible in service, and the test battery was different than the final battery design certified for installation on the airplane.” Boeing had initially determined that a battery cell might fail in 1 out of 10 million flight hours. Instead, by the time the two episodes happened, the 787 fleet in service had logged fewer than 52,000 hours. Both Boeing and GS Yuasa also underestimated the risks of a catastrophic failure. They relied on a single test, known as a nail penetration test, to simulate a short circuit to find out under what circumstances the battery might ignite.

Classroom discussion questions:

1. Why was Boeing’s reliability estimate so inaccurate?

2. How is this an OM issue?

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: Incentives Drive Boeing Back to Washington State for the 777X

After much wrangling and predictions that Boeing would locate its new 777X plant in nonunion South Carolina, the firm may have reached deals with state and IAM union officials to win the aerospace giant new tax breaks and 8 more years of labor peace in exchange for building its planned jetliner in Washington. The Wall Street Journal (Nov.6, 2013) reports that Gov. Jay Inslee called for a special session of the state legislature to approve a package of tax and policy incentives valued at $18.7 billion. Inslee said approval of that package and of the labor agreement are necessary for Boeing to make the 777X in its longtime Puget Sound base. “Inaction will cost the state of Washington,” said Inslee.

The moves capped an intense period of maneuvering over the plans for the 777X, a long-range jetliner considered pivotal to Boeing’s future. The 777X, scheduled for its 1st delivery by 2020, is likely to be the last major new jet from Boeing for many years, and there has been intense speculation over where the plane and its huge carbon-fiber composite wings would be built. The Wall Street Journal reported just last week that Boeing was leaning towards a nonunion plant in South Carolina. Boeing also announced it would give “much” of the engineering work on the 777X to engineers in 5 U.S. states and Russia, with no mention of plans to use engineers in Washington.

The South Carolina facility, Boeing’s first aircraft assembly plant manned by a nonunion workforce, has been a source of tension with the IAM. Boeing selected it in 2009 as the site of its second 787 Dreamliner assembly line, prompting a complaint from the National Labor Relations Board that the move was retaliation for a 2008 strike by the IAM that halted Boeing’s assembly lines for 58 days. The potential new agreement with IAM leaders conveys to 2024 and includes a $10,000 signing bonus for workers. The union said the deal would provide an “unprecedented degree of labor stability in the volatile and competitive industry.” “It’s a tough one, if you call their bluff and you’re wrong, then you’re just kicking yourself,” adds a machinist.

Classroom discussion questions:

1. Why is this such a critical OM decision for Boeing?

2. What factors discussed in Chapter 8 did the company consider in selecting Washington over S. Carolina?

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?