Is Boeing Reversing its 787 Engines and Buying a Supplier Facility From Vought?

Flightblogger has the scoop that Boeing will shortly announce that it is buying a facility from one of its key suppliers for the 787 program. According to the post, “Boeing is set to announce its intention to acquire the 787 operations currently run by Vought Aircraft Industries in North Charleston, SC in a major shake up of the supply chain for its new flagship product.” The blog entry suggests that those close to the deal are hinting that the move might signal either that Boeing is attempting to gain greater control over its supply chain or that it is trying to secure an additional facility for 787 production (or both). The Wall Street Journal coverage of the rumor confirms the same, noting that that “The move would represent another admission by Boeing that it needs to take a more direct role in the manufacturing process of its marquee product … [and] The move also potentially paves the way for a second 787 assembly line once Boeing is able to ramp up production.”

Recent Spend Matters coverage -- which you can read here and here -- suggests that Boeing is addressing a number of fundamental supply chain and supplier performance/quality issues as it sorts through the best means of bringing the 787 to market as safely and quickly as possible. But what this rumor also hints to us inline with the other recent news --- not to mention past supplier related delays -- is that Boeing could be reevaluating the core 787 outsourcing model where suppliers helped design much of the plane (and will be supplying the great majority of its components and parts vs. having Boeing design and produce them in-house, as was the case with previous generation planes).

Throughout Boeing’s attempt to land the 787, the aviation giant has met with many of the challenges that companies that pursue manufacturing outsourcing typically encounter, including the challenges of integrating multiple and interdependent R&D processes between suppliers and internal stakeholders. In addition, because of all of the exotic materials used in the 787, Boeing has learned the hard way that being a guinea pig for incorporating unprecedented amounts of new materials (e.g., titanium) into certain supplier-produced parts/components (e.g., fasteners) introduces significant new supply risk into the sourcing equation. At the end of this holding pattern, we expect to see a number of other mid-flight adjustments as Boeing learns from its outsourcing experience. Some may prove costly and disruptive. Others will not. But sometimes taking the bird off autopilot is better than the alternative.

- Jason Busch